Economics Roundtable

Technical Problems 3/9/15

The website was down several hours today, but is back up now.

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.


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"Economic analysis of current issues, every Friday.” Francisco M. Torralba.

March 27, 2015, 9:23 am, 1446407
Last week I started writing up a quick (?) methodology to forecast equity returns. Specifically, the question was

Forecast the real total return of U.S. equities over the next ten years. Show your work.áTime: two hours.

I wrote down a decomposition of the total return into three components:

March 25, 2015, 1:23 pm, 1445207
1. Why do central banks use the New Keynesian model?, by Simon Wren-Lewis.

What is a NK model? It is a RBC model plus a microfounded model of price setting, and a nominal interest rate set by the central bank. Every NK model has its inner RBC ...

March 20, 2015, 3:23 pm, 1442917
Suppose you are given the following task:

Forecast the real total return of U.S. equities over the next ten years. Show your work. Time: two hours.

This post describes how I would go about fulfilling this assignment.

The first thing is to define total ...

March 13, 2015, 9:23 am, 1438841
Global labor productivity is not slowing down; but it is slowing down, in many countries.

I have been playing with the labor productivity statistics from the Conference Board's Total Economy Database. Labor productivity is defined as real, PPP-adjusted GDP per person employed --using Geary-Khamis purchasing power parities. ...

March 4, 2015, 9:23 am, 1433294
The Reserve Bank of India is officially an inflation targeter. The agreement between the Ministry of Finance and the RBI was signed on February 20, and published a few days ago. The target is to "bring inflation below 6 per cent" by January 2016. For financial year 2016-17 ...

February 27, 2015, 9:23 am, 1430363
No time for writing this week, so I'm listing blog posts and articles that caught my eye recently:

1. Liftoff levers. John Cochrane is doing a fantastic job explaining how the Fed's reverse repo operations are supposed to work. Start with this post, and then read

February 20, 2015, 5:23 am, 1425919
Hideki Konishi, Kozo Ueda, andáMitsuru Katagiri presented a few months ago a paper titled "Aging and deflation from a fiscal perspective." Here are the slides.

The authors build a model that combines overlapping generations, the fiscal theory of price determination, and political considerations to analyze ...

February 13, 2015, 9:23 am, 1422015
The world might not be "deleveraging," but I wouldn't know just by looking at the debt-to-GDP ratio.

The latest updateáto the McKinsey Global Institute's "Debt and deleveraging" report says that

...debt continues to grow. In fact, rather than reducing indebtedness, or deleveraging, all major economies ...

February 6, 2015, 3:23 am, 1417473
A recent post by Antonio Fatás got me curious about the composition of growth between 2007 and 2013. (Beware, however, that the period doesn't comprise a full business cycle, and that some European economies suffered two recessions during that period.)

Antonio shows that, between 2007 and 2013, ...

January 30, 2015, 7:23 am, 1413104
Market-based measures of U.S. inflation expectations plummeted over the last quarter of 2014--which is a concern now that inflation is so low. In particular, two market-based gauges are often quoted: the break-even rate from 5- and 10-year bond yields, and rates from inflation swaps.

Janet Yellen thinks ...