Since Congress and the President are taking positions on a college football playoff system, it must be time for Econbrowser to weigh in as well.
[...]From Peter Hooper, Torsten Slok, Christine Dobridge, "Robust growth needed to avoid jobless recovery," Deutsche Bank Global Economic Perspectives (Dec. 9) [not online]:
[...]I've been discussing possible explanations for the recent tendency of the dollar prices of commodities to move together. On Friday we received a very useful data point for distinguishing between the different hypotheses.
' [...]My colleague Charles Engel has a new paper circulated by the Dallas Fed entitled "Exchange Rate Policies", which brings theory to bear on the topic. From the introduction:
[...]Some quick excerpts of what others are saying.
[...]...and an initial read on monthly GDP.
[...]Be afraid, be very afraid...again. From Joseph Lawler
... I take yesterday's CBO report as affirmation both that ... the number of jobs created by the stimulus cannot be determined without making judgment calls about the underlying economic model ...
[...]Recent indictors continue to support the impression that we're in the midst of a weak economic recovery.
' [...]From CBO's just released Estimated Impact of the American Recovery and Reinvestment Act on Employment and Economic Output as of September 2009 :
...Economic output and employment in the spring and summer of 2009 were lower than CBO had projected at the beginning of the year. But in CBO's judgment, that outcome reflects greater-than-projected weakness [...]
Causes, Consequences and Prospects, edited by Richard Baldwin
From Baldwin's introductory chapter:
World trade experienced a sudden, severe and synchronised collapse in late 2008 -- the sharpest in recorded history and deepest since WWII. This Ebook -- written for the world's trade ministers gathering for the WTO's Trade Ministerial in Geneva' [...]
From the folks who brought you Cash for Clunkers.
[...]Back in late October, I was invited to a Bank of Canada workshop (organized by Brigitte Desroches and James Rossiter), entitled "Understanding economic outcomes in uncertain times". I was flattered (and a little surprised) to be asked to participate in a panel discussion on "blogonomics", chaired [...]
Today's NYT article suggests apocalypse (very) soon:
...the government faces a payment shock similar to those that sent legions of overstretched homeowners into default on their mortgages.
Do we really need to worry so much in the short term?
[...]UCSD Ph.D. candidate Sam Dastrup has completed a very interesting study with his advisor Professor Richard Carson of what accounts for differences across U.S. communities in the magnitude of the decline in real estate prices that we've seen over the last several years.
' [...]There's been some discussion of how the GDP estimates for 2009Q3 might be revised downward in light of the September trade release [1]. e-Forecasting has presented its latest estimates up to October, and Macroeconomic Advisers through September. Macroeconomic Advisers writes:
[...]Let supply and demand for widgets (y) be given by the following two equations, respectively:
(1) yt = αt + β x t + ε t
(2) yt = γ + δ x t + Γ z t + u t
[...]Why are the prices of so many commodities rising in an economy that seems to remain quite weak?
[...]Be afraid; be very afraid.
From "'Created or saved' doesn't add up", by Joseph Lawler:
...[t]he "created or saved" numbers are meaningless. The administration purposefully devised the metric to be nebulous. Without a counterfactual, showing the trend of unemployment in the absence of the stimulus, it is impossible to know how' [...]
Last April I described new research on the role of oil prices in the recent recession. Here's an update on what's happened since then.
[...]Casey Mulligan asks:
So a year later, in September 2009, after living through a year of "disaster," how did real consumption expenditure (one economists' favorite measures of living standards) compare to what it was in September 2008?
' [...]By Joseph E. Gagnon
Today, we're fortunate to have Joe Gagnon, senior fellow at the Peterson Institute for International Economics, as a guest contributor.
' [...](Warning: Might be considered "wonky" by some) In many economic analyses, one wants to isolate the "business cycle" component of macroeconomic series. Here is one such series, which has had a detrending technique applied to it. Try to guess what it is.
[...]The U.S. recovery is underway. But so far it doesn't look as strong as we had been hoping.
' [...]Most economists are projecting a slow recovery in terms of employment. What do historical correlations imply?
[...]Both have to be "handled with care".
Revisions
We're all tempted to make predictions on the basis of the last data point. And even more difficult to resist is the temptation to make definitive statements on the basis of data that are sure to be revised. For instance, we see this question' [...]
