February 29, 2012
Keystone moving forward
In a development that should not have come as a surprise to Econbrowser readers, TransCanada announced on Monday that it would proceed with the portion of the controversial Keystone pipeline expansion that would connect Cushing, Oklahoma to the Gulf of Mexico. Because this part of the project does not cross the U.S.-Canadian border, it does not require approval from the U.S. State Department.
February 27, 2012
More on Potential GDP and the Output Gap
In the wake of St. Louis Fed President James Bullard's statement on the output gap  (which I frankly did not understand), there was renewed debate over output gap measurement [Duy] [Thoma] [Krugman]. I thought this was a good time to recap and update some of the material I'd written on this subject of output gaps.
February 26, 2012
Factors in the recent oil price increases
Crude oil prices surged last spring following disruptions in oil production from Libya, and had been drifting down during the summer and fall. But since the beginning of October, the price of West Texas Intermediate and Brent crude oil have both risen by over 30%, putting them back up near where they had been last spring. What's changed in the world since the beginning of October?
February 23, 2012
Famous Conditional Forecasts from the Real Business Cycle Side
Or, who else misunderstood the nature of the financial crisis and recession
As I was reviewing material to use in teaching how new classical models relate to the popular aggregate demand/aggregate supply models  used in policy analysis, I ran into this forecast in the real business cycle vein from October 26, 2008.
Barring a nuclear war or other violent national disaster, employment will not drop below 134,000,000 and real GDP will not drop below $11 trillion.
February 22, 2012
Crude oil and gasoline prices
Crude oil prices this week reached their highest level since last April. What will that mean for U.S. consumers at the gas pump?
February 20, 2012
The 2012 Economic Report of the President
Markups, Competitiveness, and the Bush Tax Cuts and Deficits
The Administration released the annual Economic Report of the President on Friday. Many topics were covered, but here I’ll remark upon a few issues, motivated by several graphs.
February 19, 2012
Work-arounds for the politics of Keystone
The Keystone Gulf Coast Expansion Project is now entering its fourth year of regulatory review, and is currently on indefinite political hold. In the mean time, the market is figuring out other alternatives.
February 17, 2012
Motor Vehicle Output and Sales, Three Years after the Deluge
Here is a summary graph of the state of the US motor vehicle industry, as indicated in the last GDP release.
February 16, 2012
Guest Contribution: “International Reserves and the Composition of Equity Capital Inflows”
By Xingwang Qian and Andreas Steiner
February 15, 2012
Measuring the consequences of the zero lower bound constraint
In a period of deleveraging such as the U.S. has been going through, it is possible for the natural rate of interest to become negative. Since cash is always an option for earning at least a yield of zero, no asset should ever pay less than zero. This lower bound of zero on nominal interest rates can put a constraint on the ability of the economy to self-correct or the Fed to provide stimulus in such a situation.
The Fed still has some tools to try to reduce longer-term yields, namely large-scale asset purchases and signaling the Fed's future intentions. A new research paper by Federal Reserve Bank of San Francisco President John Williams and Senior Research Advisor Eric Swanson proposes a creative new approach to measuring when and to what extent the zero lower bound is a relevant constraint on interest rates of any maturity.
February 14, 2012
The Budget Forecasts. . .
And forecasts in general
The forecasts, and comparisons against alternatives, are presented in Table 2-2 of the Analytical Perspectives of the Budget.
February 13, 2012
Send a valentine to the Fed
NPR's Planet Money: You had me at QE1.
Michael McKee: The sight of you fills me with irrational exuberance.
Annalyn Censky: Our love isn’t transitory baby, it's gonna be exceptional for an extended period.
NPR's Planet Money: I'll be your lover of last resort.
February 12, 2012
Why not abolish the Fed and return to the gold standard?
Newt Gingrich said that if elected president, he'd name [James] Grant to help run a commission looking at a possible return to the gold standard. And Ron Paul said, if elected president, he'd go all-in and name Grant-- one of Wall Street’s best-known gold bugs-- as the new chairman of the Federal Reserve....
"Unfortunately, I haven't heard from Mr. Romney yet," joked Grant when I called on him in his offices down on Wall Street. "I'm sitting by the phone, I'm ready."
I presume that Grant would be advising any would-be policy-makers who listen to him the sort of thing that he wrote in 2010:
The classical gold standard, the one that was in place from 1880 to 1914, is what the world needs now. In its utility, economy and elegance, there has never been a monetary system like it.
I thought it would be worthwhile reviewing some of the reasons why I disagree with Grant on this point.
February 09, 2012
Miscellanea: Deficit Hypocrisy Watch, Conspiracy at the BLS, and Wisconsin’s Continuing Downward Trend
Deficit Hypocrisy Watch
The WSJ editorial page last Thursday remarked upon:
"...the worst fiscal record of any President in modern times..."
February 08, 2012
How could we boost American employment and GDP? One philosophy is to try to do more of what's already working.
February 07, 2012
A Conference on "Analyzing (External) Imbalances"
Last week I had the opportunity to attend an IMF conference (organized by Olivier Blanchard, Krishna Srinivasan, and Hamid Faruqee) focusing on the critical issue of assessing the sources of the pre-crisis imbalances in systemically key countries. The proceedings also had a forward looking component, highlighting the difficulties of determining when external imbalances are problematic. The conference proceedings are here.
February 06, 2012
A Plea for Aspiring Economic Analysts to Read the Footnotes
Actually, not even the footnotes -- just the text accompanying data releases (in this case it's the second paragraph, in a box, of the release). Although, I must admit, this long rant by FoxForum contributing writer Noel Sheppard just made me laugh and laugh and laugh, thus making an otherwise bleak Monday brighter. From "CNN's Crowley Does Two Segments on Jobs Numbers Without Mentioning Plummeting Participation Rate"
February 05, 2012
Economic conditions improving
Last week's data suggest that the U.S. economic recovery is continuing to gain some strength.
February 03, 2012
Messages from the January Employment Release: Accelerating Improvement for Now
Employment growth accelerates along several dimensions: nonfarm payroll, an alternative measure of nonfarm payroll, private employment, hours, and civilian employment (report here). However, JEC vice chairman Brady (JEC-Republicans) states in a press release: "Job Numbers Mask Underlying Job Weakness."
February 02, 2012
Net Exports, Exports, Real Exchange Rates and Manufacturing
Several observers have noted that exports have increased substantially since the President made his commitment to doubling exports.  The most recent GDP release confirms improvement in the net exports to GDP ratio (ex. oil imports) and real exports, and a BEA release from a month and a half ago confirms a rebound in manufacturing value added.
February 01, 2012
Links for 2012-02-01
Quick links to a few items I found interesting.