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.

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

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- Recent Entries

December 22, 2014, 11:33 pm, 1393523
As horrific as the CIA torture revelations were, please understand that most of the investigation is still classified. I have to wonder, what's in the report we did not see.

Although I commend senator Dianne Feinstein for making sure excerpts of the CIA torture report saw the light of ...

December 22, 2014, 11:03 pm, 1393502
Many economists expect U.S. demand for Apple Inc. products will prop growth in Taiwan next year. Here, pedestrians walk in Taipei, Taiwan. Bloomberg News

TAIPEI—Record exports of ...

December 22, 2014, 10:44 pm, 1393501

Expectations are critical for macroeconomics and financial markets. But the expectation-formation process is not well understood. This column discusses some empirical characteristics of forecast disagreement from professional forecasters in the US, and discusses the ‘information frictions’ that underlie the heterogeneity of expectations.

December 22, 2014, 10:44 pm, 1393500

Eurozone deflation is likely to become reality when the annual inflation figure for 2014 is announced in January. This column argues that the ECB should develop a strategy that works in the Eurozone’s unique financial setting, instead of following the Fed’s lead. The author proposes that the ECB should pursue ...

December 22, 2014, 9:33 pm, 1393498

This column by Doug Saunders on the "resource curse" in last Saturday's Globe and Mail is quite dreadful:

When the price of oil is the foundation of your country’s economy, asudden plungeto half its value focuses the mind wonderfully, doesn’t it?

One's heart sinks at the ...

December 22, 2014, 9:33 pm, 1393497

It’s time for my last spelling/punctuation/grammar rant of the year (see my last one here in October) on what I think must be the most common spelling/punctuation/grammar/orthographic mistake in the English language — the misuse of it’s (or its’) for its — illustrated by the examples below collected from ...

December 22, 2014, 9:03 pm, 1393487
First, from Tim Duy: Fed Watch: Looking Backward to See the Future

[In 20004] Patient" lasted for two meetings before being replaced by "measured." This is fairly consistent with my expectations. My baseline scenario is that the Fed drops "considerable" entirely in January, retains "patient" in March, drops "patient" ...

December 22, 2014, 8:04 pm, 1393485

It’s time for my last spelling/punctuation/grammar rant of the year (see my last one here in October) on what I think must be the most common spelling/punctuation/grammar/orthographic mistake in the English language — the misuse of it’s (or its’) ...

December 22, 2014, 7:33 pm, 1393484
Chinese banks have experienced an outflow of deposits for the quarter for first time since 1999. Customers are attracted to trust funds and the stock market which has been on a tear, up 43% in the last six months.

In the first week of December, Chinese investors opened almost ...

December 22, 2014, 6:44 pm, 1393421
Two government initiatives to understand the value of college are colliding right now.

December 22, 2014, 6:44 pm, 1393420

Weak investment is a key macroeconomic problem in the Eurozone, and the new European Commission has proposed an ‘Investment Plan’ to complement existing policy initiatives. In this column, the Commission’s Chief Economist explains the key rationale behind the Investment Plan. 

December 22, 2014, 6:44 pm, 1393419

December 22, 2014, 6:04 pm, 1393417
(December 22, 2014 04:52 PM, by David Henderson) I'll put aside the irony that many people on the right are borrowing a page that many on the left use on other issues by blaming a climate of opinion for the two Brooklyn cop murders. My own view is... (0 COMMENTS)

December 22, 2014, 6:04 pm, 1393416
(Don Boudreaux)

Here’s letter to a young man who describes himself as a “social justice warrior”; I use his name with his kind permission:

Mr. Travis Herring

Dear Mr. Herring:

Many thanks for your e-mail.  You are correct: I do oppose legislation that forces businesses to serve customers that businesses prefer not to ...

December 22, 2014, 6:04 pm, 1393415

Last Christmas, more than $1,000 was charged to my credit card at a luxury department store. Unfortunately, I wasn’t able to enjoy this shopping spree myself. Even though I took care to secure it, my credit card was compromised.

Fortunately, I was able to get a new card and wasn’t liable ...

