September 30, 2010
IMF World Economic Outlook online
Or at least, WEO Chapters 3 and 4.
Chapter 3 is entitled "Will It Hurt? Macroeconomic Effects of Fiscal Consolidation", and Chapter 4 is "Do Financial Crises Have Lasting Effects on Trade?". Also online are Chapters 3 and 4 from the IMF Global Financial Stability Report.
Frank Warnock on Two Myths about the Dollar
Frank Warnock, an expert on US capital flows and stocks, has just written a piece for CFR entitled Two Myths About the U.S. Dollar. In it, he examines "two factors that could substantially alter the long-run value of the U.S. dollar: the dollar's reserve status and the sustainability of U.S. international debt."
September 29, 2010
When do recessions end?
Warren Buffett thinks the U.S. is still in a recession, declaring in a CNBC interview last week:
I think we're in a recession until real per capita GDP gets back up to where it was before. That is not the way the National Bureau of Economic Research measures it. But I will tell you that to any-- on any common-sense definition, the average American is below where he was before, or his family, in terms of real income, GDP.
I don't presume to be able to tell Warren Buffett what investment strategies work best. But I can provide some clarity on how economists use the term "recession," and hopefully shed some light on the issue that Buffett and others have raised.
September 27, 2010
Portfolio Crowding Out, Illustrated
I have been updating graphs for my money and banking course, and here is the graph I generated to illustrate the tremendous impact of government borrowing on interest rates via portfolio crowding out (as argued in this post).
September 25, 2010
Back of the Envelope Estimates of Chinese Trade Elasticities
And pitfalls in partial equilibrium analyses
Following up on my previous post, I want to examine what would happen if the Chinese yuan appreciated in real terms, either because of nominal appreciation, or because of more rapid inflation in China versus its trade partners. Here are some back of the envelope estimates.
September 24, 2010
The Yuan's Course, Updated and Extended
September 23, 2010
What's the Fed signaling?
There's an aspect of Tuesday's statement from the FOMC that's not being emphasized by many analysts.
September 22, 2010
Some Policy Implications of the Interdependence of Cyclical and Structural Unemployment
I have decided to forego discussion of the potentially heavy burdens faced by households with incomes in excess of $250,000 should the tax cuts not be extended for income in excess of $250K (see the poignant story here), and focus on the challenges of the unemployed, and what challenges persistent unemployment in turn poses for macroeconomic policy. (Side note: our assessment of the plight of the +$250K income households should be tempered by the knowledge that even those households with income in excess of $250K will see a tax cut under the President's proposal, since household income below the $250K threshold would be taxed at the current lower marginal rate )
September 20, 2010
The fat lady sings
The NBER Business Cycle Dating Committee issued a statement today declaring that the bottom of the most recent recession was reached in June of 2009, with the economy in the expansion phase of the business cycle during the 15 months since then. This confirms the announcement issued by the Econbrowser Business Cycle Dating Committee last April.
September 19, 2010
What's holding back employment growth?
I certainly agree that the most important factor holding back employment growth at the moment is low demand for firms' products and services. But I disagree with those who suggest that this is the only factor.
September 18, 2010
Keep on Cooking Your Eggs and Washing Your Pre-Washed Spinach Thoroughly
Fortunately for me, I don't like peanut butter. From NYT, on the Senate bill to expand FDA powers and increase funding:
September 16, 2010
The Yuan's Course
"Is the U.S. heading toward another recession?"
September 15, 2010
Links for 2010-09-15
Quick links on sources of job creation, recession probabilities, and alternative ways to access your favorite economic books.
September 14, 2010
Three Graphs Regarding EGTRRA/JGTRRA
If (1) one is a concerned about budget deficits over the longer term, but (2) is concerned that a reversion to pre-2001 tax rates would hurt short term growth, then one should favor the partial extension of EGTTRA/JGTRRA for only those earning less the $250K ($200K for singles).
September 13, 2010
The Global Economic Crisis
Impacts, Transmission and Recovery.
This was the topic of a conference I recently attended, sponsored by the Korean Development Institute and the East-West Center, organized by Maurice Obstfeld, Dongchul Cho, Andrew Mason and Sang Hyop Lee. It was a great opportunity to hear diverse views on the progress of the world economy. The papers are here.
September 12, 2010
Should the Fed try to depress long-term yields further?
I've been sharing with readers my recent research with Cynthia Wu, in which we found that the Fed could likely lower long-term interest rates further by buying more long-term securities, even though the short-term rate is essentially zero and even though the newly created reserves would simply sit idle in banks' accounts with the Fed. Here I'd like to take up the question of whether such a policy would be desirable.
September 08, 2010
The "Ever-Expanding" Government Sector, Illustrated
Just some numbers to bring reality into the general discussion:
The Budgetary Impact of EGTRRA/JGTRRA Extension and AMT Fixes
...According to the CBO
In evaluating the advisability of extending either completely or partially the tax cuts of 2001 and 2003 (aka EGTRRA and JGTRRA), and implementing additional fixes to the AMT, one should consider the impact on the budget.
September 04, 2010
Snapshots of the Employment Situation, August 2010
I thought I'd add a few observations on the latest employment report (other reports here: [NYT], [WSJ RTE/Izzo] [CR], [Economist's View]). First, by an alternate measure, employment is improving more rapidly than the standard nonfarm employment (NFP) measure. Second, the alternate measure increased faster than nonfarm payroll employment over the period of temporary Census hiring. Third, aggregate hours worked in the private sector continues to rise faster than private sector employment. Fourth, the NFP growth consistent with zero GDP growth is lower in the last decade, versus previous decades, even while the elasticity of NFP growth with respect to GDP growth has risen.
September 03, 2010
August auto sales
August auto sales worst in 27 years, declared some headlines. While the statement may be true, I don't think it's the best way to summarize what we're seeing.
September 01, 2010
What Kind of Model Is Brian Riedl Using?
If one wants to be taken seriously in the world of policy analysis, one should at least use an internally consistent framework. This consideration, apparently, has not troubled Mr. Reidl.