March 30, 2011
Dispatches (XI): Walker Administration Interprets the Law
With update, wherein the Walker Administration complies with the third temporary restraining order.
From the Wisconsin State Journal:
State officials say they will move forward with Wisconsin's controversial collective bargaining law, despite a judge's order barring its implementation -- and a threat of sanctions against anyone who violates it.
Exports, Growth Prospects and Rebalancing
Exports in Context
Anybody who follows forecasts of GDP growth for 2011Q1 will notice that over time, estimates have been revised down (this is true for Macroeconomic Advisers, for instance). The dimmed prospects for GDP growth throws in high relief the importance of net exports. From the WSJ, "Foreign Shocks Temper America's Export-Led Rebound":
March 29, 2011
Consumption spending slowing down
Guess what: rising energy prices are taking a toll on consumers.
March 27, 2011
Update on Japan
A few quick links:
- Toll of dead and missing is in the tens of thousands, with hundreds of thousands still in temporary shelters.
- Dangerous reactor situation persists as evacuation area broadened.
- Automakers face supply problems.
- Impressive photos of rapid road repair.
- Hideaki Akaiwa: a hero's epic told in a modern style.
March 25, 2011
Bloggers Beware! (If You Work at a State University in Wisconsin)
The Republican Party of Wisconsin has made an open records request for the emails of a University of Wisconsin professor of history, geography and environmental studies in an apparent response to a blog post the professor wrote about a group called the American Legislative Exchange Council (ALEC).
March 24, 2011
"Renminbi Going Global"
That's the title of a new working paper by Xiaoli Chen (Shandong University) and Yin-Wong Cheung (UCSC). Readers might recognize Cheung as a co-author with G. Ma and R. McCauley on a 2010 BIS paper, discussed in this May 2010 Econbrowser post, and just published in Pacific Economic Review. For anybody who is interested in the latest developments in the Chinese government's attempts to internationalize the Renminbi, this is essential reading. From the summary of the paper.
March 23, 2011
Commodity prices in pictures
A few graphs I found interesting.
March 22, 2011
National Journal: Ag Committee Supports Cuts to Food Assistance, Not Farm Subsidies
The House Agriculture Committee endorsed a letter this week to Budget Chairman Paul Ryan arguing that the Supplemental Nutrition Assistance Program, which helps low-income Americans purchase food, would make a better target for cuts than automatic subsidies to farms.
Musing about Shocks and Trends in an Era of Production Fragmentation
Yesterday's NYT article, Crises in Japan Ripple Across the Global Economy noted:
In the wake of Japan's cascading disasters, signs of economic loss can be found in many corners of the globe, from Sendai, on the battered Japanese coast, to Paris to Marion, Ark.
March 21, 2011
Dispatches (X): The Economic Impact of Governor Walker's Plans
And Walker (Still) Plans No-Bid Sales of Power Plants, the $7.5 million worth of damages to the Capitol building becomes $347,000 (maybe), and the expanding politicization of the civil service.
From Wisconsin State Journal:
Gov. Scott Walker's plans to balance the state budget by cutting spending and public workers' take-home pay will slow the state's economic recovery, according to projections by a UW-Madison economist.
March 20, 2011
A dominant class of economic theories is built on the assumption that prices respond only sluggishly to new economic conditions. It's an interesting challenge to try to reconcile that premise with what we see in the data.
March 18, 2011
Coordinated Forex Intervention "Works"
A coordinated move by central banks of rich nations to stabilize the yen's value appeared to be having a decisive effect on Friday, after a sharp rise in the yen after Japan's devastating earthquake and nuclear crisis raised fears about the global economy.
March 17, 2011
Real Interest Rates and Crowding Out: Reagan Era vs. Now
Recent commentary on whether real interest rates rose during the Reagan era tax cuts -- Kling responding to Krugman -- impelled me to look at the data...
Employment Prospects for Lower Wage Workers
I spent the better part of last Friday at an Institute for Research on Poverty conference, entitled "Employment Prospects for Lower Wage Workers: Easing the Implications of a Slow Recovery Conference". It was a tremendous learning experience for me (since I'm not a labor economist), and a chance to be reminded of the full enormity of the challenges facing policymakers, as the economy limps in a fitful recovery, with little succor from further aggregate demand stimulus measures, and threatened by supply shocks as well as incoherence in fiscal policymaking. I mentioned the conference in a post last week, but the presentations and papers are now online.
March 16, 2011
More on Japan
I wanted to add a few quick additional comments to Ilan Noy's reflections on the possible economic implications of the tragedy in Japan.
March 15, 2011
Guest Contribution: The Macroeconomic Aftermath of the Earthquake/Tsunami in Japan
By Ilan Noy
Today, we're fortunate to have Ilan Noy, Associate Professor of Economics at the University of Hawai'i, as a Guest Contributor.
In the last 14 months, we have seen a spate of very large earthquakes which began with the unprecedented devastation caused by the earthquake in Haiti (1/10/10) -- the most destructive natural disaster in modern history (relative to national population), continued with the unusually strong earthquake in Chile (2/27/10), to the most recent events generated by the earthquake in Sendai, Japan.
March 14, 2011
2011 Econbrowser NCAA tournament challenge
If you're not too busy forecasting oil prices and the stock market, try your hand at the 2011 Econbrowser NCAA tournament challenge. All you have to do is go to the Econbrowser group at ESPN, do some minor registering to create a free ESPN account if you haven't used that site before, and make your picks for the winners of each game. Just make sure you complete your entry before Thursday, because the Econbrowser group only allows predictions before the tournament begins.