December 22, 2014, 6:04 pm, 1393414

On December 18 the Congressional Budget Office released its latest report on Social Security. In addition to updating its projections for system financing – which has worsened considerably in recent years – CBO touched on the debate over how to measure Social Security ...

December 22, 2014, 5:33 pm, 1393412

December 22, 2014, 5:33 pm, 1393411
Under a new set of family insolvency laws in Spain, those who have stopped paying their mortgage will be shielded from eviction from their homes.

Via translation from El Confidential, please consider Changing the Bankruptcy Law.

A bill in Parliament proposes new regulations on family insolvencies ...

December 22, 2014, 5:24 pm, 1393410

A New York Times article over the weekend delves into the history and rationale of the 2 percent inflation target, beloved of central bankers everywhere and a fairly recent innovation. Of course, the US Federal Reserve has a dual mandate, which includes ...

December 22, 2014, 5:03 pm, 1393348
Customers wait in line to pay for their merchandise during Mexico’s “El Buen Fin,” but sales during the country’s version of “Black Friday” have slowed this year.

December 22, 2014, 5:03 pm, 1393349

The U.S. economy’s gradual improvement is being threatened by weaker economic growth prospects overseas, something that might force Federal Reserve officials to wait beyond next year before raising interest rates, according to former Fed Vice Chairman Donald Kohn.

December 22, 2014, 5:03 pm, 1393347

Tim Duy:

Looking Backward to See the Future, by Tim Duy: Is this our future, brought back from the past? A contact referenced the last hike cycle via the FOMC statements from 2003-04 (emphasis added):

October 28, 2003:

The Committee perceives that the upside and downside risks to the ...

December 22, 2014, 5:03 pm, 1393346
From the Philly Fed:

The Federal Reserve Bank of Philadelphia has released the coincident indexes for the 50 states for November 2014. In the past month, the indexes increased in 44 states, decreased in two, and remained stable in four, for a one-month diffusion index of 84. Over ...

December 22, 2014, 4:44 pm, 1393345

We're talking softball, from Maine to San Diego...  

We're talking Homer,

Ozzie and the Straw...

The IRS is auctioning off a deferred annuity the Mets owe to Darryl Strawberry (yup, the Mets are still paying for Darryl).  What does this ...

December 22, 2014, 4:04 pm, 1393344

Watch the latest video at

December 22, 2014, 4:04 pm, 1393343

The total discrediting of Rolling Stone’s story on rape at the University of Virginia has shined a light on one of the least palatable features of American life: the so-called epidemic of rape on campus.

Authorities from Barack Obama on down have cited the phony statistic that one in five college ...

December 22, 2014, 3:03 pm, 1393277
The year may almost be over, but the economic data are still rolling in. The Commerce Department on Tuesday could upgrade its estimate for economic output during the third quarter, the latest in a string of impressive readings on U.S. growth.

December 22, 2014, 3:03 pm, 1393276

At MoneyWatch:

Do safer banks mean less economic growth?: One reason the financial crisis was so severe was that banks were highly leveraged. That is, they relied heavily on borrowed funds to acquire risky financial assets. This left them highly vulnerable when those assets' prices collapsed and the banks ...

December 22, 2014, 2:44 pm, 1393275
Two government initiatives to understand the value of college are colliding right now.

December 22, 2014, 2:44 pm, 1393274

A lot of the mortgage servicing litigation over the past seven years has faltered on standing issues. Does the borrower have standing to sue the servicer? This has been a problem for RESPA and HAMP suits, where there are questions about whether there is a private right of ...

December 22, 2014, 2:05 pm, 1393273

December 22, 2014, 2:05 pm, 1393272

Angels/demons versus humans: Dominion > Constantine>.

Powerful female politician(s) battling corruption and dystopia: Ma
dam Secretary
 (Tea Leoni) > State of Affairs (Katherine Heigl)

Reality TV entrepreneurs: The Profit > Shark Tank.

