Economics Roundtable

Database Maintenance 7/4/15

Routine database maintenance will induce some duplicated items for the next day or two.

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 .

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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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Macro and Other Market Musings

David Beckworth.

July 22, 2015, 1:23 pm, 1513680
Paul Krugman notes that Eurozone crisis is a vindication of that optimum currency area (OCA) theory. I agree but would note the crisis also sheds light on the specialization versus endogeneity debate surrounding the OCA criteria. Interestingly, Krugman himself wrote some of the literature ...

July 16, 2015, 3:23 am, 1510112
According to a recent Bloomberg article, nine people saw the Eurozone crisis coming years before anyone else. Wow, only nine people saw it coming? That is remarkable, these folks must be truly prescient if only they foresaw the crisis.
Except that this claim ...

July 13, 2015, 3:23 pm, 1508399
The blogosphere is once again talking about Canada's successful fiscal austerity in the mid-to-late 1990s. Paul Krugman rekindledthe conversation with this statement:

[L]ook at everyone's favorite example of successful austerity, Canada in the 1990s. Canada came in with gross debt of roughly 100 percent of ...

July 5, 2015, 1:23 am, 1503177
Paul Krugman is frustrated (my bold):

In my own case, I’d guess that about 80 percent of what I’ve had to say about macroeconomics since the crisis was prefigured in my 1998 liquidity trap paper, which was classic MIT style — a stylized little model ...

July 5, 2015, 1:23 am, 1503176
Source: Greg Ip
After six years of low interest rates many yields are now crossing the zero percent ...

July 5, 2015, 1:23 am, 1503178
I made the case in my last post that the Eurozone crisis was largely a monetary policy crisis. That is, had the ECB lowered interest rates sooner and begun its QE program six years ago the fate of the Eurozone would be more certain. Instead it raised ...

July 5, 2015, 1:23 am, 1503173
Just a quick note on whether the Fed should raise interest rates later this year. One concern that many observers have with the Fed tightening is that nominal wage growth has yet to show any signs of accelerating. They often point to the employment cost index which ...

July 5, 2015, 1:23 am, 1503172
Paul Krugman says yes and yes:

The rise of the US sunbelt can be understood largely as a response to the emergence of widespread air conditioning, which made places that are warm in the winter attractive despite humid, muggy summers. It’s a gradual, long-drawn-out ...

July 5, 2015, 1:23 am, 1503174
Ramesh Ponnuru has an article in the National Review where he revisits the 'test' of Market Monetarism put forth by Paul Krugman and Mike Konczal in 2013. Here is Ramesh:

The story begins in late 2012. The Federal Reserve ...

July 5, 2015, 1:23 am, 1503175
Update: Here is the second half of my interview which aired on Tuesday.

On Friday I was interviewed by Erin Ade on Boom Bust. We discussed why the Eurozone is not an optimal currency area--low labor mobility, limited fiscal transfers, differing regional business cycles--and why ...