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April 30, 2010
The recession is over
That's the big take-away from today's report from the Bureau of Economic Analysis that the seasonally adjusted real value of the nation's production of goods and services grew at a 3.2% annual rate during the first quarter of 2010. But the details behind today's report suggest that the recovery so far remains pretty weak by historical standards.
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Posted by James Hamilton at 08:52 AM permalink | Comments (26)
April 29, 2010
What Are the Externalities of "Drill, Baby, Drill"?
From NYT, "Size of Spill in Gulf of Mexico Is Larger Than Thought", the extent of the spill in the Gulf of Mexico:
Figure from CAMPBELL ROBERTSON and LESLIE KAUFMAN, "Size of Spill in Gulf of Mexico Is Larger Than Thought," NYT (29 April 2010).
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Posted by Menzie Chinn at 11:14 AM permalink | Comments (42)
Employment Bounceback?
Dobridge, Hooper and Slok in "Jobless Recovery III Seems Unlikely" Global Economic Perspectives (April 21, 2010) [not online]:
The sluggish performance of payroll employment and jobless claims in recent months despite well-above-trend growth in output has raised the specter of another jobless recovery. ...
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Posted by Menzie Chinn at 08:10 AM permalink | Comments (6)
April 28, 2010
Why Adam ate the apple
In my last post, I discussed how the run-up of U.S. mortgage debt during the last decade was funded. One important element was the sale of commercial paper that helped fund the purchase of some mortgage-related securities. Here I comment on why it was hard for some institutions to resist buying that commercial paper.
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Posted by James Hamilton at 07:24 AM permalink | Comments (22)
April 26, 2010
China and Latin America: Re-evaluating Macro Linkages
Last week, I attended a conference organized by Eduardo Fernandez-Arias and Alessandro Rebucci at the Inter-American Development Bank. One of the panels focused on the impact of China on Latin America's economy.
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Posted by Menzie Chinn at 07:50 PM permalink | Comments (18)
Non-Economic Question of the Day: Should I Take My (US) Passport If I Visit Arizona?
Reading this factsheet pertaining to SB 1070, I think the answer is yes.
Posted by Menzie Chinn at 02:44 PM permalink | Comments (58)
April 25, 2010
Follow the money
What happened to housing and financial markets over the last decade? To find out, follow the money.
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Posted by James Hamilton at 01:14 PM permalink | Comments (31)
April 21, 2010
The Administration's February Forecast Compared to Current Expectations
Back in February, some observers were characterizing the Administration's forecast as too rosy. Now, the Administration forecast is looking positively pessimistic by comparison to private sector forecasters, at least over 2010.
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Posted by Menzie Chinn at 11:07 PM permalink | Comments (20)
Improving the fuel efficiency of U.S. light vehicles
I recently highlighted grounds for pessimism about the ease with which the U.S. could significantly change our oil consumption habits. Here I highlight some interesting new research by U.C. Davis economics professor Christopher Knittel which offers a more optimistic assessment.
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Posted by James Hamilton at 05:57 AM permalink | Comments (57)
April 19, 2010
Data Based Assessment of the Unemployment Insurance Impact on UE
From the San Francisco Fed's Valletta and Kuang (h/t RTE/Derby):
Although economists have shown that extended availability of UI benefits will increase unemployment duration, the effect in the latest downturn appears quite small compared with other determinants of the unemployment rate. Our analyses suggest that extended UI benefits account for about 0.4 percentage point of the nearly 6 percentage point increase in the national unemployment rate over the past few years. It is not surprising that the disincentive effects of UI would loom small in the midst of the most severe labor market downturn since the Great Depression.
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Posted by Menzie Chinn at 02:48 PM permalink | Comments (5)
Joe Lawler and Joe Stiglitz Agree!
Or, on economic costs versus budget costs
From American Spectator, Joe Lawler writes:
"The cost ... to the budget, though, is not the only relevant cost."
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Posted by Menzie Chinn at 07:35 AM permalink | Comments (10)
April 18, 2010
Consumers get more pessimistic
The Reuters/Michigan index of consumer sentiment tumbled four points in April. Could just be measurement noise, or could be that something new is pressing down on consumers.
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Posted by James Hamilton at 06:48 AM permalink | Comments (10)
April 17, 2010
Granger causality
Hal Varian passes along this amusing result if you query Google Insights for Search for searches on "mixed drinks" and "hangovers."
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Posted by James Hamilton at 07:33 AM permalink | Comments (19)
April 16, 2010
Recent estimates of Chinese Yuan misalignment
Yin-Wong Cheung, Eiji Fujii and I have just written a chapter for a VoxEU book The US-Sino Currency Dispute edited by Simon Evenett (link to blog post). After discussing the various approaches to measuring misalignment, we summarize the most recent estimates of CNY undervaluation.
Continue reading "Recent estimates of Chinese Yuan misalignment"
Posted by Menzie Chinn at 07:07 AM permalink | Comments (9)
April 15, 2010
More on oil prices and the economic recovery
On Saturday I commented on whether rising oil prices threaten the economic recovery. Here are some quick links to perspectives from other observers.
