April 28, 2011
Economy still growing and still disappointing
The Bureau of Economic Analysis reported today that U.S. real GDP grew at an annual rate of 1.8% during the first quarter of 2011. Not exactly what the doctor ordered for a still very sick patient.
April 26, 2011
The Washington Post reported last week on a discouraging poll. Americans supposedly want to reduce the deficit, but not if it means changing Medicare, cutting programs like defense or Medicaid, or raising taxes on anybody but the very richest Americans. Democrats and Republicans seem farther than ever from finding agreement. It's times like this that I'm glad there are some optimists around who still see some basis for making progress with America's daunting fiscal challenge.
UW Conference on Long term unemployment in industrial countries
This Thursday, the La Follette School and the UW Center for World Affairs and the Global Economy is holding a conference on "Long term unemployment in industrial countries: Causes, Consequences and Policy Responses". In a timely report, the OECD last week released Persistence of High Unemployment: What Risks? What Policies?. From the report:
April 25, 2011
A Divergence of Opinion
As highlighted in Figure 1, estimates of GDP regarding 2011Q1 growth differ widely.
April 23, 2011
Saudi oil production and the Libyan conflict
One of the key questions in assessing the effect of the Libyan conflict on world oil prices was the extent to which an increase in Saudi production would offset some of the lost output from Libya. Now we know the answer, and it's not reassuring.
Trilemma Indices Updated
The Aizenman, Chinn and Ito indices that measure how countries align their policies to conform to the Trilemma    have been updated to 2009. Below is a time series plot of exchange rate stability, monetary independence and capital account openness for China.
April 21, 2011
Chinese Inflation and the Impact on the US Economy
The portents from China, on the price front, are ominous. Inflation is rising, as shown in Figure 1:
April 20, 2011
Heritage Breaks Internet Silence on Its Ryan Plan Simulations (w/o a single number!)
Or, a "Forensic Analysis for the Heritage CDA results"
The Heritage Foundation Center for Data Analysis (CDA) simulation of the Ryan plan, on behalf of the House Committee, has come in for some criticism. Commentary has been provided by Paul Krugman, and perhaps most comprehensively by Macroeconomic Advisers. (My comments are here:   ). Yesterday, the Heritage Foundation CDA’s director, William Beach, posted a rebuttal to Krugman's critique. While Big Picture posted an excellent rejoinder, I want to deal with one particular aspect of Mr. Beach's open letter. Consider this excerpt.
April 19, 2011
Keystone Gulf Coast Expansion Project
If President Obama is looking for ideas that would build American infrastructure, create jobs, and reduce the budget deficit, here's an option to consider.
April 17, 2011
The puzzling differential between the price of oil in different markets seems to be persisting.
April 14, 2011
Dispatches (XIII): Gov. Walker: "It doesn't save any [money]"
That is Governor Walker's answer to the question of how much money rescinding collective bargaining for public unions saves the state government. From the Capital Times:
More on the Characteristics of the Heritage Foundation CDA Analysis of the Ryan Plan
April 13, 2011
Interest rate risk and the Fed
Is borrowing short and lending long a risky strategy for the Fed?
April 12, 2011
Dispatches (XII): Wisconsin Governor Walker Threatens Layoffs (Again!)
From WisPolitics today:
Gov. Scott Walker says he may have to again consider laying off state employees if his collective bargaining law remains tied up in the courts for much more than the next week or two.
From the GOP: Budget Cuts for FY 2011
From the House Appropriations Committee (Republican), courtesy of TPM:
April 11, 2011
Some Thoughts on Energy Independence
The President's new initiative on increasing energy independence inspired much commentary on how much it was aspirational, rather than realistic; see for instance this extensive NYT article. In this post, I want to consider whether reduced dependence on imported energy is a worthwhile objective.
April 10, 2011
Paying for health care
Representative Paul Ryan's (R-WI) plan to address the U.S. federal deficit is an opportunity to reflect on fundamental questions of what we're trying to buy and how much we're willing to spend when it comes to the role of the government in health care.
April 08, 2011
Implied Supply Side Elasticities from the Heritage CDA Simulations
Following up on yesterday's post on the Heritage Foundation's assessment of the Ryan plan, I thought it would be useful to see how the labor and capital supply elasticities that are implied in the simulations compare with the literature, for the benefit of my macroeconomics class. Unfortunately, I come up with some really odd numbers, so I must either be making a mistake somewhere, or the simulation is very odd. Update 4/10, 4:50pm Pacific: I added two graphs illustrating exactly how odd these numbers are.
April 07, 2011
Representative Ryan's Roadmap: Interesting Implied Macro Impacts
I've read and re-read the Heritage Foundation's analysis of how the projections for the Ryan plan were developed. I'm sure it's my own failing, but I still don't quite understand what is going on. And this is after Heritage took down their original documentation that indicated unemployment would eventually hit 2.8%.
April 05, 2011
Natural gas moving forward
The Denver Post reported the opening on Saturday of stations offering compressed natural gas to drivers in Grand Junction and Rifle, towns along Interstate 70 in western Colorado, making it possible to drive a vehicle fueled by compressed natural gas from Denver to Los Angeles.
2011 Econbrowser NCAA tournament challenge winner
Congratulations to (1) the University of Connecticut, 2011 NCAA men's basketball champion, and (2) A. Chaves, who, in part because he or she successfully predicted (1), is winner of this year's world-famous Econbrowser NCAA tournament challenge.
And condolences to most of the rest of us, who messed up pretty badly with our predictions. Not that I wouldn't have made pretty much the same calls if the same teams were to play again.
April 04, 2011
Gains and Losses from Trade with China
From the conclusion to a provocative paper by David Autor, David Dorn, and Gordon Hanson, entitled The China Syndrome: Local Labor Market Effects of Import Competition in the United States:
our study suggests that the rapid increase in U.S. imports of Chinese goods during the past two decades has had a substantial impact on employment and household incomes, benefits program enrollments, and transfer payments in local labor markets exposed to increased import competition. These effects extend far outside the manufacturing sector, and they imply substantial changes in worker and household welfare.
April 03, 2011
More favorable developments
April 01, 2011
The March Employment Situation Release
U.S. employment recorded a second straight month of solid gains in March and the jobless rate fell to a two-year low of 8.8 percent, underscoring a decisive shift in the labor market that should help to underpin the economic recovery.