June 30, 2010
Also in town for last week's International Symposium on Forecasting was Bill Gavin from the Federal Reserve Bank of St. Louis. I had an interesting discussion with him about changes over time in U.S. employment dynamics that I wanted to share with our readers.
June 29, 2010
EIA: The China Syndrome
We're pleased to feature another post from Steven Kopits of Douglas-Westwood, this time on the EIA's oil demand outlook.
June 28, 2010
From Arthur Kroeber, in China Economic Quarterly "Economic rebalancing -- Twin peaks: fiscal and financial reform" [not online]:
June 26, 2010
Identifying business cycles
The 30th Annual International Symposium on Forecasting was held in San Diego last week. Among the many interesting presentations was Princeton Professor Mark Watson's discussion of estimating business cycle turning points using a large number of indicators.
Views on Rebalancing the Global economy
VoxEU has released a primer on rebalancing the global economy here, edited by Stijn Claessens, Simon J Evenett and Bernard Hoekman. For those interested in the political feasibility of rebalancing, Jeff Frieden holds forth on "The political economy of rebalancing". The table of contents for the entire book is here.
June 23, 2010
Links for 2010-06-23
Tim Duy thinks the fanfare about a new Chinese currency policy is overdone:
The PR overload suggests the Administration is desperately in need of a "win," no matter how trivial.... While China appears willing to adjust the parity rate, changes are likely to be more window dressing than anything else. The industrial base shifted from the US to China over the past twenty years, a transition aided by the Clinton Administration's commitment to a strong dollar, and it is not going to come rushing back for a few percentage points of currency value. The structural shift has happened, and it won't reverse easily.
When Bill McBride says he expects house prices to decline, I pay attention:
When months-of-supply is below 6 months, house prices are typically rising-- and above 6 months-of-supply, house prices are usually falling.... We are much closer to the price bottom now than in 2008, and I don't expect that severe of a price decline. But I do expect house prices to fall in the 2nd half of 2010 and into 2011-- probably another 5% to 10% for the major house price indexes (Case-Shiller and CoreLogic).
A federal judge overturned the moratorium on new deepwater offshore drilling:
"An invalid agency decision to suspend drilling of wells in depths of over 500 feet simply cannot justify the immeasurable effect on the plaintiffs, the local economy, the Gulf region, and the critical present-day aspect of the availability of domestic energy in this country," [U.S. District Judge Martin] Feldman wrote....
The temporary injunction by [Judge] Feldman appears unlikely to bring a swift resumption of deepwater drilling: Oil companies say they're reluctant to start new ventures as an uncertain appeals process unfolds.
June 21, 2010
Some Ruminations on Trade Flows, Trade Costs and Trends
One of the persistently challenges I consistently face in trying to model US import and export flows is the sensitivity of the results to the inclusion of time trends. Time trends are bothersome because they are, in one sense, a measure of our ignorance. That's a worry as we consider the feasibility of global rebalancing    .
June 20, 2010
Inflation or deflation?
For the last year and a half my assessment has been that the near-term pressures on the U.S. economy were deflationary, while long-term fundamentals involve significant inflation risks. It's time for a look at the data that have come in over the last 6 months, and time to say that I still see things exactly the same way.
June 18, 2010
More on BP
The Christian Science Monitor details 5 decisions by BP on the Deep Horizon drilling that saved costs but added to risks: (1) foregoing section casing and tiebacks, (2) using only 1/3 the recommended number of stabilizers, (3) failure to test the cement seal, (4) implementing only partial mud circulation, and (5) failure to secure the wellhead. And they don't even mention the acoustic shut-off switch.
June 17, 2010
Is Spain Next?
Today, we're fortunate to have Mark Copelovitch, Assistant Professor of Political Science and Public Affairs at the University of Wisconsin, as a Guest Contributor.
First off, let me thank Menzie for the opportunity to "pinch hit" here at Econbrowser. It's a pleasure to be here. I am Menzie's colleague in the La Follette School of Public Affairs here at Wisconsin, and my primary area of expertise is the politics of international finance.
June 16, 2010
Links for 2010-06-16
Three interesting figures on fuel consumption, job creation, and prospective interest rates.
June 14, 2010
"Sarah Palin Says "Drill, Baby, Drill" Was Right"
From CBS News, an excerpt of a Palin twitter message:
"Extreme Greenies:see now why we push'drill,baby,drill'of known reserves&promising finds in safe onshore places like ANWR? Now do you get it?"
Global Imbalances and the Crisis
In today's VoxEU, Kati Suominen asks "Did global imbalances cause the crisis?, and surveys the arguments. I recently wrote a survey on the same topic for the forthcoming Encyclopedia of Financial Globalization. Here's my take:
June 13, 2010
Gold and inflation
Federal Reserve Chair Ben Bernanke last week dismissed the suggestion that the recent surge in gold prices signals some kind of inflationary pressures:
So gold is out there, doing something different from the rest of the commodity group. I don't fully understand the movements in the gold price, but I do think that there is a great deal of uncertainty and anxiety in financial markets right now and some people believe that holding gold will be a hedge against the fact that they view many other investments as being risky and hard to predict at this point.
I think Bernanke has this exactly right.
June 10, 2010
Exchange Rate Angst and Rebalancing
As the euro has plummeted against the USD, there's been concern that efforts to rebalance the global economy will face increasing headwinds. [Bergsten] [Duy]. This worry is only added to by the already widening US trade deficit . In this post, I don't want to dispute the difficulty of effecting global rebalancing. It was already a difficult task, even before the euro area's recent debt-related travails. What I do want to do is to put the recent exchange rate movements in perspective. My three observations are as follows:
June 09, 2010
Toxic assets and toxic oil
In some ways the Gulf of Mexico oil spill seems like a replay of the subprime lending disaster. Clever technological innovations blew up in a mess that nobody knew how to control, wreaking devastation on those innocently standing by. The actors and the scenes have changed, but you can't shake the feeling you've been through this nightmare before.
June 08, 2010
The Job Shortfall: Then and Now
In an interesting post a couple weeks ago, Keith Hennessey critiques the President's recent speech about employment growth, and presents the following graph, to highlight the gap between where employment is and where it "should" be.
June 07, 2010
Macroeconometrics in the Mountains
I'm just back from a two day conference at the Norges Bank's conference center in the mountains north of Oslo (organized by Karsten Gerdrup, Christian Kascha, Francesco Ravazzolo and Dagfinn Rime). For me as an end-user of econometric methods, this was a great experience. I got to see some recent developments in applying time series methods to problems in macro and finance (and to see Norway for the first time). Here were some of the papers presented and discussed (I've omitted the papers that are not posted online).
June 05, 2010
Current economic conditions
Yes, we're still in the economic recovery phase, and yes, it still looks pretty sluggish.
June 02, 2010
EIA: Hard Core Peak Oil Forecast
Today Econbrowser is pleased to host this guest contribution from Steven Kopits, who heads the New York office of Douglas-Westwood, energy business consultants.
June 01, 2010
Mind the Gap
Even as inflation continues to fall , there are calls to raise interest rates soon in order to quell inflationary pressures. I remember reading similar calls for monetary restraint in Japan in 2000-01, when that country was struggling to escape deflation (I sure had a hard time explaining the fears to my boss, and indeed never came up with a good answer). But rather than dismiss these calls, I think it useful to revisit the different measures of the output gap, to see whether those fears of rampant inflation due to disappearing slack make sense. Fortuitously, Michael Kiley has just circulated a new paper reviewing the various concepts of the output gap (see also these previous posts:   ).