December 30, 2010
Best economics blogs
Hazards in Interpreting Seasonals
Professor Casey Mulligan has an interesting post, in which he observes that while retail sales are about 15-20% higher in December than in the previous three months, retail employment is only about 4% higher in December than October, thus proving that fiscal stimulus cannot be very effective at raising employment.
December 29, 2010
Looking back at the Great Recession
Some people use the end of December as an opportunity for a retrospective on the year. But I decided to take a look back at the last three years, by way of updating some comparisons I made in April 2009 between the Great Recession and the average characteristics of other postwar recessions.
December 27, 2010
Petroleum Prices and the International Dimension
Paul Krugman observes that there are many real side factors that should drive oil prices higher (in an article that cites Jim’s 2009 paper). I certainly don't have much to add in terms of thinking about oil prices and domestic macro implications, but Krugman's note did impel me to examine more closely the international aspects of the underlying demand factors.
December 26, 2010
Changes in the yield curve
The bond market sees an improving economy.
December 22, 2010
Consumption, Imports and the Prospects for US External Balances
Most forecasts incorporate a resurgence in the US trade and current account deficits. This projection makes sense to the extent that the US is expected to grow faster than Europe and Japan, and the estimated income elasticity of US imports exceeds that of US exports (the Houthakker-Magee finding ). Here’s a summary of forecasts for the current account.
December 21, 2010
Velocity of money
I wanted to follow up on Menzie's recent observations about what's been happening to the supply and demand for money.
December 20, 2010
Capital Controls on the Agenda?
At the recent conference related to G20 issues (discussed in this post), capital controls as a means of managing capital inflows was high on the agenda. The World Economic Forum's Financial Development Report has a nice schematic outlining some key types of controls:
December 19, 2010
What to expect in 2011
I didn't have time to put together a detailed post for today. But fortunately, I see that Bill McBride has done a much better job than I could of summarizing what to look for in 2011.
December 17, 2010
Some Lessons from Recent Global Macro Events
I've just attended a conference sponsored by the Reinventing Bretton Woods Committee, entitled "The International Monetary System: Old and New Debates", which took place against the backdrop of France's chairmanship of the G-20.
December 15, 2010
Forgetting about Demand, Once Again
Professor Mulligan asserts that the payroll tax cut will have little effect on output, even in sticky price Keynesian, and New Keynesian, models. He writes:
December 14, 2010
Did QE2 work?
Having offered my assessment of the effects of the Fed's second round of quantitative easing (QE2), I wanted to mention briefly the takes of some other observers.
December 13, 2010
Extending unemployment benefits
Here I make two quick observations on the policies being discussed.
December 11, 2010
On November 3, the Federal Reserve announced some new monetary policy measures that have been popularly (if perhaps inaccurately) referred to as a second round of quantitative easing, or QE2. What effects, if any, does QE2 seem to have had so far?
December 09, 2010
Trade and Credit, Again
From Off the Cliff and Back? Credit Conditions and International Trade during the Global Financial Crisis, by Davin Chor and Kalina Manova:
December 08, 2010
Worrying about oil prices
The price of oil moved above $90 a barrel yesterday. Is it time to become concerned about the possible macroeconomic effects?
December 07, 2010
The Correlation between Money Base Growth and Inflation
I've been reading through undergraduate textbooks, trying to figure out where the idea that money base expansion must necessarily manifest itself in higher inflation. In Stephen Williamson's macro textbook, he argues that fears of inflation are motivated by the view that eventually, money base expansion will feed into money expansion (box on pp. 432), despite the fact that there is no obvious contemporaneous correlation between the two variables.
December 05, 2010
Still no strength in this rebound
The new news looks to me like the same old news.
December 04, 2010
The Hill: "Senate rejects million-dollar tax-cut compromise in Saturday session"
Or more clearly, all Senate Republicans plus
one four Democrats reject a tax cut for incomes below one million dollars. From The Hill:
Republicans had held firm in recent weeks that the tax cuts — designed to benefit the wealthiest Americans — should be permanently extended as a whole. Democrats had argued that only the cuts for the middle class should be extended, also blasting Republicans for failing to propose any spending cuts or revenue increases to pay for all of the cuts.
December 02, 2010
CEA Assessment of the the Impact of Letting UI Extensions Expire
From the CEA's report "The Economic Impact of Recent Temporary Unemployment Insurance Extensions" released earlier today.
Chicken**** Passes House
House passes middle-class tax bill with three Republicans supporting
By Vicki Needham - 12/02/10 04:00 PM ET
The House passed by a vote of 234-188 a measure that permanently extends expiring middle-class tax cuts and provides a patch for the alternative minimum tax.
December 01, 2010
BCA, UI and EGTRRA/JGTRRA
Four Acronyms in a Very Depressing Play
Truly we are in a strange world where legislative extension of unemployment insurance payments, which is highly effective at maintaining aggregate demand, is stalled, while giving tax cuts to households with income in excess of $250K (a.k.a. the Todd Henderson households) moves forward despite having very little impact on employment and aggregate demand. In other words, on benefit-cost grounds we would want to do exactly the reverse. Given the sheer incoherence of some of the arguments being propounded, it might be useful to recap some findings.