June 30, 2011
Tax Changes, Revenue Impacts, Conditional Statements, and Other Things that Befuddle the Statistically Disinclined
Or, a weblog post for the benefit of those unable to read beyond a technical paper’s abstract, a clarification of what exactly Romer and Romer (2010) found regarding the impact of tax increases on tax revenues. This note is inspired by Econbrowser reader Ricardo (who also goes under the monikers of RicardoZ, Dick, and DickF) who inaccurately (but with inexplicable confidence) characterizes the Romer and Romer findings regarding tax changes in my last post’s comments:
June 29, 2011
Links for 2011-06-29
Some quick links to recent analyses of health care costs, oil price shocks, and forecasting commodity prices.
June 28, 2011
Random Views on U.S. Default
From WSJ Washington Wire:
Mark Zandi, chief economist of Moody’s Analytics, said the market impact of failing to raise the $14.29 trillion debt ceiling by Aug. 2 could become severe by late July.
Forecasting Commodity Prices
With commodity prices exhibiting wide fluctations over the past few years, it's no wonder that many are interested in determining what procedure best forecasts. A recent New York Fed blog post by Jan Groen and Paolo Pesenti tackles this issue. In a horse race between various economic, time series, and futures-based approaches...
there is no obvious winner. Information from large panels of global economic variables can help, but their forecasting properties are by no means overwhelming. It all depends on the choice of the specific index and the forecasting horizon. ...
June 27, 2011
The Strategic Petroleum Reserve drawdown
The International Energy Agency announced on Thursday that its 28 member countries had agreed to release 60 million barrels from their combined strategic stockpiles. The U.S. plans to contribute half of this total, all in the form of sweet crude. Thirty million barrels represents about 10% of the U.S. strategic petroleum reserve of 293 million barrels of sweet crude oil, and about 4% of the entire 727 million barrels stockpiled in the U.S. SPR.
June 25, 2011
Dispatches (XIV): "Walker cancels budget bill-signing at firm run by felon"
Gov. Scott Walker has called off plans to sign the 2011-'13 budget bill at a private Green Bay-area company run by an executive with eight felony convictions, a spokesman announced today.
June 24, 2011
Or more on China-U.S. exchange rate pass through
Tuesday's Wall Street Journal illustrated the conflicted nature of American views regarding real yuan appreciation. The front page article by Hilsenrath, Burkitt and Holmes argued "Change in China Hits U.S. Purse". On the back page of the C section was a countering article, "No appreciation for the rising yuan", by Orlik, that noted the moderate impact on prices of imported goods from China.
June 23, 2011
And Policymakers Are Proposing to Withdraw Stimulus?
Three pictures and three quotes
GDP growth is slackening:
June 22, 2011
Making jobs priority one
It is looking unlikely that there will be more stimulus from either fiscal policy or monetary policy. Former President Bill Clinton has called for suggestions for other policy options that might be helpful. Here are a few ideas along those lines.
June 21, 2011
Guest Contribution: The Fiscal Stimulus in 2009-11
Trade Openness, Fiscal Space and Exchange Rate Adjustment
This post draws upon Aizenman and Jinjarak (2011).
June 19, 2011
Monetary policy since 2000
I just returned from the annual conference of the Society for Financial Econometrics hosted by the University of Chicago. One of the many interesting papers described changes in Federal Reserve policy over time.
June 16, 2011
When Price Does Not Clear the Market
And other non-Neoclassical tales
Finance and Development has a profile of one of my teachers, Nobel Laureate George Akerlof, written by Prakash Loungani. Akerlof's views are critical to recall in these times when some individuals think supply and demand are sufficient to answer all policy issues. Akerlof's research highlighted the role of information asymmetries that prevent prices for setting quantity demanded equal to quantity supplied. From the article
June 14, 2011
A game of chicken
Making a political game out of the debt ceiling is playing with fire.
June 13, 2011
Links for 2011-06-13
Some items I found interesting:
- Tyler Cowen outlines what I see as the responsible approach to the U.S. federal fiscal challenges: slow the growth of government spending.
- Some undergraduates at Rutgers University have developed a nice site to track economic indicators. And Bill McBride has an invaluable summary of which ones really matter.
- From the Federal Reserve Bank of Boston: Oil and the Macroeconomy in a Changing World: A Conference Summary.
- The Office of Personnel Management on shifting costs of Postal Service retirement funding to U.S. taxpayers.
- And Glenn Reynolds warns beware of bimbots.
June 12, 2011
Chinese oil demand
Stuart Staniford notes that the number of trucks and passenger vehicles in China has been growing at about 23% each year.
June 09, 2011
In Order to Know Where You Are Going...
...you need to know how you got where you are. From the abstract to a working paper by myself, Barry Eichengreen and Hiro Ito, entitled A Forensic Analysis of Global Imbalances:
We re-examine the determinants of current account balances applying updated data to the framework based on Chinn and Ito (2007). ...
June 08, 2011
The significance of OPEC announcements
The Organization of Petroleum Exporting Countries (OPEC) today announced that its members could not reach an agreement to change OPEC's production quotas. How significant is that announcement? In my opinion, not very.
June 07, 2011
Growth Forecasts and Informational Rigidities
From a new IMF working paper by Prakash Loungani:
We document information rigidity in forecasts for real GDP growth in 46 countries over the past two decades....
June 05, 2011
Life without QE2
Last November, the Federal Reserve announced a plan to purchase $75 billion each month in intermediate-term Treasury securities, a measure popularly described as a second round of quantitative easing, or QE2. June is the last month of this program, and it looks unlikely that the Fed will extend it, causing some observers to be concerned. My view is that QE2 had relatively modest effects, and such benefits as it provided should not evaporate with the end of the purchases.
June 04, 2011
Debt ceiling politics
Here's a link to an interview with a local TV station.
June 03, 2011
May Employment Report
The Employment Situation release for May was not entirely a surprise, given Jim's post yesterday, but contained unwelcome news nonetheless. WSJ RTE quotes Stephen Stanley of Pierpoint Securities thus: "...consider me worried".
June 02, 2011
A weakening economy
Incoming data over the last two weeks paint a consistent picture that the U.S. economy, which had been growing at a disappointingly slow rate, has weakened further.
June 01, 2011
Some Brief Thoughts on Sovereign Defaults
Sovereign default experiences are a staple in international finance. Here are a couple bits of information from a vast literature.