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October 31, 2010
Links for 2010-10-31
Some quick links on the flash crash, China's rare earth elements monopoly, Larry Summers, and economics at UCSD.
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Posted by James Hamilton at 06:59 AM permalink | Comments (13)
October 30, 2010
The Chamber of Commerce Is the International Cosmopolitan Elite
Not that there's anything wrong with that!
I have been pondering two seemingly separate issues -- the first, what constitutes an "elite". David Brooks says it's bobos; Charles Murray says it's those who "...spend school with people who are mostly just like them -- which might not be so bad, except that so many of them have been ensconced in affluent suburbs from birth and have never been outside the bubble of privilege. Few of them grew up in the small cities, towns or rural areas where more than a third of all Americans still live." Personally, I always thought American elites were football players and the folks highlighted on Entertainment Tonight, given the amount of attention devoted to those two groups. (See other recent commentary here) The second, as a social scientist, what interests should one expect the U.S. Chamber of Commerce to be lobbying for [1] (since we do not have direct observation on the funding of the group, we need to infer the interests). I have come to a single answer that partly addresses both of these two questions:
Continue reading "The Chamber of Commerce Is the International Cosmopolitan Elite"
Posted by Menzie Chinn at 12:25 PM permalink | Comments (14)
October 29, 2010
Another disappointing GDP report
The U.S. economy managed to keep growing in the third quarter, but well below what's needed for a normal economic recovery.
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Posted by James Hamilton at 07:25 AM permalink | Comments (11)
October 27, 2010
A Post-Mortem on the Fall and Rise in World Trade
And Implications for US Exports
Nearly two years ago, I noted the collapse in world trade, and observed that various explanations for the decline ranged from the drying up of trade financing, to amplification due to vertical specialization, to the composition effect (the fact that durables are over-represented in trade relative to GDP).
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Posted by Menzie Chinn at 09:30 PM permalink | Comments (7)
Negative real interest rates
What message should we take from negative real interest rates?
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Posted by James Hamilton at 07:55 AM permalink | Comments (29)
October 26, 2010
Guest Contribution: The ageing, crisis-prone, welfare state is bad news for welfare migration
By Assaf Razin
Today, we're fortunate to have Assaf Razin, Friedman Professor of International Economics at Cornell University, and Professor Emeritus at Tel Aviv University, as a Guest Contributor.
Posted by Menzie Chinn at 08:00 AM permalink | Comments (7)
October 25, 2010
ARRA's Impact: The Kauffman Survey
From the just-released Kauffman Economic Outlook, authored by Tim Kane, an indicator of what some economists thought the ARRA accomplished, in terms of unemployment.
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Posted by Menzie Chinn at 04:15 PM permalink | Comments (8)
October 24, 2010
Richard Clarida's retrospective on the financial crisis
I earlier discussed several of the presentations at the monetary policy conference at the Federal Reserve Bank of Boston last week. But missed in the popular coverage of the conference was an insightful discussion by Columbia Professor Richard Clarida that expressed very nicely the conclusions that I have come to as well on the events that led us into these problems.
Continue reading "Richard Clarida's retrospective on the financial crisis"
Posted by James Hamilton at 06:23 AM permalink | Comments (36)
October 21, 2010
Currency Wars and (Macro) Competitiveness
With the cover page of the Economist [1] [2] worrying about currency wars, and various analysts arguing whether the US can or cannot win such a "war" (see Naked Capitalism for a discussion), I thought it would be useful to see where we now stand, in terms of "competitiveness", as understood by open economy macroeconomists.
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Posted by Menzie Chinn at 08:10 AM permalink | Comments (31)
October 20, 2010
Arguments against QE2
Having earlier reviewed some of the reasons in favor of additional quantitative easing (QE2), I'd like to acknowledge some of the dissenting views.
Continue reading "Arguments against QE2"
Posted by James Hamilton at 06:50 AM permalink | Comments (80)
October 17, 2010
More than one tool for the Fed
One theme that emerged from the monetary policy conference at the Federal Reserve Bank of Boston on Friday and Saturday is that, as I stressed in my discussion of the recent FOMC minutes, the Fed is not thinking of large-scale asset purchases as the only tool available in the current environment.
Continue reading "More than one tool for the Fed"
Posted by James Hamilton at 11:25 AM permalink | Comments (52)
October 15, 2010
More discussion of options for the Fed
I'm in Boston today at a conference at the Federal Reserve Bank. Fed Chair Ben Bernanke spoke this morning and this afternoon I presented results from my research with Cynthia Wu. I hope to have time later this weekend to say a little more about some of the presentations and discussion. But for now let me provide a link to an interview with CNBC on some of these issues.
