April 29, 2013
Unconventional Monetary Policy Effects on the Exchange Rate at the ZLB
The descent of interest rates to near zero in the advanced economies has prompted something of a rethink of how monetary policy can affect exchange rates.
A Message from the 2013Q1 Advance Release
And a slightly older message from the CBO.
April 28, 2013
The contributions of Reinhart and Rogoff
With all the heated discussions of the last two weeks, it is important to keep perspective on which issues are in dispute and which are not. Let me state plainly something on which I think we ought to be agreed: Carmen Reinhart and Ken Rogoff's 2009 book, This Time Is Different: Eight Centuries of Financial Folly, is a valuable work of scholarship that continues to deserve study and praise from any thinking person. Here I review some of my reasons for saying that.
April 26, 2013
Another mediocre GDP report: is this the new normal?
The BEA released today its estimate of 2013 first-quarter real GDP, which grew at a 2.5% annual rate from the previous quarter. That's below the average 3.1% growth rate since World War II, but better than the 2.1% average since the recovery began in 2009:Q3.
Wisconsin: Economic Development
April 25, 2013
Measuring Financial Openness
Chinn-Ito Index Updated to 2011
April 24, 2013
Reinhart-Rogoff and Herndon-Ash-Pollin: a few further comments
I made some comments on Sunday about a recent critique by Thomas Herndon, Michael Ash, and Robert Pollin of an influential 2010 paper by Carmen Reinhart and Kenneth Rogoff. Yesterday Econbrowser hosted a reply from Pollin and Ash to my remarks. Here I would like to add a few further thoughts on this discussion.
April 23, 2013
Reply to Prof. Hamilton regarding "Reinhart-Rogoff Data Problems"
Today Econbrowser hosts this guest contribution from Robert Pollin and Michael Ash of the Department of Economics and Political Economy Research Institute (PERI) at the University of Massachusetts-Amherst.
Guest Contribution: "Fairness and Sustainability for Cyprus"
Today, we have a guest contribution from Marios Zachariadis, Associate Professor of Economics at University of Cyprus.
April 21, 2013
Reinhart-Rogoff data problems
The methods and conclusions of an influential paper by Carmen Reinhart and Kenneth Rogoff published in 2010 have recently been challenged by Thomas Herndon, Michael Ash, and Robert Pollin. Here I comment on both the details and broader significance of the dispute.
April 19, 2013
Wisconsin in March: Nonfarm payroll employment declines
Private nonfarm payroll employment growth near zero, and the level is about 70 thousand below the path implied by Governor Walker's commitment to increase private sector employment by 250 thousand by 2015M01.
April 18, 2013
No Time for Austerity: US Edition
With unemployment at 7.6% and an output gap of around 6%, it's (still) not the time to embark on front-loaded spending cuts in the United States.
April 17, 2013
"The Great Divergence of Policies"
April 16, 2013
Gold Prices Falling
Was their rise caused by “bad policies”? And why are they falling now?
April 15, 2013
"Rethinking Macro Policy II: First Steps and Early Lessons"
That's the title of an IMF conference taking place starting tomorrow (April 16-17). The program is below, and the live webcast will be available here (and follows up on a 2011 conference on the same subject).
Five years into the crisis, the contours of the macroeconomic policy of the future are only slowly coming into focus. From macroeconomic to financial stability, policy makers have realized that they have to watch many targets. They have also realized that they have potentially many more instruments at their disposal, from macro prudential tools to unconventional monetary policy. But how to map instruments to targets remains very much a work in progress. -- Olivier Blanchard
April 14, 2013
Growing student debt
I was curious to take a look at the growing student debt load and the government's exposure to potential repayment issues.
April 11, 2013
Some New Estimates of Japanese Trade Elasticities
One component of Abenomics is a vigorously expansionary monetary policy. The yen has depreciated substantially as a consequence -- as of February, about 20% relative to 2012Q3. One question is how much of an expenditure switching effect this depreciation will induce. In order to examine this question, I have done some quick and dirty econometrics, summarized in this paper.
April 10, 2013
Who is holding all those U.S. dollars?
If recent trends continue, in a few months there will be $1.2 trillion in Federal Reserve notes (otherwise known as dollar bills) in circulation. Who is holding all these?
April 09, 2013
2013 Econbrowser NCAA tournament challenge
Despite much bracket-busting, the nation's best college basketball team seems somehow to have emerged as winner of the 2013 men's NCAA basketball tournament. Congratulations to Louisville, and congratulations to budwysor, who won the coveted championship of the 2013 Econbrowser NCAA tournament challenge, in part by picking not only Louisville as winner but also 5 of the last 8 teams standing. Thanks to all the others who participated. And if things didn't go your way, there's always next year!
April 07, 2013
Currency Wars vs. Currency Spillovers
From Steven Englander (Citibank), “Currency war, BoJ Style” (4/7, not online):
Japan is likely to be labeled as a currency warrior by major Asian trading partners. However, the new BoJ policy has been endorsed by the Fed and IMF and is very G7 compliant, so the BoJ has cover for its policy agenda, despite the aggressiveness of its balance sheet expansion and negative implications for JPY.
Is the recovery dying?
The Bureau of Labor Statistics reported on Friday that the number of Americans with jobs only increased by 88,000 in March on a seasonally adjusted basis. That's one of the weakest months in the last two years. Although it's clearly a disappointment, I would caution against reading too much into the latest number.
April 04, 2013
Guest Contribution: "Should We Care about Sticky Prices?"
Today we are fortunate to have a guest contribution written by Yuriy Gorodnichenko (UC Berkeley) and Michael Weber (UC Berkeley). It is based upon their paper entitled "Are Sticky Prices Costly? Evidence From The Stock Market".
This Is Not an Oil Spill
The BoJ’s Kuroda Acts
April 03, 2013
The death of peak oil
Those behind the theory appear to have been dead wrong, at least in terms of when the peak would hit, having not anticipated the rapid shift in technology that led to exploding oil and natural gas production in new plays and areas long since dismissed as dried up.
These comments inspired me to revisit some of the predictions made in 2005 that received a lot of attention at the time, and take a look at what's actually happened since then.
April 02, 2013
Wisconsin, and Her Neighbors: Philadelphia Fed Coincident Indices
From the MacIver Institute, “The Free Market Voice of Wisconsin”:
Teaching Mundell-Fleming, Interest Rate Parity, and the LM Curve
Simon Wren-Lewis’s post has sparked vigorous discussion   (and rejoinder) of whether the teaching of Mundell-Fleming, omitting uncovered interest parity, to our undergraduate students is defensible. In addition, he wonders whether it makes sense to use an LM curve, given the absence of a stable money demand curve, and the fact that most advanced country central banks target a policy rate. I think these are good questions for teachers, as well as those who provide advice regarding policy measures.