January 31, 2012
CBO's Budget and Economic Outlook: Tax Expenditures
The CBO has just released the Budget and Economic Outlook. The document is full of extremely useful information, and provides a useful anodyne for some of the reality-free analyses floating around (examples here). For now, I'll just highlight two interesting graphs regarding tax expenditures:
January 29, 2012
Inflation expectations and the Fed
The Fed has begun implementing its new communication strategy. Here's what the message seems to be.
January 28, 2012
Wisconsin Governor Walker: "We are heading in the right direction."
That statement is from Wisconsin Governor Scott Walker's State of the State address. Here are some additional remarks:
January 27, 2012
U.S. GDP: not a recession, but still not very encouraging
The Bureau of Economic Analysis reported today that U.S. real GDP grew at an annual rate of 2.8% during the fourth quarter of 2011. That's better than any of the previous 5 quarters, which tells you more about how disappointing the previous year and a half has been than it does about how great the fourth quarter was. The average historical growth rate for the U.S. economy over the last 60 years has been about 3.2%.
January 25, 2012
UK: Into Recession
So much for expansionary fiscal contraction in the UK. Not that that’s a surprise.
January 23, 2012
In Search Of: Fiscal Responsibility
Given all the talk about taxes, I wondered how the Republican candidates plans stack up on the fiscal responsibility dimension, which Jeffry Frieden and I define thus:
[T]rue fiscal responsibility involves a willingness to raise sufficient tax revenue, over the longer term, to pay for the programs the government implements. Fiscal responsibility should not be equated with a small government, but rather with a commitment to pay for the government services provided. ...
January 22, 2012
Here's my suggestion for how to become rich: buy low and sell high.
January 20, 2012
Dispatches (XIX): Wisconsin Employment Hemorrhaging Continues
Wisconsin's Department of Workforce Development yesterday released preliminary employment figures for December, and revised figures for November. Both nonfarm payroll employment and private nonfarm payroll employment continue to decline (Figures 1 and 2). Total nonfarm payroll employment is now below levels recorded in January 2011, when Governor Walker took office. The divergence between the national employment trend and Wisconsin's over the past six months is highlighted in Figure 3.
January 19, 2012
Miscellanea: America's Lost Decades, Wisconsin’s Lost Year, Hi Frequency Measures, Europe, and Conditional Inflation Targeting
Here’s my 25 minute presentation of Lost Decades at the Rotary Club of Madison, on January 4th (as recorded by Wisconsin Eye) Powerpoint. One point I made was that the global financial crisis and ensuing recession have exacted a tremendous cost on the US economy. In the absence of more aggressive action, another 2.4 trillion Ch.2005$ loss will be incurred through 2013Q4. The blithe indifference with which opponents of extended payroll tax reductions, extended unemployment benefits, food stamp expenditures and infrastructure investment contemplate the damage continues to astound me.
January 18, 2012
Links for 2012-01-18
FT Alphaville on crude oil and the eurozone crisis.
VoxEu notes the systematic international tendency for official deficit figures to understate the magnitude of the change in public debt.
Liberty Street Economics on forecasting with internet search data.
January 16, 2012
Think Tanks in the Economics Profession
Indicators via representation at the Allied Social Sciences Association meetings.
January 15, 2012
Iranian oil embargo
January 12, 2012
China: Inflation and Exchange Rate Watch
Chinese inflation is decelerating . This suggests that whatever further real CNY appreciation occurs is likely arise from nominal appreciation, over the near term.
January 11, 2012
Reducing Petroleum Consumption from Transportation
MIT Professor Christopher Knittel has a new paper on the potential for the United States to reduce petroleum consumption.
January 10, 2012
Dispatches XVIII: Wisconsin Employment and Activity Indicators
As Governor Walker begins a tour of the state to tout a new jobs plan , it might be useful to review economic conditions in Wisconsin. Briefly put, Wisconsin employment (total, private) continues to decline, and Wisconsin's coincident indicator continues to diverge from the US indicator (as well as most other of the region's indicators). Hence, points made in previous posts   still seem applicable.
January 09, 2012
"Financial Integration and Global Rebalancing"
I organized the International Economics and Finance Society panel on "Financial Integration and Global Rebalancing" at the Allied Social Sciences Association meetings in Chicago. In the end, the papers fit together much better than I had anticipated; they all dealt with with the factors driving the puzzling pattern of current account balances -- and how policy can possibly influence those patterns.
January 08, 2012
Current economic conditions
The latest U.S. economic indicators have taken a favorable turn.
January 05, 2012
Lost Decades at ASSA/Chicago
For those of you attending the Allied Social Sciences Association (and AEA) meetings in Chicago, January 6-8, I'll be at the W.W. Norton booth in the exhibition hall, Friday afternoon, particularly 5PM onward, ready to talk about Lost Decades: The Making of America's Debt Crisis and the Long Recovery.
January 03, 2012
Looking Forward in the New Year: Crowding Out and Hyper-Inflation Watch
In my previous post, I cited Jeff Frieden's and my proposal for a conditional inflation target. Yet, according to several observers, we are either on the brink of crowding out due to elevated government deficits , or high to hyperinflation, due to monetary base expansion . As has been noted, none of these outcomes have yet materialized, despite months of such warnings.   Here, I wanted to evaluate where market expectations stand on these views.
January 02, 2012
A Call for Action: Conditional Inflation Targetting
[We need] inflation -- just enough to reduce the debt burden to more manageable levels, which probably means in the 4 to 6 percent range for several years. The Fed could accomplish this by adopting a flexible inflation target, one pegged to the rate of unemployment. Chicago Fed President Charles Evans has proposed something very similar, a policy that would keep the Fed funds rate near zero and supplemented with other quantitative measures as long as unemployment remained above 7 percent or inflation stayed below 3 percent. Making the unemployment target explicit would also serve to constrain inflationary expectations: As the unemployment rate fell, the inflation target would fall with it.
January 01, 2012
On the burden of government debt
I didn't have time for a lengthy discussion of this issue, so will have to settle for some quick links of interest.