The Commerce Department reported today that the seasonally adjusted real value of the nation's production of goods and services grew at a 3.5% annual rate during the third quarter, a little better than the 3.2% average seen since 1947.
[...]The 3.5% growth rate was, in my view, in large part attributable to direct measures to stimulate the economy, including direct spending on goods and services by the government (Federal, state and local), as well as tax measures. First, let's take a look at how each category of final demand [...]
As commodity prices start rising again -- at least some -- the question of whether futures are useful indicators seems relevant. Figure 1 shows the IMF commodity price indices, as reported in the October World Economic Outlook:
[...]There were some other very interesting presentations at the conference hosted by the Federal Reserve Bank of Boston last week. Fed Chair Ben Bernanke spoke on Financial Regulation and Supervision after the Crisis while Princeton Professor Alan Blinder's message was It's Broke, Let's Fix It: Rethinking Financial [...]
The National Saving Identity states:
CA ≡ (T-G) + (S-I)
Where CA is the current account, (T-G) is the consolidated government budget balance, and (S-I) is the private sector saving-investment balance. Figure 1 depicts the profound shifts that have occurred in these components (normalized by nominal GDP).
[...]Last week I participated in a conference hosted by the Federal Reserve Bank of Boston, at which I discussed the new lending programs and asset acquisitions pursued by the Federal Reserve over the last two years. Previously I shared with Econbrowser readers empirical evidence on the effects these [...]
Jeffry Frieden, Professor of Government at Harvard, has a new Council of Foreign Relations working paper "Global Imbalances, National Rebalancing, and the Political Economy of Recovery" :
Global macroeconomic imbalances -- massive borrowing by some countries and massive lending by others -- drove the financial boom and bubble that eventually burst [...]
Does high unemployment mean that there's nothing to worry about in terms of inflation?
[...]By Willem Thorbecke
Today, we're fortunate to have Willem Thorbecke, Senior Research Fellow at Asian Development Bank Institute and a Consulting Fellow at Japan's Research Institute of Economy, Trade and Industry, as a guest contributor.
Asia's role in the propagation of the global recession has been a subject' [...]
Real output grew significantly this quarter. Will employment follow?
[...]I thought it of interest to see what surveys of forecasters indicate about two questions being asked: Is a dollar collapse imminent -- Martin Wolf is skeptical, while others [0] are convinced the end is nigh -- and is a double dip recession likely? I take a look [...]
During the last two years, the Federal Reserve responded to problems in the financial markets through what I have described as monetary policy using the asset side of the Fed's balance sheet, replacing its traditional holdings of Treasury securities with a variety of new lending programs and alternative assets. [...]
From the abstract to Why are we in a recession? The Financial Crisis is the Symptom not the Disease!, by Ravi Jagannathan, Mudit Kapoor, and Ernst Schaumburg:
...We argue that the large increase in the developed world's labor supply, triggered by geo-political events and technological innovations, is the major underlying cause [...]
The challenges for private oil companies to increase oil production are pretty daunting.
[...]Paul Krugman recently characterized the current pace of trade activity as worse than that during the Great Depression. And indeed, Barry Eichengreen and Kevin O'Rourke have been diligent in illustrating how this is the case, most recently in this September VoxEU post. Caroline Freund ([pdf] here)' [...]
In which I join the ongoing debate on how much we should expect fiscal and monetary stimulus to accomplish.
[...]By Morris A. Davis
Today, we're fortunate to have Morris A. Davis, Assistant Professor of Real Estate and Urban Land Economics at University of Wisconsin School of Business, as a guest contributor.
Research by economists inside the Federal Reserve system have shown that two events typically lead homeowners' [...]
The latest auto and employment numbers paint a picture of an economic recovery that remains tepid and potentially fragile.
[...]I've found it puzzling that there's all this talk about the prospects for the dollar, in the wake of the G-20 meetings, and more recently World Bank President Zoellick's comments about the primacy of the dollar as a reserve currency. My puzzlement arises from the fact that many of the' [...]
Mark Thoma has assembled a set of useful discussions of multipliers. Econbrowser has added a handy new category "multipliers", that compiles entries on the topic. In addition, Ethan Ilzetzki, Enrique G. Mendoza and Carlos A. Vegh provide a very useful cross-country (including emerging market economy) survey here [...]
The S&P/Case-Shiller home price indices registered another month of increase in July. That's a critical bit of favorable news, since continued declines in home prices would mean further increases in default rates and new stresses on financial institutions.
