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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Money and Banking

July 24, 2017, 9:33 am, 1765311

“Global banks are global in life but national in death.” Mervyn King

Courses in international economics usually introduce students to the impossible trinity, also known as the trilemma of open-economy macroeconomics: namely, that a fixed exchange rate, free cross-border capital flows, and discretionary monetary policy are incompatible ...

July 17, 2017, 9:33 am, 1763493

Dear Mr. Quarles,

Congratulations on your nomination as the first Vice Chairman for Supervision on the Board of Governors of the Federal Reserve System. We are pleased that President Trump has chosen someone so qualified, and we are equally pleased that you are willing to serve.

Assuming everything goes according to plan, ...

July 10, 2017, 9:33 am, 1761804

“Financial security is an important part of national security and an important basis for the steady and healthy development of the economy.” President Xi Jinping, Reuters, April 26, 2017.

“Leverage comes by the pound and goes away by the ounce.” Zhang Zhongkai, Xinhua News Service, May 4, ...

July 3, 2017, 9:33 am, 1760264

Guest post by Lawrence J. White, Robert Kavesh Professor in Economics, NYU Stern School of Business

The major credit rating agencies (CRAs)—Moody’s, Standard & Poor’s (S&P), and Fitch—contributed significantly to the financial crisis of 2007-09. Their excessively high initial ratings of residential mortgage-backed securities (RMBS) helped fuel the bubble ...

June 26, 2017, 5:33 am, 1758297

Changes in financial regulation are having a profound impact on the demand for safe assets—assets with a fixed nominal value that may be converted at all times without loss into the means of payment. Not only is demand for safe assets on the rise, but the ability of the private ...

June 19, 2017, 9:33 am, 1756644

“…we expect to be cutting a lot out of Dodd-Frank because, frankly, I have so many people, friends of mine that have nice businesses that can't borrow money, they just can’t get any money because the banks won’t let them borrow because of the rules and regulations in Dodd-Frank....” President ...

June 12, 2017, 9:33 am, 1754979

“The advantages of competition and deregulation must be sought in ways that do not impair the payments system or subject it to interruptions and breakdowns.” James Tobin, “Financial Innovation and Deregulation in Perspective,” BOJ Monetary and Economic Studies, September 1985.

How will financial innovation alter the role of central ...

June 5, 2017, 9:33 am, 1753164

“The stability of the proportion of the national dividend accruing to labor […] is one of the most surprising, yet best-established, facts in the whole range of economic statistics [….] Indeed, […] the result remains a bit of a miracle.” J. M. Keynes, “Relative Movements of Real Wages and Profit,” ...

May 29, 2017, 9:33 am, 1751411

Economists have debated the relationship between inflation and unemployment at least since A.W. Phillips’s study of U.K. data from 1861 to 1957 was published 60 years ago. The idea that a tight or slack labor market should result in faster or slower wage gains seems like a natural ...

May 22, 2017, 9:33 am, 1749623

“… positive trends can sometimes evolve into prices that increase more than fundamentals justify.” Eric Rosengren, President and CEO, Federal Reserve Bank of Boston, May 9, 2017.

The Federal Reserve’s annual stress test is the de facto capital planning regime for the largest U.S. banks. Not surprisingly, it comes ...