Economics Roundtable

March 2017 Fed Funds Rate

What is the effect of a 0.25% change in the Fed Funds rate?.

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March 2017 Payroll Employment

Payroll employment has not grown impressively since 2000. Some baby-boomers retired, but that does not totally account for this graph.

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May 2014 Payroll Employment

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

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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?

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The Economics Roundtable is sponsored by EconModel.

The Classic Economic Models cover micro, macro, and financial markets.

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Brad Setser:  Follow the Money

March 17, 2017, 10:34 am, 1729568

I have a new paper out with David Kamin of New York University Law School—it will be formally out in Tax Notes in a couple of weeks, but given that there is a live debate on the topic, we are posting it in draft form now—and the New York ...

March 15, 2017, 6:34 pm, 1729015

So report Emine Boz, Luis Cubeddu, and Maurice Obstfeld of the IMF —the net financial outflow from emerging markets that characterized the pre-crisis global economy is no more. Capital isn’t exactly flowing downhill, e.g. from rich, advanced economies to poorer emerging economies. The aggregate current account of the emerging ...

March 13, 2017, 4:34 pm, 1728218

A few quick reactions to Tony Fratto’s argument that the cost of holding foreign exchange reserves acts as a natural limit on exchange rate manipulation. The cost of holding reserves is the cost of so-called sterilization—issuing short-term domestic currency debt to offset (in technical monetary policy sense) or to ...

March 10, 2017, 12:34 pm, 1727592

Developments in Puerto Rico are accelerating. The long-run fiscal plan is really a critical component of PROMESA—as it is intended to be a guide both for Puerto Rico’s annual budget and for any debt restructuring. I want to offer a few quick comments on the Ernst & Young ...

March 8, 2017, 12:34 pm, 1726809

Over the last year, U.S. import growth stalled. Capital goods imports did nothing—in part because of weakness in non-residential investment. And consumer goods imports were flat.

That appears to have changed. Real consumer goods imports were up 9 percent year over year in January. Real capital goods imports were up 7 ...

March 6, 2017, 6:34 pm, 1726153

An applied economics question:

A country with no independent monetary policy, undergoing a ten-year slump that has reduced its real GDP on average by over a percentage point a year, needs to do a fiscal consolidation of roughly 10 percentage points of its GDP. How much does output fall?

The example is ...

February 24, 2017, 4:34 pm, 1723209

Take out U.S. exports of manufactures to Canada and Mexico, and the United States manufacturing exports to the world are about 3 percent of U.S. GDP.*

Non-NAFTA manufacturing imports are over 7 percent of U.S. GDP.

These calculations are based on the North American Industry Classification System (NAICS) data for manufacturing ...

February 22, 2017, 12:34 pm, 1722253

It should go almost without saying that China’s ability to maintain its current exchange rate regime matters.

The yuan has been more less stable against the CFETS basket since last July. If the current peg breaks, China will struggle to avoid a major overshoot of its exchange rate.

Christopher Balding recently ...

February 17, 2017, 2:34 pm, 1721020

Few policies are less liked than China’s 2015/2016 credit-driven stimulus. Even people like me who worried that slamming the brakes on credit, in the absence of more fundamental reforms to lower China’s savings rate, risked creating a shortfall in demand were not exactly enthusiastic supporters. China would be far better ...

February 14, 2017, 6:34 pm, 1719865

Neil Irwin’s column on the border-adjustment tax spurred an interesting debate. Irwin notes that a 25 percent rise in the dollar (or even a somewhat smaller rise) would have an impact outside the United States, as the dollar is a global currency.

Dean Baker and Jared Bernstein noted ...