August 31, 2011
Recommendations for economic policy
August 30, 2011
Some groups have overstated the need for immediate fiscal retrenchment in order to push an agenda spending cuts, when in fact we face more serious problems of medium and long term spending growth and lagging tax revenues, and overall increasing indebtedness to the rest-of-the world. That second point (which I first made in 2005  ) has been somewhat neglected in the (misplaced) focus on reining in spending at the short horizon.
August 28, 2011
Fundamentals, speculation, and oil prices
I was in Washington DC last week, arriving right after the earthquake and getting out of town just before Irene, to attend a conference on commodity markets at the Commodity Futures Trading Commission. Here are some of the remarks I made at the conference on the role of speculation and fundamentals in recent oil price movements.
August 25, 2011
In the excitement over the debt ceiling debate, the increasing extent of fiscal drag, and anxiety about an economic slowdown, I have neglected discussion of the dollar. I still think that continued dollar depreciation is necessary to effect global rebalancing. I’d prefer it to happen by way of expansionary monetary policy, but we might get dollar depreciation as intransigent policymakers work hard to destroy the safe-haven role of US Treasury securities.  So, while all eyes are on Jackson Hole, here’s a quick, stream of consciousness review of some dollar-related issues.
August 23, 2011
Where can America find more income and jobs?
In January 2008, ExxonMobil and Norway's Statoil announced a promising discovery in the Julia Field in the Gulf of Mexico that may contain a billion barrels of oil. In October of that year, Exxon applied for a 5-year extension of the lease for time to develop a suitable development plan. To the company's surprise, the U.S. Department of Interior denied the request in February 2009, and has continued to turn down subsequent appeals. The company has filed a lawsuit to have the decision overturned.
August 22, 2011
Or, some people continue to defend the view that rapid inflation is just around the corner
An Econbrowser reader writes, in defense of Governor Perry’s assertion that the Fed is debasing the currency: "The CPI is not a valid indicator of 'debasement.'" I think this comment provides a wonderful example of the Alice in Wonderland world in which some people reside -- if the data do not cooperate, redefine the terms!
August 21, 2011
Waiting for the Fed to act
Economic conditions are deteriorating. Here's how and when the Fed might intervene.
August 18, 2011
August 17, 2011
Not dead yet
We had a couple of pretty scary economic developments last week, but as far as I can tell, we're still standing.
August 16, 2011
The Slowdown at Home and Abroad
The news from the European core of near zero growth shouldn’t have been so surprising.   Growth is slowing in the US and abroad. Why are some US policymakers so dead set on withdrawing stimulus?
August 15, 2011
Governor Perry on Monetary Policy
From the Washington Post:
..."If this guy [Fed Chairman Bernanke] prints more money between now and the election, I don’t know what y’all would do to him in Iowa, but we would treat him pretty ugly down in Texas. Printing more money to play politics at this particular time in American history is almost treacherous, or treasonous, in my opinion.”
August 14, 2011
Economic consequences of recent oil price changes
Earlier this year, disruptions in Libya and the resurgence of demand from the emerging economies sent oil prices up sharply, a development that many economists believe contributed to the slow growth for 2011:H1. The chaotic markets of the last few weeks saw oil prices drop back down to where they had been in December. Will that be enough to revive the struggling U.S. economy? There is some evidence suggesting that it may be too late.
August 12, 2011
Chinn and Swagel on Radio Times: "Economic News Roundup"
This morning, I was a guest on WHYY's Radio Times with Marty Moss Coane. The other panelist was Phill Swagel, and topics covered the stock market, the stimulus, and the state of the economy. One can hear the podcast here: [mp3].
August 11, 2011
Still Waiting for Expansionary Fiscal Contraction in the UK
And Generalissimo Francisco Franco is still dead (with apologies to the under 35 set).
Since in the U.S. we are currently embarking upon a program of reducing fiscal stimulus, it seems useful to examine whether this action would result in rapid economic growth as some have predicted. The UK is at the forefront of conducting this fiscal experiment.
August 10, 2011
Losing your AAA
On Friday, Standard & Poor's, one of the three main credit rating agencies, downgraded U.S. Treasury debt from AAA to AA+, citing doubts about the effectiveness, stability, and predictability of American policymaking and political institutions in being able to deal with the rising debt burden by the middle of the decade. It's been a wild ride for equity and commodity markets ever since.
August 09, 2011
And dispensing with childish things, such as the belief that our economic future can be secured by spending cuts alone. From "The Downgrading of a Debtor Nation", by me and Jeffry Frieden, in today's New York Times:
THE Treasury can cry foul all it wants, but the decision by Standard & Poor’s to downgrade America’s credit rating by one notch last Friday, and the subsequent plunge in the stock market, are serious symptoms of a loss of confidence -- an assessment that is fundamentally political, not economic.
August 08, 2011
Joe Gagnon: "A Plan for Action on Jobs"
Joe Gagnon (formerly associate director of Monetary Affairs, and of International Finance, Divisions at the Fed) of the Peterson Institute for International Affairs has had enough with the policy paralysis . From Stop Sticking Our Heads in the Sand! A Plan for Action on Jobs:
...our leaders have been in denial about the true nature and magnitude of the problem. The ongoing stock market anxiety surely must wake them up.
August 06, 2011
Index funds and commodity prices
There has been a lot of growth over the last decade in funds that take long positions in commodity futures contracts in order to offer investors an asset that follows raw commodity prices. I've been looking into some of the data that have been used to measure the size of those positions.
The S&P Downgrade and Tax Revenue Increases (or lack thereof)
August 05, 2011
Is the Jobs Mystery Solved?
Professor Scott Sumner says "No more jobs mystery. Period. End of story.". I’m not so certain.
From the post:
If I hear one more discussion of the mysterious lack of jobs I’ll explode. The new GDP numbers are the final nail in the coffin. For years I’ve been saying there is no jobs mystery. That any deviation from Okun’s Law was minor compared to the scale of the output collapse. With the new RGDP figures we now know I was right, there isn’t and never was any mystery as to why there are so few jobs. RGDP is very low. Period. End of story.
More on the debt ceiling aftermath
Here are interviews I did earlier this week on the debt deal:
August 04, 2011
Livin’ in a Shapiro-Stiglitz World
I have been wondering why so many seem to be indifferent to the plight of the unemployed. Sometimes, the attitude is not so much indifference, but rather irritation that the poor are exempted from the burdens of society (see e.g., ).
Here is a plot of the unemployment rate and the alternative unemployment rate including marginally attached and part-time workers.
August 02, 2011
Assessing the damage
We finally get our debt-ceiling deal, only to watch the S&P500 fall 3.7% from Thursday's close. What gives?
August 01, 2011
Income Share by Top Fractile (continued)
Or, why it was so important to keep top marginal income tax rates constant for millionaires.
Figure 1 depicts the income shares accruing to the top 0.5 percent and top 0.1 percent of households (including realized capital gains). It is clear that their shares have declined going from 2007 to 2008; for the top 0.1%, their share has declined from 12.3% to 10.4% of total income.