October 30, 2011
Home Affordable Refinance Program
Last week the Federal Housing Finance Agency, Fannie Mae and Freddie Mac jointly announced changes to the Home Affordable Refinance Program (HARP) with the goal of making it easier for some households to refinance their mortgages at lower interest rates. Here I offer some thoughts on this proposal.
October 29, 2011
CBO on Income Inequality, and Interpreting OWS
Tabulating Inequality Trends
The CBO released a report on income inequality earlier this week. This means that the "inequality deniers" are having a more difficult time arguing that widening spreads an wages, compensation, or overall income are merely statistical artifacts dreamt up by liberals (see e.g. here). What is of most interest is (i) real after-tax income of the top 1 percentile has risen about 275%, and (ii) the pre-transfers/pre-tax income share of the top 1% has increased most profoundly.
October 27, 2011
Could be worse
The Bureau of Economic Analysis reported today that U.S. real GDP grew at an annual rate of 2.5% during the third quarter of 2011. That's below the average postwar growth rate of 3.2% and well below the 4.3% growth for an average expansion quarter. Even so, it's better than any of the previous 3 quarters, and better than many analysts had been expecting when the quarter began in July.
October 26, 2011
IMF Book Forum: "Lost Decades: The Making of America's Debt Crisis and the Long Recovery"
The transcript and video for the IMF Book Forum (October 14th) is now online here. Nobel Laureate George Akerlof (UC Berkeley) moderated, Diane Lim Rogers (EconomistMom, Concord Coalition) and Gail Cohen (Joint Economic Committee) were discussants, and Simon Johnson (Baseline Scenario, MIT) provided concluding comments.
The Dollar and the Renminbi as International Currencies
There's been a lot of discussion of the potential rise of the Renminbi as an international currency. In particular, Jeffrey Frankel has recently written a paper on the subject (blogpost), backed in part on research we did in our papers   on the dollar. Now, the New York Fed's Linda Goldberg, Mark Choi and Hunter Clark have re-examined some of benefits of being an international currency in a post entitled What If the U.S. Dollar’s Global Role Changed?.
October 24, 2011
“Financial Stability in Emerging Markets: Dealing with Global Liquidity”
That was the title of a conference in Beijing (October 21st), organized by the Central University of Finance and Economics (CUFE), Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ), and the German Development Institute / Deutsches Institut für Entwicklungspolitik (DIE) . I had the privileged of delivering a keynote speech. The conference agenda is here, and encompassed three sessions: Global Liquidity -- Consequences and Policy Options; Dealing with International Capital Flows; and a panel forum on International Capital Flows and the International Monetary System.
Guest Contribution: The Great Slump is Not Yet Half Over
By David Papell and Ruxandra Prodan
October 23, 2011
Links for 2011-10-23
Dave Altig and Patrick Higgins at the Federal Reserve Bank of Atlanta have raised their estimate of 2011:Q3 real GDP growth from 1.4% as of the beginning of September to 3.2% currently.
Enterprise Products Partners and Enbridge Inc. announced plans to build a new pipeline from oversupplied Cushing, Oklahoma to the Gulf Coast (hat tip: Jim Brown). I reviewed the great need for such a pipeline here, and this may be one way to get one built without having to wait forever for White House approval.
Federal Reserve Bank of San Francisco President John Williams reviews lessons from the last 3 years on the effects of unconventional monetary policy.
Michael Plante and Mine Yucel at the Federal Reserve Bank of Dallas review the evidence on the role of speculation in recent oil price moves.
October 19, 2011
Peak production for U.S. oil-producing regions
I've just finished a new paper on Oil prices, exhaustible resources, and economic growth, which explores details behind the phenomenal increase in global crude oil production over the last century and a half and the implications if that trend should be reversed. Below I reproduce the paper's summary of the history of oil production from individual U.S. regions.
October 16, 2011
The Real American Jobs Act: Dealing with the Threat from Farm Dust Regulation (Really!)
Could monetary policy mitigate the real effects of oil shocks?