Food competition cornucopias Top Chef > MasterChef > Hell’
s Kitchen

December 22, 2014, 2:04 pm, 1393271
(December 22, 2014 01:11 PM, by Scott Sumner) Here's the always brilliant Steven Landsburg discussing the importance of theoretical tools: I sometimes hear economists defend the unrealism of their models thusly: "Economics is an infant science. Today our models are unrealistic; a decade from now, they'll be a... (0 COMMENTS)

December 22, 2014, 2:04 pm, 1393270
(Don Boudreaux)

Here’s a small addition to humanity’s prosperity pool.  It’s an addition that makes our world a little bit cleaner and nicer.  This addition is made possible by petroleum, obviously, as well by as the countless creative, entrepreneurial innovations that enable petroleum to be transformed into this disposable and ...

December 22, 2014, 2:04 pm, 1393269

The last thing that a beleaguered Vladimir Putin will want to hear is that Russia has now reached the stage where it desperately needs an IMF supported economic adjustment program. Without such a program it is difficult to see how Russia can regain domestic and international confidence in the management ...

December 22, 2014, 2:04 pm, 1393268

In a recent National Review story, economist Tino Sanandaji takes issue with inequality researcher Thomas Piketty, author of this year’s surprising best-seller, “Capital in the Twenty-First Century,” over how America’s superrich got that way. Sanandaji:

Piketty believes that most top wealth is inherited and that the ...

December 22, 2014, 1:03 pm, 1393211

Two government initiatives seeking to understand the value of a college education are about to butt heads.

The White House spelled out a plan Friday to rank the nation’s 5,000 colleges and universities, reasoning that students need more information before committing to the hefty expense of higher education. At the ...

December 22, 2014, 1:03 pm, 1393210
Sales of previously owned homes tumbled to a six-month low in November, a sign the housing market continues to underperform despite a burst of hiring and stronger economic growth. (Bloomberg ...

December 22, 2014, 1:03 pm, 1393209
• Once again housing economist Tom Lawler's forecast of 4.90 million SAAR was closer than the consensus (5.20 million) to the NAR reported sales (4.93 million).

•The most important number in the NAR report each month is inventory. This morning the NAR reported that inventory was up 2.0% ...

December 22, 2014, 12:44 pm, 1393208

December 22, 2014, 12:44 pm, 1393207

December 22, 2014, 12:44 pm, 1393206

December 22, 2014, 12:34 pm, 1393205

At first glance, 2014 seemed like a tax policy wasteland, but two developments may have set the stage for important future initiatives.  A wave of tax-driven corporate inversions showed one reason why tax reform is necessary.  A detailed plan by House Ways & Means Committee chairman Dave Camp (R-MI) showed ...

December 22, 2014, 12:34 pm, 1393204

December 22, 2014, 12:04 pm, 1393198

I’m not going to argue Time magazine was wrong to give its annual “Person of the Year” award to the Ebola fighters. Perfectly reasonable choice. But how could one of the finalists  — ...

December 22, 2014, 12:04 pm, 1393200

AEI early-childhood education expert Katharine Stevens writes in the Wall Street Journal that the December 10, 2014 award of $750 million to states, district, agencies and non-profits is nothing but a Trojan horse.

Personally highlighted by ...

December 22, 2014, 12:04 pm, 1393199

The safe bet is always that India won’t get its act together economically. For risk-takers, next year may be a time to make the unsafe bet. It’s possible that India will finally adopt a unified goods and services tax ...

December 22, 2014, 12:04 pm, 1393196

Like clockwork, just days after another North Korean provocation, the press begins reporting that this time, China is upset, for real, no kidding. The story at the moment is from the New York Times, headlined “Chinese Annoyance With North Korea Bubbles to the Surface,” ...

December 22, 2014, 12:04 pm, 1393197

As the historically minded will recall, back in 2012 the Obama administration declared that the United States “will of necessity rebalance toward the Asia-Pacific.” That was the guidance the commander in chief gave to the U.S. military, the idea being that since, the peace of Europe was eternal and self-sustaining, ...

