Econbrowser

Back to the Stimulus Debate: W, Timing, the States, and Baselines

Menzie Chinn — 2009-07-02T19:45:48-08:00

A "W" Recession?

Martin Feldstein has recently raised the possibility that we might experience a relapse into recession (a beautiful symmetrical W), with the next dip in 2010. In my view, this means (1) we should have opted for a bigger and better composed stimulus package, and (2) the timing of expenditures in the stimulus package might not be as problematic as many commentators have indicated. From Bloomberg:

No rebound for autos

James Hamilton — 2009-07-01T17:25:02-08:00

Autos are worth watching as one sector where economic growth could resume first. But despite what others are saying, I don't believe that it's happening yet.

A V-shaped recession?

James Hamilton — 2009-07-01T13:41:08-08:00

As James Morley has pointed out, often a sharp economic downturn is followed by an equally sharp economic recovery. One reason for that is the liquidation of inventories that accompanies any recession and restocking that takes place in recovery. What should we expect this time?

The Newest Data on Foreign Exchange Reserves

Menzie Chinn — 2009-06-30T12:56:32-08:00

The IMF has released its estimates for 2009Q1 reserves (COFER data). Below I update and extend my recent post on the dollar as a reserve currency.

New Papers on International Finance: Crises, Puzzles, and Exchange Rates

Menzie Chinn — 2009-06-29T21:40:03-08:00

Summertime is conference season, especially for those of us who don't live close to a major airport hub. The first conference I attended was the NBER's International Seminar on Macroeconomics, co-organized by Lucrezia Reichlin and Ken West. The conference was broken up into several sections: Financial Crises, International Economic Puzzles, Exchange Rates and Financial Development. Lot's of interesting papers, and plenty of stimulating discussion. I can't do justice to the proceedings, but I can provide the summaries of the papers.

On grilling the Fed Chair

James Hamilton — 2009-06-27T07:26:19-08:00

I got a bit angry at accounts of the latest appearance of Federal Reserve Chair Ben Bernanke before the U.S. Congress.

Links for 2009-06-26

James Hamilton — 2009-06-26T08:43:58-08:00

The Federal Reserve Bank of New York has put together some very useful timelines of the financial crisis, if you want a handy reference for what happened when in both the United States and around the world.

The BEA reported that disposable personal income increased 1.6% between April and May. In the absence of the stimulus cuts to personal taxes and increases in social benefit payments, the number would have been 0.2%. Real personal consumption expenditures were up 0.2% for the month, though that leaves the April-May average 0.1% below the January-March average. Calculated Risk, always your go-to source for these matters, sums it up this way:

Usually PCE and Residential Investment (RI) lead the economy out of recession, and right now both remain weak. As households increase their savings rate to repair their balance sheets, it seems unlikely that PCE will increase significantly any time soon.

And via Craig Newmark, earn $11 a day by working in hell.

So Much for "Exorbitant Privilege" and "Dark Matter" As Well: Anticipating the 2008 NIIP Release

Menzie Chinn — 2009-06-25T09:30:39-08:00

In my last post, I cited Jeff Frankel's keynote speech from a recent Bank of Canada-ECB workshop. He also pointed to the end of "Exorbitant Privilege" and "Dark Matter", and other arguments of American exceptionalism. I think we'll see resounding evidence of this in Friday's release of the US end-2008 Net International Investment Position (NIIP).

The leading economic index

James Hamilton — 2009-06-24T08:09:42-08:00

The Conference Board Leading Economic Index increased by more than 1% in both April and May. Since I've been scratching my head trying to find some confirmation for recent economic optimism, I was curious to take a look at what's responsible for the favorable reading from the LEI.

Update on US Exports and Imports: The Collapse Continues

Menzie Chinn — 2009-06-23T17:00:05-08:00

Here's an update of US imports and export behavior. The trade collapse remarked upon a couple of months ago is still in play.

The Global Saving Glut: Rest in Peace? Mirage? Bete noir?

Menzie Chinn — 2009-06-22T13:51:21-08:00

I've just come back from two weeks on the road, during which time I attended a couple of conferences. The first conference (NBER International Seminar on Macroeconomics) dealt with issues of exchange rates, reserve accumulation and financial crises (more on that later). The second one, a joint Bank of Canada-ECB workshop (not online), focused on exchange rates in the global economy. At the latter, Jeff Frankel delivered the keynote speech, entitled "On Global Currency Issues", in which he outlined what's "out" and what's "in" in international finance (Powerpoint presentation here). One of the phenomena he concluded was no longer relevant was "the global saving glut".

Gasoline prices and consumer sentiment

James Hamilton — 2009-06-21T07:39:41-08:00

Gasoline prices (in case you've been hiding in a cave and didn't know) have been on something of a roller coaster the last few years. And it looks as though we're climbing back up another hill at the moment. How much are the recent increases in gas prices likely to weigh down American consumers?

Clive Granger memorial pages

James Hamilton — 2009-06-17T11:51:15-08:00

The UCSD Economics Department has set up a remembrance page in honor of Clive Granger. Those of you who contributed such moving remarks here at Econbrowser are invited to enter them also on the UCSD remembrance page, as well as to visit the other material collected there.

Guest Blog: The Impact of the Trilemma Configurations on Macroeconomic Performance

Menzie Chinn — 2009-06-17T05:40:53-08:00

By Hiro Ito

Today, we're fortunate to have Hiro Ito, Associate Professor of Economics at Portland State University as a guest blogger.

In my last posting, I introduced a recent paper coauthored with Menzie Chinn and Joshua Aizenman (UC, Santa Cruz) on the "trilemma," or "impossible trinity" -- a country simultaneously may choose any two, but not all, of the three goals, monetary independence, exchange rate stability and financial integration.

The Dollar as a Reserve Currency: Apres le Deluge

Menzie Chinn — 2009-06-15T16:20:35-08:00

Time to review trends in reserves, against the backdrop of financial crisis, recession, and dollar gyrations. (I'll try to be original, but Brad Setser has been more diligent than I in covering these issues over the past few months. [0] [1] [2])

A few observations:

Known dollar reserves as a share of world reserves appear to be falling.
Total dollar reserves have likely not declined as precipitously.
Even with the decline in the dollar share, it is probably not as low as it was during the early 1990's.
The dollar share is (mechanically) linked to the dollar's value.
Known dollar reserves at end-2008 are less than predicted by a historical correlation.
But this differential is infinitesimal compared to the "unallocated" share of total reserves.