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Posted by James Hamilton at 06:09 AM permalink | Comments (14)
April 14, 2010
Averting the Consumption Disaster
The CEA has just released the newest quarterly report on the impact of the ARRA. In addition to tabulating the impacts on output and employment, there's a special section by Chris Carroll (one of the leading authorities on modeling consumption behavior -- I used to teach his papers in my PhD macro course), which concludes in the absence of the ARRA "...consumer spending would likely have continued to fall" (which is consistent with my post from a couple days ago).
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Posted by Menzie Chinn at 11:26 AM permalink | Comments (23)
IMF WEO: "Transitioning out of Sustained CA Surpluses"
[Corrections made 11am Pacific]
"Getting the Balance Right: Transitioning Out of Sustained Current Account Surpluses" by Abdul Abiad, Daniel Leigh and Marco Terrones:
This chapter examines the experiences of economies that ended large, sustained current account surpluses through policy actions such as exchange rate appreciation or macroeconomic stimulus. It subjects these historical episodes to statistical analysis and provides a narrative account of five specific transitions, examining economic performance and identifying key factors that explain various growth outcomes.
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Posted by Menzie Chinn at 07:13 AM permalink | Comments (5)
April 12, 2010
"Where's the Consumption Disaster?", Again
Back in November 2009, Casey Mulligan asked this question, and observed:
Both of these [disposable income and consumption] are HIGHER in September 2009 than they were a year earlier.
I observed that it made sense to look at per capita values; and that changed the conclusions substantially.
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Posted by Menzie Chinn at 07:35 PM permalink | Comments (11)
The Post-Crisis Global Economy: Prospects for Recovery and Reform
Join a distinguished panel of speakers, including Jeffry Frieden, Stanfield Professor of International Peace, Department of Government, Harvard University, Menzie Chinn, Professor of Economics and Public Affairs, and Michael Knetter, Albert O. Nicholas Dean, Wisconsin School of Business, for a discussion of pressing questions facing the global and U.S. economies in the aftermath of the crisis. Moderated by Mark Copelovitch, Assistant Professor of Political Science & Public Affairs.
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Posted by Menzie Chinn at 07:14 PM permalink | Comments (1)
April 11, 2010
A Chinese Trade Deficit?
From Reuters:
China's $7.24 billion deficit in March, the first time the trade balance has been in the red since April 2004, mainly reflected strong imports of oil, raw materials and cars, the General Administration of Customs said on Saturday.
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Posted by Menzie Chinn at 01:21 PM permalink | Comments (7)
April 10, 2010
Do rising oil prices threaten the economic recovery?
Ten of the 11 recessions in the United States since World War II have been preceded by a sharp increase in the price of crude petroleum. Oil had been holding around $80/barrel over the last month, but traded as high as $87 last week, leading the Financial Times to ask whether oil could give the "kiss of death to recovery." Here is how I would answer that question.
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Posted by James Hamilton at 12:27 PM permalink | Comments (36)
April 08, 2010
Measuring the Long Run Real Exchange Rate - Income Relationship
Yanping Chong, Oscar Jorda and Alan M. Taylor have tackled the perennial challenge of measuring the long run relationship between the real exchange rate and per capita income levels. From the abstract to The Harrod-Balassa-Samuelson Hypothesis: Real Exchange Rates and their Long-Run Equilibrium:
Frictionless, perfectly competitive traded-goods markets justify thinking of purchasing power parity (PPP) as the main driver of exchange rates in the long-run. But differences in the traded/non-traded sectors of economies tend to be persistent and affect movements in local price levels in ways that upset the PPP balance (the underpinning of the Harrod-Balassa-Samuelson hypothesis, HBS). This paper uses panel-data techniques on a broad collection of countries to investigate the long-run properties of the PPP/HBS equilibrium using novel local projection methods for cointegrated systems. ...
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Posted by Menzie Chinn at 07:20 AM permalink | Comments (2)
April 07, 2010
Links for 2010-04-07
A few items from the 'sphere that you might find interesting.
Continue reading "Links for 2010-04-07"
Posted by James Hamilton at 09:04 AM permalink | Comments (7)
April 06, 2010
The Predictive Content of Commodity Futures: Latest Estimates
Econbrowser readers will know that I've long been interested in how derivatives like futures predict commodity prices. An early paper on energy futures, coauthored with my former CEA colleagues Michael LeBlanc and Oli Coibion, was summarized in this 2006 post (paper here). Recently, Oli Cobion and I have updated and expanded our examination, to incorporate for the most recent data, account for GARCH effects, alloow for time variation, and to try to explain why there has been time variation in the deviations in the unbiasedness proposition.
From the abstract to our paper:
Continue reading "The Predictive Content of Commodity Futures: Latest Estimates"
Posted by Menzie Chinn at 06:36 AM permalink | Comments (8)
April 05, 2010
NCAA tournament winner
It was an exciting basketball tournament, right down to the final game.
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Posted by James Hamilton at 09:17 PM permalink | Comments (4)
April 04, 2010
Looks good to me
Finally we're starting to see some convincing indications of economic recovery.
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Posted by James Hamilton at 06:22 AM permalink | Comments (22)
April 01, 2010
"Export or Die"
From today's Economist, Greg Ip writes:
America's economic transformation will require businesses to rely less on selling to Americans and more on selling abroad.... The emphasis will be on high-value products and services rather than on labour-intensive items such as furniture and clothing.
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Posted by Menzie Chinn at 01:15 PM permalink | Comments (21)