December 22, 2014, 11:33 am, 1393194
Magali Delmas, Stephen Locke and I have just released a new NBER Working Paper. Stephen is on the rookie job market this year. I always try to write "original" papers on subjects where I hope that a new literature will emerge. Let me sketch this paper's big ...

December 22, 2014, 11:24 am, 1393193

I highly recommend a movie to be released next year (that is, the year that begins next week). Terry Jones, of Monty Python fame, is one of the key developers of the film. It is on the Global Financial Crisis, but also provides a quick history of bubbles and crashes. ...

December 22, 2014, 11:24 am, 1393192
The Fed has a dirty little secret, one it has closely guarded over the past six years of unconventional monetary policy. This secret has eluded many journalists, commentators, and economists and led to ...

December 22, 2014, 11:03 am, 1393131

Let's start today with an excerpt from an abstract published by Edwin Elton, Martin Gruber and Mustafa Gultekin during the dark ages of stock price theory, back in September 1981.

It ...

December 22, 2014, 11:03 am, 1393130
The NAR reports: Existing-Home Sales Lose Momentum in November as Inventory Slightly Tightens

Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, fell 6.1 percent to a seasonally adjusted annual rate of 4.93 million in November from a downwardly-revised 5.25 million in October. ...

December 22, 2014, 10:44 am, 1393128

December 22, 2014, 10:44 am, 1393129

December 22, 2014, 10:44 am, 1393127

December 22, 2014, 10:44 am, 1393126

OUR correspondents on the biggest business and finance stories of 2014, and what will make headlines next year

December 22, 2014, 10:05 am, 1393124

We have learned in testing that moviegoers respond favorably to Kim Jong-Un when he is seen as more of a recluse who can be charming at times as opposed to a person who is simply a dangerous dictator.

There is more here, on possible commercial reactions to The Interview, ...

December 22, 2014, 10:05 am, 1393123

“Digital preservation is really just an oxymoron at this point,” says Jan-Christopher Horak, director of the UCLA Film and Television Archive. “It’s really just putting plus and minus electronic charges on plastic — and that plastic has an extremely short half-life. So that most digital media, even if you take ...

December 22, 2014, 10:04 am, 1393122
(Don Boudreaux)

… is from page 576 of the 5th edition (2015) of Thomas Sowell’s Basic Economics:

In short, the rise of brands promoted better quality by allowing consumers to distinguish and choose, and by forcing producers to take responsibility for what they made, reaping rewards when it was good and ...

December 22, 2014, 9:33 am, 1393119

For simplicity, ignore government spending and taxes. "Fiscal policy" means lump-sum transfer payments.

Suppose the economy is in a permanent liquidity trap. If we ignore the central bank's paper and ink operating costs, another name for the permanent liquidity trap is the "Friedman Rule". Both have the nominal interest ...

December 22, 2014, 9:33 am, 1393118

Some forecasters are confidently predicting a large further rise in the U.S. dollar against key currencies like the euro and the yen. And a few ominously warn of impending currency wars where central banks outside the United States will manipulate their currencies to gain a global trade advantage.

Not so fast. ...

December 22, 2014, 9:03 am, 1393067
The Chicago Fed released the national activity index (a composite index of other indicators): Index shows economic growth accelerated in November

Led by improvements in production-related indicators, the Chicago Fed National Activity Index (CFNAI) rose to +0.73 in November from +0.31 in October. Two of the four broad categories ...

December 22, 2014, 8:34 am, 1393066
US economic growth is still expected to decelerate in this year’s fourth quarter relative to Q3, although today’s revised nowcast reflects a stronger outlook for GDP in the final three months of 2014 vs. last month’s projection.  Q4’s advance is now on track for a 3.0% advance (real seasonally adjusted ...

December 22, 2014, 8:34 am, 1393065

Congress is adjourned. The Daily Deduction will appear Mondays until it reconvenes.

What might the White House tax reform plan look like? We may find out soon. President Obama says he will soon present some “pretty specific proposals” to revamp the US tax code in the new Congress. His ...

December 22, 2014, 7:33 am, 1393061

#1 is for Taco Bell:

Need a job? Let's taco about it.