[...]By David Papell
Today, we're fortunate to have David Papell, Professor of Economics at University of Houston, as a guest contributor.
The Federal Open Market Committee voted last Wednesday to keep the federal funds target rate at a record low of between zero and 0.25 percent. If it was' [...]
Here I offer some thoughts on Bloomberg's account that the Fed has made inquiries with its dealers about the feasibility of a significant increase in the Fed's reverse repo operations.
[...]Tim Duy worries that some FOMC members are overestimating the inflation risk.
Arnold Kling proposes a mackerel theory of value.
The discussion at Cato of monetary policy continues.
[...]According to news accounts [0], rebalancing is going to be a central topic. Brad Setser, now in his official capacity as NEC/NSC director of international economics, blogs:
We will press the G-20 to agree on a framework for strong, balanced and sustainable growth. As the U.S. starts to act [...]
From today's chapters 3 and 4 of the IMF World Economic Outlook, released today. From Chapter 4:
"...the results based on the small-scale regressions suggest that economies with larger current account deficits, rising inflation, and a deteriorating fiscal balance before a crisis experienced significantly larger output losses [from financial crises].
" [...]Chapters 2 and 3 of the IMF's Global Financial Stability Report are out.
[...]Last week we received positive readings for some key economic indicators. But I still see plenty to worry about.
[...]These topics are the subject of two special issues, the first in IMF Staff Papers, and the second in the Review of International Economics.
[...]I see a good case for this, but also some big things to worry about.
[...]Deleveraging implies slow growth in total credit, and according to the usual reasoning, slow growth in GDP. Several of Deutsche Bank's economists, however, focus on what they call the credit impulse. They provide the following provocative graph, which suggests a rapid recovery:
[...]The Cato Institute is hosting a discussion this month of the extent to which monetary policy may have contributed to our current economic problems. In the lead essay that appeared on Monday, Professor Scott Sumner of Bentley University suggested that the Fed erred in allowing nominal GDP to [...]
By Simon van Norden
Today, we're fortunate to have Simon van Norden, Professor of Finance at HEC Montréal (École des Hautes Études Commerciales), continue as a guest contributor.
In my previous post, I wrote about some of the evidence linking serious banking crises to real estate market collapses. That' [...]
...and a Rejoinder to Posner.
The CEA Analysis of ARRA's Impact
Yesterday, the Council of Economic Advisers released the first of its mandated reports on the impact of the ARRA on economic activity. Based upon a variety of approaches (VAR, multiplier based), it concludes:
"...our multiplier analysis and estimates from a wide" [...]
Michael Dueker is Head Economist for North America at Russell Investments and a member of the Blue Chip forecasting panel. In February of 2008 he warned Econbrowser readers that it appeared unlikely that the economy was going to escape the slowdown without a recession. In December of [...]
The new semester has begun, and I was reviewing economic trends in my macro courses. In my lectures, I highlighted the sharp drop-off in consumption. In the following, I discuss how well my predictions for consumption from last November have held up.
[...]I've been trying to understand changes over time in the California state budget, though the data are presented in a way that makes that extremely difficult to do. I did spend enough time to discover one component of the budget that seems to have grown at a pretty healthy' [...]
By Simon van Norden
Today, we're fortunate to have Simon van Norden, Professor of Finance at HEC Montréal (École des Hautes Études Commerciales), as a guest blogger.
"Once you've seen one financial market crisis...you've seen one financial market crisis."
-- Attributed to Federal Reserve Board Governor Kevin Warsh by' [...]
In a recent Economix post, Casey Mulligan asserts that aid to the states and localities is unwarranted given that state and local government employment is doing just fine. His graph highlighting cumulative gains/losses ends in January 2009, to show what had transpired by the time the stimulus bill was [...]
The University of California may say I'm just taking a few days off. That's not how I see it.
' [...]My article with Jeffry Frieden and the decomposition of the 2001-07 change in the deficit discussed in The Lasting Legacy of the Bush Tax Cuts inspired lots of vigorous debate regarding the role of the Bush deficits in the current crisis. Here is the CBO's take on [...]
August auto sales provided the strongest signal of an economic rebound that we've seen yet. But August is so yesterday.
