March 31, 2010
PPACA and "What If?" Scenarios
Or, if we have Excel, why can't journalists and bloggers add and subtract, and do sensitivity analysis?
From Dobridge, Hooper, Slok, "Overview of the 2010 Health Reform Bill," Deutsche Bank Global Economic Perspectives March 31, 2010. [not online]
March 30, 2010
Congress seeks more information on health care charges
AT&T announced last week that it would charge $1 billion against its earnings as a result of the recently passed health care bill. Other companies also announcing charges include Caterpillar ($100 M), John Deere ($150 M), and MMM ($85-90 M). Analyst David Zion of Credit Suisse estimated that S&P 500 companies will rack up a combined $4.5 B charge.
March 29, 2010
Robert Samuelson on Economics
And on unavoidable spending, and debt crises, and on budget accounting...
From the Washington Post: comes this headline:
March 28, 2010
Interest rates spike up
How scary is it?
March 27, 2010
Does Unemployment Insurance Necessarily Raise the Unemployment Rate and Decrease Employment?
Some analysts (e.g., most recently Professor Mulligan) have stressed the disincentive effects of unemployment insurance on the unemployment rate and the level of employment. I think it useful to consider the offsetting effects arising from various effects, and hence distinguishing between the two variables. In my view, the impact of UI is more complicated than it would seem at first glance, with UI potentially increasing employment while concurrently increasing the unemployment rate. In addition, according to newer research, even if UI extends unemployment duration, it still might be welfare-enhancing. In other words, some researchers appear to have had their worldview frozen in 1990.
March 25, 2010
A Still Relevant GAO Classic: Floating Exchange Rates in an Interdependent World and "Overvaluation"
Following up on my misalignment post from Tuesday, here's a volume compiled by the GAO when it was the General Accounting Office containing a symposium on exchange rates. The symposium took place in the midst of currency overvaluation: "Floating Exchange Rates in an Interdependent World". The authors included Richard Cooper, Stanley Black, Rudiger Dornbusch, Jeffrey Frankel, and Jacob Frenkel.
Policy Analysis in DSGEs
A few weeks ago , I wished for a comparative survey of the properties of many macro models, along the lines of the Brookings comparison project of the early 1980's. I got part of my wish (at least in part), in the form of a (very cool!) comparison of key policy agency dynamic stochastic general equilibrium (DSGE) models, in Effects of Fiscal Stimulus in Structural Models (h/t Mark Thoma).
March 24, 2010
Not a textbook rebound
Is this as good as it gets? For the time being at least, it seems to be.
March 23, 2010
A Misalignment Primer
As the release of the next Treasury Report to Congress on International Economic and Exchange Rate Policies looms, it might be useful to recount the various ways in which different observers define currency "misalignment".
March 21, 2010
Why reform health care?
Amidst all the preoccupation with the procedural details of how health care legislation is likely to be implemented, I was glad to see Paul Krugman make the case for why reform is needed in the first place.
March 19, 2010
The Mason-Dixon Line in Health Care Reform: Economists Edition
The WSJ Real Time Economics blog has posted the letters for and against the health care reform bill winding through Congress. The most interesting thing about the lists of signatories is the geographical divide. It was so interesting, I did a fast tabulation (so, don't quote me on it), and what one finds is that of the list in favor, only 2 of 41 economists are affiliated with institutions in the South (defined using the most restrictive definition in this Wikipedia page -- so to be completely accurate, I haven't used the actual Mason-Dixon line). Of the 131 signatories to the against letter, 40 are affiliated with institutions in the South, i.e., essentially 30% of the total. A list of affiliations is below:
March 18, 2010
What the heck is a "Punk Staffer"?
And how does a "punk staffer" differ from a non-punk staffer?
CBO Scoring of HR3590 plus Reconciliation Legislation
The CBO and the Congressional Joint Committee on Taxation have just released its scoring of "budgetary effects of the reconciliation proposal, in combination with the effects of H.R. 3590, the Patient Protection and Affordable Care Act (PPACA), as passed by the Senate". The link to the document is here. The CBO/JCT estimated reduction in the deficit over FY2010-2019 is $119 billion. A comparison of the impact on the budget balance against previous reconciliation measures is presented in Figure 1, below.
Obama after One Year: Crisis, Response, Recovery
A couple days ago, I presented my views on the policy response to the financial crisis and the Great Recession in a UW Center for World Affairs and the Global Economy / UW CIBER / MITA and ICE sponsored event. The power point slides are here (big file, 1.3MB). I took the latitude as the invited speaker to expand the topic from the Obama Administration's measures to encompass the response to the crisis and recession from both the fiscal and monetary policy authorities.
March 17, 2010
Bank supervision and the Federal Reserve
In testimony today before Congress, Fed Chair Ben Bernanke outlined his reasons why the Federal Reserve is uniquely suited to be the regulatory supervisor for U.S. banks.