December 22, 2014, 7:33 am, 1393062

December 22, 2014, 7:33 am, 1393060

From Business Week:

“If you don’t have housing, you can’t do labor,” Chris Thornberg, principal at Beacon Economics, a Los Angeles-based research and consulting firm,toldBloomberg News. “If you can’t do labor, you are missing a major ingredient for economic growth.”

December 22, 2014, 7:33 am, 1393059

Absolutely true.

And I'd say it generalizes to welfare and charity: assist someone whose name and a bit of whose story you know. Improve the world one person, one day at a time.

December 22, 2014, 7:33 am, 1393054

We'll know later today whether they're right.

December 22, 2014, 7:33 am, 1393053

"Here's what happens when unions control everything."

Remember this when California comes to the federal government begging for a bailout.

December 22, 2014, 7:33 am, 1393052

Scott Adams is a genius.

December 22, 2014, 7:33 am, 1393055

If only the real world were like the movies.


December 22, 2014, 7:33 am, 1393056

Good reasons why college is not right for at least some people. But I don't think I believe this:

What’s even more striking is a conversation I recently had with a marketing team lead at Apple who also routinely takes part in their hiring process. She explained ...

December 22, 2014, 7:33 am, 1393058

This is amusing:

His idea, detailed ina paperand further elaborated ina talkhe is delivering at universities around the world, has sparked controversy among his colleagues, who see it as either tenuous or a potential breakthrough, or both.

Genius, or crazy, or both! But, fortunately, ...

December 22, 2014, 7:33 am, 1393051

Some sorely needed encouragement.

And in case you missed it, there's this: "5-Year-Old Cancer Patient Signs 1-Day NBA Contract, Dunks In Preseason Game".

December 22, 2014, 7:33 am, 1393057

"The great Ebola lie — Outbreak hyped for funding & mediaattention".

But the media weren’t asking skeptical questions. The next day, reporting on a separate WHO conference, a New York Times headlineblared: “New Ebola Cases May Soon Reach 10,000 a Week, Officials Predict.”

The “soon” in ...

December 22, 2014, 7:33 am, 1393043

December 22, 2014, 7:33 am, 1393045

Some information on the characteristics of job candidates in econ from the top schools.

FYI: Arizone State is looking for anAssistant Professor of Future Thinking and Sustainability.

December 22, 2014, 7:33 am, 1393042

December 22, 2014, 7:33 am, 1393050

Well, a visiting professor, but these days we should be grateful for what we can get.

December 22, 2014, 7:33 am, 1393046

Why? Mostly because they're so freakin' better than they used to be.

December 22, 2014, 7:33 am, 1393044

Steve Albini, author of "The Problem with Music," is back with another take on the subject.

Fast forward 21 years. This weekend, Albinigave a speechat an Australian music conference in which he basically said that the internet hasn't broken the music business at all — at ...

December 22, 2014, 7:33 am, 1393049

Not for me--too cold. Your mileage may vary.

December 22, 2014, 7:33 am, 1393047

News to me, but it sounds right.

The rope-a-dope myth has played an important role in Ali's apotheosis, filling in holes in his resume as a boxer and cultural figure. His career in general is now seen through the prism of his victory over Foreman. Among other ...

December 22, 2014, 7:33 am, 1393048

Including an excellent one about billg's mom.

December 22, 2014, 7:33 am, 1393038

December 22, 2014, 7:33 am, 1393039

Leo, yesterday, doing what he does like no one else.

The only downside is one of these times, Ray Hudson is going to have a stroke.

December 22, 2014, 7:33 am, 1393041

He certainly is good. (I think the Boss and Neil Young are his best.)

December 22, 2014, 7:33 am, 1393037

The academic economics version of the old wisecrack, "To find a prince, you have to kiss a lot of frogs."

December 22, 2014, 7:33 am, 1393040

I'd readGorilla Marketing.


December 22, 2014, 7:33 am, 1393032

It would be a better world if all high-achieving high school students knew this:

That’s why some students are applying to 20 or more schools: to increase their odds of making a single match. The most important elite college admissions statistic, then, is not the percentage of ...