Posted by James Hamilton at 03:18 PM permalink | Comments (16)
October 13, 2010
The "Ever-Expanding" Government Sector, Illustrated (Part II)
I've been lecturing on the government sector in my macro course. In updating my lecture notes, I plotted out some interesting graphs, which link up nicely with this previous post. The following four figures highlight: (1) normalized Federal outlays are not much higher than in 1986; (2) government consumption to GDP is back up to 1991 levels; (3) the cyclically adjusted budget deficit is only 2 ppts larger than that recorded in 1987; and (4) Federal consumption remains far below the previous peak in 2007.
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Posted by Menzie Chinn at 08:45 PM permalink | Comments (52)
Why is the Fed doing this?
Most observers now seem convinced that the Federal Reserve will shortly implement QE2, a second round of quantitative easing. It's worth taking a look at what QE2 is and is not expected to accomplish.
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Posted by James Hamilton at 08:10 AM permalink | Comments (54)
October 11, 2010
"Transforming China's Economic Development Model"
That was the title of a seminar at the annual IMF-World Bank meetings I participated in last Thursday (agenda here).
Continue reading ""Transforming China's Economic Development Model""
Posted by Menzie Chinn at 10:49 AM permalink | Comments (17)
October 10, 2010
The market moves ahead of the Fed
Over the last month, a consensus seems to have emerged that (1) the Fed has the ability to depress long-term yields further, and (2) the Fed has the intention to implement such measures. That raises the possibility that recent market moves represent a bet already placed by market participants on the basis of the logical implications of (1) and (2).
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Posted by James Hamilton at 08:03 AM permalink | Comments (38)
October 07, 2010
Some thoughts on the IMF reform debate
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. He is also author of The International Monetary Fund in the Global Economy: Banks, Bonds, and Bailouts (Cambridge University Press, 2010).
Continue reading "Some thoughts on the IMF reform debate"
Posted by Menzie Chinn at 05:00 AM permalink | Comments (5)
October 06, 2010
Hangin' in there
Recent economic indicators tell more of the same story-- disappointingly weak growth.
Continue reading "Hangin' in there"
Posted by James Hamilton at 06:00 AM permalink | Comments (20)
October 05, 2010
The Incidence of Unemployment and Underemployment, by Income
As we ponder the plight of the over-$250K household income group (see the poignant story here), I think it worthwhile to examine the unemployment and underemployment rates for lower-income households. In researching statistics for our forthcoming book, Lost Decades, Jeff Frieden and I stumbled upon this study by Andrew Sum and Ishwar Khatiwada, with Sheila Palma, of Center for Labor Market Studies at Northeastern University. They characterized the mid-2010 employment situation as "A Truly Great Depression Among the Nation's Low Income Workers Amidst Full Employment Among the Most Affluent".
Continue reading "The Incidence of Unemployment and Underemployment, by Income"
Posted by Menzie Chinn at 01:52 PM permalink | Comments (37)
October 04, 2010
Prospects for Growth And Rebalancing
From an article in the newest issue of GlobalAsia:
Only a few months ago, policymakers around the world were confronted with a series of challenges that, while substantial, seemed relatively well defined. International organizations such as the International Monetary Fund and the Organization for Economic Cooperation and Development highlighted the challenges of a two-speed recovery: emerging markets racing ahead, advanced economies plodding along. Global financial imbalances, particularly in current accounts, were a worry, but there were promising signs that growth and rebalancing in the United States and China would prove durable.
The prospects for a sustained global recovery now seem much less certain. ...
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Posted by Menzie Chinn at 05:01 PM permalink | Comments (11)
October 03, 2010
QE2: estimates of the potential effects
As the conviction grows that the Federal Reserve will adopt a second round of quantitative easing (dubbed by some as "QE2"), I thought it might be helpful to survey some of the different estimates of what effect this might have on long-term interest rates.
Continue reading "QE2: estimates of the potential effects"
Posted by James Hamilton at 05:51 AM permalink | Comments (36)
October 02, 2010
Causes of the flash crash
Donald Marron calls our attention to the report of the CFTC and the SEC on the causes of bizarre prices at which some stocks traded last May.
Continue reading "Causes of the flash crash"
Posted by James Hamilton at 10:24 AM permalink | Comments (11)