' [...]From The 2009 Budget Deficit: How did we get here? by John Irons, Kathryn Edwards, and Anna Turner:
This Issue Brief examines the details and causes of the current budget deficit and the role the current recession has played. The years between 2001 and 2007 saw a large deterioration in [...]
From Arnold Kling's entry yesterday:
Kwak goes on to endorse Chinn's ideological rant that the Bush tax cuts caused the financial crisis. Yes, I know that Chinn is speaking in the tone of economic analysis rather than a rant, but only a left-wing ideologue would take the thesis seriously. I [...]
From Arnold Kling's entry yesterday:
Kwak goes on to endorse Chinn's ideological rant that the Bush tax cuts caused the financial crisis. Yes, I know that Chinn is speaking in the tone of economic analysis rather than a rant, but only a left-wing ideologue would take the thesis seriously. I [...]
Paul Krugman may not be that concerned by the Obama administration's new projection that the unified federal budget deficits will sum to $9 trillion dollars over the next 10 years. But I am.
[...]By Richard Posner's math...On August 25th he wrote, regarding Dr. Romer's August 6 speech:
[...]From "Reflections on the Causes and Consequences of the Debt Crisis of 2008," in the La Follette Policy Report by Menzie Chinn and Jeffry Frieden:
In late 2008, the world's financial system seized up. Billions of dollars worth of financial assets were frozen in place, the value [...]
I was happy and surprised to see that the nominal S&P/Case-Shiller seasonally adjusted Home Price Index rose by 0.75% in June for a composite of 20 U.S. metropolitan areas.
[...]The WHite House has just released the Mid Session Review and the CBO the Budget and Economic Outlook: An Update. Here are the economic projections:
[...]Stanford Professor John Taylor has suggested that monetary policy could be summarized in terms of a simple rule, lowering interest rates when output is too low and raising them when inflation is too high. A number of academic papers have investigated this rule from the perspective of describing [...]
Tom Keene has been doing a series for Bloomberg Radio this week on the new book, The Road Ahead for the Fed. You can listen to Tom's interviews with me or three of the other authors who contributed to the book by clicking on a link below.
[...]Richard Posner displays his failure to understand the difference between expenditures (reported on Recovery.com) and tax rebates (not reported online, but have to be estimated).
[...]Since Richard Posner has decided to exhibit his math skills again, I thought it useful to work through some math to see how one can obtain back-of-the-envelope estimates for the stimulus package. I'll use Mr. Posner's numbers to illustrate.
' [...]Here are the latest reads on monthly GDP:
[...]Richard Posner has a critique of public intellectuals who work in the public sphere (with special reference to Christina Romer), either in government service, or in journalistic fora. Mark Thoma and Brad Delong have already made clear the (many) points at which Mr. Posner has gone astray. [...]
We know the glass is both half empty and half full. But the real question is whether liquid is being added in or draining out.
[...]John Fernald and Kyle Matoba of the San Francisco Fed have just released a utilization adjusted total factor productivity series (data here). The importance of this development is clearly laid out by the authors:
This Economic Letter looks at potential output from the perspective of growth accounting, which assesses some [...]
A month ago, I examined the information content of the OECD's Composite Leading Indicators. The August release (for June data) is out. There's substantial variation in the implied outlook across economies.
[...]This was another week when everybody but me sees an economic recovery in the works.
[...]GDP Forecasts
The WSJ August survey indicates a resumption of growth in Q3. What was perhaps a bit surprising was the bump up in the Q3 q/q SAAR growth from about 1 percent to 2.4 percent. The out-quarters were little changed. These forecasts imply the following trajectory for GDP.
[...]Updates on what this is going to cost you and me.
[...]Or, "return of the black helicopters"
Plenty of examples of hyperbole in current policy discussions, but here I want to return [0] to the specific topic of whether several key data series examined by economic analysts can be trusted, or whether in fact they are deliberately manipulated by government bureaucrats. [...]
During the summer, I had the good fortune to attend two excellent conferences focused on new findings in exchange rate economics (yes, not all economic research is focused on the financial crisis and recession). The first was a Bank of Canada-European Central Bank conference Exchange rates: The global perspective, [...]
I spent the last week of July as a visiting scholar at the Federal Reserve Bank of Atlanta, home to Macroblog and a number of superb economists. Their Center for Quantitative Economic Research is now going to be reporting my GDP-Based Recession Indicator Index, as you'll see from' [...]