December 22, 2014, 7:33 am, 1393031

Every high school student applying to one or more "selective" colleges should readthis. (See also the qualification offered in "Do 80 Percent of Top Students Really Get Into an Elite College?")

December 22, 2014, 7:33 am, 1393033

AEI's Christina Hoff Sommers explains.

(Kinda the usual suspects, but still useful to have it laid out.)

December 22, 2014, 7:33 am, 1393034

Short answer: no.

In summary,evidence from simple tests suggest that the “Anxious Index” from the Survey of Professional Forecasters is probably not a useful indicator of future U.S. stock market behavior.

December 22, 2014, 7:33 am, 1393036

Quora question answered by the Chief Economist at Google, Hal Varian.

December 22, 2014, 7:33 am, 1393035

Don't--I repeat, don't--make any jokes at all about bombs: "A Doctor Made A Bomb Joke In An Airport And Was Fined $90,000".

December 22, 2014, 7:33 am, 1393030
North Korean leader Kim Jong-un is an incredible blowhard, but no credible threat to anyone outside North Korea. He just wants attention.

And he's going to get it following his Threat to target White House after Obama Claims North Korea Behind Sony Hacking.

President Barack Obama ...

December 22, 2014, 7:33 am, 1393029
Or Shachar

Last year, IntercontinentalExchange (ICE) launched a credit default swap index futures contract. In the first two weeks there were spurts of interest in it, but soon it became evident that the new product was unable to generate sufficient demand. Given their short life span ...

December 22, 2014, 7:23 am, 1393028

Liquidity refers to the ease at which assets can be converted into cash.

An asset is said to be liquid, if it is easy to buy and sell; for example short-date government gilts are a highly liquid market because it is easy ...

December 22, 2014, 7:03 am, 1392983

War. What is it good for?:

Conquest Is for Losers, by Paul Krugman, Commentary, NY Times: More than a century has passed since Norman Angell, a British journalist and politician, published “The Great Illusion,” a treatise arguing that the age of conquest was or at least should be over. ...

December 22, 2014, 6:44 am, 1392982

Joshua Angrist of the Massachusetts Institute of Technology talks to EconTalk host Russ Roberts about the craft of econometrics--how to use economic thinking and statistical methods to make sense of data and uncover causation. Angrist argues that improvements in research design along with various econometric ...

December 22, 2014, 6:34 am, 1392981
● Chinese central bank survey: More bankers think economy cooled in Q4: | Reuters ● BoJ: Japan’s Economy Continues To Recover Moderately | RTT ● Oil Rises for Second Day on Saudi Confidence in Demand | Bloomberg ● US gas prices fall to lowest since May 2009: Lundberg survey | ...

December 22, 2014, 5:03 am, 1392966

December 22, 2014, 5:03 am, 1392965

Tim Duy:

Asked and Answered. Mostly, by Tim Duy: Last week I had six questions for Federal Reserve Chair Janet Yellen. Here is my attempt to piece together the answers from her post-FOMC press conference:

Question 1: If you want to know what the Fed is thinking ...

December 22, 2014, 4:44 am, 1392964

Banking has recently proven much more fragile than expected. This column argues that the Basel III regulatory response overlooks the interactions between different kinds of prudential policies, and the link between prudential policy and competition policy. Capital and liquidity requirements are partially substitutable, so an increase in one requirement should ...

December 22, 2014, 4:44 am, 1392963

Foreign direct investment is an essential element in 21st century development strategies. This column discusses new evidence that estimates the importance of financial liquidity as a driver of such flows into emerging-market economies. Financial liquidity considerations are key determinants of the size and ownership structure of these investments.

December 22, 2014, 3:33 am, 1392959
This is a Wall Street Journalopedon inequality. With 30 days passed, I can post it here. It's a much edited version of my evolving "Why and How we Care About Inequality" essay.

What the ‘Inequality’ Warriors Really Want

Progressives decry inequality as ...

