Economics Roundtable

May 2014 Payroll Employment

After 76 months, we finally got back to the prerecession level of payroll employment.

Click on the image to get a bigger version.


The best summary of the state of our economy is the graph (below) of employment as a fraction of population for people over 16 years old. The decrease is large, but the most troubling feature of the graph is the flat trend .

Click on the image to get a bigger version.

Graph-of-the-Year Candidates

Donald Marron likes European interest rates. Click on the image to get a bigger version. Can you find three distinct subperiods?

Brad DeLong favors the U.S. gdp gap.

Remember M1?

Money Supply M1 growth is now over 20% per year over a 12 month lag. M1 growth has touched 20% before, but not with excess reserves of $1.6 trillion. Where is M1 headed?

Click on the chart for a larger version.


The Economics Roundtable is sponsored by EconModel.

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Economics and …

July 5, 2015, 12:44 am, 1502202
Why is it that so many economists assume that private agents are rational but policymakers are irrational?

Breaking with that rather silly custom, Nick Rowe (hat tip: Mark Thoma) applies the rational expectations concept to policymakers and reaches the conclusion that we will never be able to ...

July 5, 2015, 12:44 am, 1502203
A headline on Bloomberg:

Fed Loans Guided by Raters Grading Subprime Debt AAA

Oh, my God! You mean the Fed is actually relying on ratings provided by major ratings agencies? Can you imagine such a thing? And did you know there are homosexuals in Iran? ...

July 5, 2015, 12:44 am, 1502204
If I were a currency trader, I'd be selling Euros.

July 5, 2015, 12:44 am, 1502205
Back of the envelope analysis:

UE rate is now 6.7%.
Almost certain to rise over next couple of months.
Probably at 7% early in '09.

The most optimistic estimates have recession ending about halfway thru '09.
Stimulus program heavy on public works will be slow to implement.

July 5, 2015, 12:44 am, 1502201
Following up on my last post concerning Nick Rowe's application of rational expectations to public policy: it occurs to me that the way to look for evidence of policy effectiveness is to find cases where policy was, in retrospect, irrational. In other words, look for cases ...

July 5, 2015, 12:44 am, 1502200
If you believe in a NAIRU, or anything remotely like a NAIRU or an accelerationist Phillips curve, the prognosis for prices is looking increasingly ugly. For those who believe confidently in such a Phillips curve and accept historical estimates of the parameters, deflation is now a certainty, and ...

July 5, 2015, 12:44 am, 1502197
Reading Karl Smith’s comment on my previous entry, I started to think about the implications of rational expectations in the context of potential deflation. I’m thinking of a model like “Rational Expectations meets Calvo Pricing meets the Keynesian Multiplier meets the Mundell-Tobin Effect.” It goes something like ...

July 5, 2015, 12:44 am, 1502198
In a blog post a couple of weeks ago, Paul Krugman presents a scatterplot of the change in the inflation rate (y) as a function of the output gap (x), with the following regression line:

y = 0.5228 x - 0.4739

I'm puzzled as to why he includes ...

July 5, 2015, 12:44 am, 1502199
Yeah, it's not just "good for you"

Here's how things stand: the stimulus bill is way too small, it's floundering in the Senate, and we stand possibly on the edge of a deflationary abyss.

Solution: find, say, the 5 most wavering Republican senators and offer ...

July 5, 2015, 12:44 am, 1502196
It appears now that the G-20 intend to make their compromise with the devil. That’s pretty much inevitable, since the devil is one of them. When I say the devil, I am of course referring to the nation that invented the automobile (hint, President Obama: not the ...