March 15, 2010
What Do Business Economists Think the ARRA Accomplished?
Or, counterfactuals, yet again.
From the WSJ March survey survey of forecasters, the results indicate that instead of the 0.15% growth rate recorded in 09Q4 y/y growth, the growth rate would have been -0.93%. For 2010Q4 Q4/Q4 growth, they forecast 3% growth, and in the absence of the ARRA, they would have predicted 2.2% growth.
2010 Econbrowser NCAA tournament challenge
If you're both a very faithful and a very passive Econbrowser reader, for two years now you've sat on the sidelines while you watched other, equally faithful but less passive readers participate in the world-famous Econbrowser NCAA Tournament Challenge, in which brave souls pretend they can predict a significant number of the winners of the games of the NCAA men's basketball tournament. If so, here's your third chance to sit on the sidelines again, or maybe even to participate this time.
March 14, 2010
The challenges ahead for world oil
University of Leeds Professor Joyce Dargay and New York University Professor Dermot Gately have a new research paper suggesting that projections from the DOE, IEA, and OPEC are underestimating the challenges ahead for meeting world oil demand.
March 12, 2010
Update: the 2010-19 Impact of PPACA on Budget Balance
And a quantitative comparison to previous reconciliation measures.
The CBO and the Congressional Joint Committee on Taxation (JCT) have updated cost estimates for H.R. 3590, the Patient Protection and Affordable Care Act (PPACA), as it was passed by the Senate on December 24, 2009. The figures are here. I've incorporated the new estimates into the bar chart first reported in this March 1st post.
March 11, 2010
Durable Goods and the Collapse of Global Trade
Durable goods represent a moderate share of the economy in most industrial countries -- in the U.S., for example, they accounted for 23.6 percent of real GDP in 2008. However, durable goods make up a large share of international trade. In the U.S., they accounted for more than 60 percent of trade in goods (excluding energy products) in 2008. The figure is 70 percent on average for the OECD countries, according to several studies.
Whither the Yuan?
Political pressure seems to be mounting for yuan appreciation.  Figure 1 depicts the stability in the USD/CNY nominal exchange rate over the past year.
March 09, 2010
Modeling problems in credit markets
On Friday I joined fellow blogger Mark Thoma (and a good many other economists) at a very interesting conference on financial markets held at the Federal Reserve Bank of San Francisco. Here I share some ideas I expressed at the conference about the directions I feel this research ought to go.
Russ Roberts writes:
Menzie Chinn invokes the CBO "estimates" to argue against those who say the stimulus didn't work. Did the stimulus help turn the economy around and create jobs? I'm skeptical on logical grounds but I confess that I do not have strong empirical evidence on my side.
But those who defend the stimulus have no empirical support either...
March 08, 2010
Speaking of Unfunded Liabilities: Medicare Part D
The Financial Report of the United States Government, 2009 was released last week. Perusing the tables, one encounters the gigantic new, unfunded entitlement enacted in 2003, namely Medicare Part D.
March 07, 2010
A new index of financial conditions
What do current financial indicators tell us about where the economy is headed?
March 04, 2010
The Global Financial Crisis: Explaining Cross-Country Differences in the Output Impact
From "The Global Financial Crisis: Explaining Cross-Country Differences in the Output Impact," IMF WP 09/280, by Pelin Berkmen, Gaston Gelos, Robert Rennhack, and James P. Walsh:
We provide one of the first attempts at explaining the differences in the crisis impact across developing countries and emerging markets. Using cross-country regressions to explain the factors driving growth forecast revisions after the eruption of the global crisis, we find that a small set of variables explain a large share of the variation in growth revisions. ...
March 03, 2010
Who Are You Going to Believe?
...CBO estimates that in the fourth quarter of calendar year 2009, ARRA's policies:
- Raised real GDP by between 1.5 percent and 3.5 percent,
- Lowered the unemployment rate by between 0.5 percentage points and 1.1 percentage points,
- Increased the number of people employed by between 1.0 million and 2.1 million, and
- Increased the number of full-time-equivalent jobs by 1.4 million to 3.0 million compared with what those amounts would have been otherwise (see Table 1).
March 02, 2010
Another month of weakly improving auto sales.
Net Fiscal Stimulus
From the abstract to "On the ease of overstating the fiscal stimulus in the US, 2008-9", by (my sometime coauthor) Joshua Aizenman and Gurnain Kaur Pasricha:
This note shows that the aggregate fiscal expenditure stimulus in the United States, properly adjusted for the declining fiscal expenditure of the fifty states, was close to zero in 2009. While the Federal government stimulus prevented a net decline in aggregate fiscal expenditure, it did not stimulate the aggregate expenditure above its predicted mean. ...
March 01, 2010
What Are These Three Numbers?
These numbers are expressed in billions of FY2010 dollars.
Figure 1, in billions of FY2010 dollars.