December 22, 2014, 2:05 am, 1392949

Nicaragua plans to begin building access roads and highways on Monday near the country’s Pacific coast as it starts work on a $50 billion inter-oceanic canal meant to rival Panama’s century-old waterway.

…At an estimated cost more than four times the size of Nicaragua’s $11 billion economy, the project has raised ...

December 22, 2014, 2:04 am, 1392948
This is getting out of hand. A recent post received too many high quality comments. I discuss the discussion some here. The general view expressed in the discussion is that it sure looks as if non residential fixed capital investment as a percent of GDP expressed (nrfinvgdp) and nominal interest ...

December 22, 2014, 2:04 am, 1392947

Oil prices have been falling — and with them the quality of reporting and writing about this periodic event. Stock market “guru” Laszlo Birinyi (just to select one of many annoying examples) claims that “It [the oil price drop] is just a black swan. It comes clearly out of the ...

December 22, 2014, 12:34 am, 1392926
I'm going to try to clear up some issues in the blog discussion among Ambrose Evans-Pritchard, Paul Krugman, and Simon Wren-Lewis, among others, about zero-lower-bound monetary policy. Rather than parse the thoughts of others, I'll start from scratch, and hopefully you'll be less confused.

I'll focus ...

December 22, 2014, 12:34 am, 1392925

In ...

December 22, 2014, 12:34 am, 1392924

An ...

December 22, 2014, 12:04 am, 1392922
In the post below, I discuss a very strong correlation in the data which surprised me — a high ratio non residential fixed capital investment to GDP is correlated with high nominal interest rates on corporate bonds. I think the discussion in comments was very interesting and I have promised ...

December 21, 2014, 11:03 pm, 1392915

I find it incredibly sad that people feel they have to make "The Case Against Torture" (NY Times). What is wrong with us?

December 21, 2014, 9:33 pm, 1392913
Autopsy for Keynesian Economics. (I don't get to pick the titles BTW) A Wall Street Journal Oped. I'm trying for something cheery at Christmas, and a response to the many recent opeds that ISLM is just great and winning the battle of ideas. As usual, the whole thing ...

December 21, 2014, 7:03 pm, 1392893
From James Hamilton at Econbrowser: Do falling oil prices raise the threat of deflation?

If gasoline prices stay where they are and if we buy the same number of gallons of gasoline this year as last, that leaves us with an additional $160 billion to spend over the course ...

December 21, 2014, 6:34 pm, 1392892

December 21, 2014, 6:34 pm, 1392891

I was halfway through a good new book on US-Russian relations last week when it occurred to me that I might very well vote for Jeb Bush, that is, if I get the chance.

I was startled by the thought. For the last ten years, at least, I’ve thought of myself ...

December 21, 2014, 5:33 pm, 1392889

If I make one very trivial change to Paul Krugman's model of a temporary liquidity trap, I can change the results, so that the central bank can use current monetary policy to return the economy to full employment, even if it cannot make credible commitments about future monetary policy.

I am ...

December 21, 2014, 5:33 pm, 1392888

December 21, 2014, 5:33 pm, 1392887
OPEC is pointing the finger at speculators as well as Non-OPEC countries, but especially US shale producers for the crude price crash.

Let's explore that idea in a series of charts. But first let's take a look at the allegation.

The Wall Street Journal reports Gulf ...

December 21, 2014, 4:44 pm, 1392866

December 21, 2014, 4:05 pm, 1392865

From Paul Mason, here is the summary bit:

So a worst-case scenario under a Syriza victory is: short-term repayment crisis, botched negotiations with the EU, social upheaval, capital flight and default.

A best-case scenario – for Syriza – would see its EU allies force a long-term debt deal, but it would ...

December 21, 2014, 4:04 pm, 1392864
(Don Boudreaux)

The Institute for Justice – a special and genuine force for significant good in the U.S. – just published its superb Entrepreneur’s Survival Guide.

I thank the many of you who sent to me Michael Moynihan’s excellent essay “Castro’s Hipster Apologists Want to Keep Cuba ‘Authentically’ Poor.”  A ...