March 13, 2011
Consumers see bad news
The Reuters-Michigan survey of consumer sentiment registered a decline from 77.5 in February to a preliminary reading of 68.2 in March. That's the biggest monthly decline since the financial crisis in October 2008, and wipes out the nice gains of the last four months to put us back where we were in October 2010.
AP: GOP budget targets agency that warned of tsunami
WASHINGTON (AP) — A spending plan being pushed by Republicans would slash funding for the agency that warned Hawaii and the West Coast about the devastating tsunami in Japan.
March 12, 2011
Dispatches (IX): 49,000-
85,000 100,000 Rally In Madison
Source: "Capitol Square overflows in largest Wisconsin labor solidarity demonstration yet," The Isthmus (3/12/2011).
From USA Today:
By 3 p.m., tens of thousands of people crowded the Capitol Square. There is a big discrepancy in the crowd estimates compiled by Capitol Police and the Madison Police Department. Capitol Police estimated about 49,500 at 2 p.m. while Madison police said the crowd was about 85,000.
Latest Reuters estimate at up to 100,000.
March 10, 2011
The Macroeconomic Effects of Large Exchange Rate Appreciations
From the abstract to a new OECD Development Center working paper, by Marcus Kappler, Helmut Reisen, Moritz Schularick and Edouard Turkisch, the results of a large, cross-country study based upon a narrative approach to identifying appreciation episodes:
The study shows that currency appreciations can help to a certain extent in reducing global imbalances, and that it can go along with a shift from a mainly export-based model of growth towards a model with internal sources of growth. The cost in terms of growth would be very limited in the case of developed countries, but somewhat larger for developing countries.
March 09, 2011
What will Saudi Arabia do?
One key question in determining the impact of instability in Libya and elsewhere on world oil markets is how much other countries can and will increase production to offset the shortfall. Here I review the critical role of Saudi Arabia in past disruptions and discuss the current situation.
March 07, 2011
Dispatches (VIII): A Dog's Life in Wisconsin
Or, don't lose your dog in Wisconsin.
Just one of the odd bits of legislation winding through Madison, WI. From AB40:
SECTION 2704. 174.13 (2) of the statutes is amended to read: 174.13 (2) Any officer or pound which has custody of an unclaimed dog may release the dog to the University of Wisconsin System, the University of Wisconsin–Madison, the Medical College of Wisconsin, Inc., or to any other educational institution of higher learning chartered under the laws of the state and accredited to the University of Wisconsin System or University of Wisconsin–Madison, upon requisition by the institution.
The Challenges of Long Term Unemployment
The composition and implications of long term unemployment has been vigorously debated over the last year. The most recent informed commentary (skipping non-evidence based assessments ) includes Macroblog and SF Fed (earlier discussion here and here). Two conferences on the subject will be held at the University of Wisconsin-Madison, this Friday, and later at the end of April.
The magnitude of the phenomenon can be illustrated by inspecting mean unemployment duration, and number of unemployed over 27 weeks.
The 25 best financial blogs
If you only follow one economics blog, it has to be Calculated Risk, run by Bill McBride. The site provides concise and very accessible summaries of all the key economic data and developments. One of the reasons McBride is able to do this so well is that he has an almost uncanny knack of recognizing which facts really matter. He began the blog in 2005 because he saw a disaster brewing in the form of the housing bubble, and tried his best to warn the rest of us of what was coming. I've followed him closely ever since, and I don't know if he's ever been wrong. My advice is, if you've come up with a different conclusion from McBride on how economic developments are going to unfold, you'd be wise to think it over again!
March 06, 2011
Velocity of Federal Reserve deposits
I've been emphasizing that the U.S. Federal Reserve has not been printing money in the conventional sense of creating new dollar bills that have ended up in anybody's wallets. Instead, the Fed has been creating new reserves by crediting the accounts that banks maintain with the Fed. Today I'd like to offer some further observations on how those reserve balances mattered for the economy historically, how they matter in the current setting, and how they may matter in the future.
March 03, 2011
Dispatches (VII): WWBD?
Or, "What Would Bob (La Follette) Do?"
Protesters' signs and online discussions have repeatedly invoked La Follette, a turn-of-the-20th century Wisconsin governor and U.S. senator. His bust has become a locus of the protest, with demonstrators draping flowers around its neck and festooning its pedestal with signs saying "Long Live La Follette" and "What Would Bob Do?"
March 02, 2011
Good news from autos-- for now
The price of oil rose from $80 a barrel in September 2007 to average $134 in June 2008. The toll this took on the U.S. auto industry was in my mind an important factor that contributed to the first year of the Great Recession in 2007:Q4-2008:Q3. Given the recent concerns about oil supplies in North Africa and the Middle East, it's useful to review what happened three years ago and relate it to where we stand at the moment based on the February auto sales data that were just released.
March 01, 2011
Crowding Out Watch, Updated
I'm teaching the concept of portfolio crowding out in my intermediate macro course (handout with algebra here) now, and as I was going through the notes, I observed that last I had checked, there was (still!) little evidence of crowding out. Here's the graph, updated with data through 2/25 (that is, pretty much the same story as last time I discussed this, despite the hysterics).