Michael Levi (hat tip:Marginal Revolution) and Jeremy Kahn are among those who recently rediscovered some earlier research by Ben Bernanke and others that concluded that the economic downturns that followed historical oil price shocks could have been avoided if the Fed had followed a more expansionary monetary policy at the time. Here I call attention to some subsequent research that took another look at their evidence and reached a different conclusion.
October 12, 2011
Wealth Inequality: A Time Series Plot
"Do you concur that measures of the wealth distribution have been mostly quiescent since the 1970s and that the distribution of wealth is more even today than it was in the 1940s (the peak for the US modern era)?"
Well, I think that this is an interesting question, and so I went a-searching for data. This is what I found, which led to my answer of "no".
October 11, 2011
Sargent and Sims
I'm a little late getting to this (by standards of cyberspace time anyway), but I wanted to comment on Monday's announcement about the Nobel prize in economics.
Crowding Out Watch, Again
I thought my March post on crowding out would be my last for a while, but the latest data are startling enough so that I wanted to post this graph of ten year real interest rates. Just for all those people who were worrying about big jumps in rates with government borrowing.
October 10, 2011
The World Close to Stall Speed
Or at least OECD
plus China *, on the basis of the OECD's Composite Leading Indicators for August 2011:
On China: Global Impact, Domestic Costs, Hard Landing, and the RMB As an International Currency
A new book on China (and Asia) in the global economy, the costs of the Chinese currency regime, the prospects for a Chinese hard landing, and can China save the day if the US and euro area go into recession. Plus, the prospects for the RMB as a key international currency.
October 08, 2011
Is another U.S. recession a 'done deal'?
Today we're pleased to feature a guest contribution from Michael Dueker, chief economist at Russell Investments and formerly an assistant vice president in the Research Department at the Federal Reserve Bank of St. Louis. Dueker is also a member of the Blue Chip forecasting panel. Econbrowser readers may remember that in February 2008 Dueker correctly predicted the onset of the current recession, using a model-based forecast. In a depths-of-recession piece from December 2008, he predicted in this forum that the recession would last until July or August of 2009, but that employment growth would not resume until March of 2010. We asked Mike to share the latest macroeconomic predictions from the Dueker Business Cycle Index model, subject to the disclaimer that the content does not constitute investment advice or projections of the stock market or any specific investment.
October 06, 2011
IMF Book Forum: Lost Decades
Yuan Appreciation: Do Chinese Trade Flows Behave Differently? (I)
China is in the news; or more accurately, the Chinese currency, is. From Reuters:
A sharp rise in China's yuan currency might cut the U.S. trade deficit by as much as one third and create enough American jobs to put at least a modest dent in the unemployment rate.
Then again, it may also lead to a destabilizing spike in Chinese unemployment and spark a trade war that drags the global economy back into a deep recession.
October 05, 2011
Slow growth continues
The stock market has looked scary. But economic indicators suggest U.S. growth is continuing.
October 03, 2011
Gov. Perry on Anthropogenic Climate Change
From Reuters, three days ago:
"I still stand by that the science is not settled on man-made global warming," Perry said while campaigning in the key early primary state of New Hampshire.
By the way of contrast, from the Preface to National Academy of Sciences, Advancing the Science of Climate Change (2010):
...there is a strong, credible body of evidence, based on multiple lines of research, documenting that climate is changing and that these changes are in large part caused by human activities. ...
October 02, 2011
Monetary policy and democracy
Should presidents of regional Federal Reserve Banks have a vote on the FOMC, the policy-making committee of the Federal Reserve?
October 01, 2011
De-Mythologizing Fiscal Consolidation
In Lost Decades, Jeffry Frieden and I argue that fiscal consolidation is a necessary prerequisite for long term recovery; however, fiscal consolidation too soon can derail the recovery, and plunge us further into debt. In contrast, some commentators have asserted that fiscal consolidation can be accomplished painlessly, or even with immediate benefits (e.g., JEC-Republicans, Rep. Paul Ryan/Heritage Foundation). Recent empirical work which carefully identifies the relevant episodes concludes that such instances of expansionary fiscal contraction are rare, and usually conducted near full employment. Ball, Leigh and Loungani review the effects of fiscal contraction in "Painful Medicine".