December 21, 2014, 3:03 pm, 1392842

Bill McBride at Calculated Risk:

Katie Couric and the Net Petroleum Exporter Myth: To understand what the general public is hearing about oil, I watched a Yahoo video yesterday with Katie Couric explaining the decline in oil prices.

In general the piece was very ...

December 21, 2014, 2:05 pm, 1392841

1. Should you publish a book with too many hyphens?

2. Japan Senior Cheer Association (mostly video), and more here.

3. Kangaroos against drones.

4. It’s odd that such a category even exists (“Top 10 feminist fiascoes of 2014″).  This is a good ...

December 21, 2014, 2:04 pm, 1392840
(December 21, 2014 02:46 PM, by David Henderson) UW-Madison has been moving toward egalitarian grading since 2008 when the university began reporting to departments and instructors the rates of D, F, and drop grades by gender, first-generation college status, and targeted minority status. That sent a message to... (0 COMMENTS)

December 21, 2014, 1:33 pm, 1392838

December 21, 2014, 12:34 pm, 1392819
Existing home sales in the US are expected to decline slightly to an annual pace of 5.25 million units in tomorrow’s update for November, according to The Capital Spectator’s median point forecast for several econometric estimates. The projection represents a marginal decrease from October’s 5.26 million units (seasonally adjusted annual ...

December 21, 2014, 11:03 am, 1392790

The spectacular drop in oil prices means that inflation is going to fall even further below the Fed’s 2% target. Does that raise any new risks for the economy? I say no, and here’s why.

December 21, 2014, 11:03 am, 1392789
To understand what the general public is hearing about oil, I watched a Yahoo video yesterday with Katie Couric explaining the decline in oil prices.

In general the piece was very good. Couric started by explaining that the decline in oil prices could be explained in two ...

December 21, 2014, 10:34 am, 1392788

The Moscow Times has a headline you don’t see every day: “Falling Ruble Hits Russians Where it Hurts Most as Condom Prices Soar.” (The story’s a ...

December 21, 2014, 10:04 am, 1392787
(Don Boudreaux)

… is from page 302 of the late Thomas McCraw’s excellent 1984 volume, Prophets of Regulation:

On balance, however, it seems clear that the concern about legal process has controlled the outcome of regulation more often than has the concern about the substance of economic efficiency.  In economists’ ...

December 21, 2014, 8:05 am, 1392755

There is a good interview with Paul Fischer, who has studied this and related topics, here is one bit:

The way Americans are shown is equally counterfactual. There’s a long-running film franchise in North Korea that Kim Jong-il started called — depending on how you translate — Unknown Heroes ...

December 21, 2014, 6:04 am, 1392741
My regular column is available to subscribers on This is an excerpt. A few days ago something happened which I have not experienced for a very long time, if ever. Inflation fell to just 1% and will surely...

December 21, 2014, 5:33 am, 1392739
If you don't have the money, spend it anyway, says the Ukrainian government.

Of course, that's no different than the philosophy of any other country, including the US.

In this case, however, Ukraine's borders on default.

Please consider Ukraine Can’t Scrimp on Military Spending as ...

December 21, 2014, 5:03 am, 1392738

December 21, 2014, 3:24 am, 1392736

1. Recently I appeared on RT Boom/Bust again.  The interview lasts 6+ minutes.  Erin Ade and I discussed:

Who benefits from lower energy prices.The No-Lose Line for owning bonds,Whether you are compensated for inflation risks in long bondsHow much an average ...

December 21, 2014, 2:44 am, 1392735

Migration is heavily influenced by social networks. Nonetheless, little is known about the underlying mechanisms. This column uses a new dataset from China to disentangle the effects of strong and weak ties on the migration decision. The findings indicate that strong and weak ties act as complements. Having many weak ...

December 21, 2014, 2:05 am, 1392734

Here is a new research paper by Voskobvoynikov and Solanko, but dating before the collapse in oil prices:

Based on newly available data, we argue that multifactor productivity increases over the period 1995-2008 generated only about a half of Russia’s GDP growth, a smaller increase than most previous estimates. Further, growth ...