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 .

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.

RSS Feed

- Recent Entries

July 6, 2015, 7:03 am, 1504066
Protesters wave EU flags during a rally demanding Greece remain in the eurozone, outside Greek Parliament in Athens on Tuesday. FOTIS PLEGAS G./EUROPEAN PRESSPHOTO AGENCY

Greece has ...

July 6, 2015, 7:03 am, 1504065
The New Orleans metro region was the only one to post an increase in the jobless rate, to 6.3% in May from 5.9% a year earlier.

July 6, 2015, 7:03 am, 1504069

The Wall Street Journal’s Daily Report on Global Central Banks for Wednesday, July 1, 2015:

Sign up for the newsletter:


Hilsenrath’s Take: Fallout Contained So Far Following Greek Default Fischer: Rates to Increase Gradually Fed’s ...

July 6, 2015, 7:03 am, 1504064


A roofer works on a home in the Briar Chapel community in Chapel Hill, N.C. Construction spending hit a new high in May. GERRY BROOME/ASSOCIATED PRESS

U.S. ...

July 6, 2015, 7:03 am, 1504068

In a worst-case scenario of a Greek exit from the eurozone, the risks of contagion to other countries in the single currency area are less elevated than in 2010-11, but it could “easily” weaken the upturn, said Standard & Poor’s Ratings Services Wednesday.

“Yet, such a shock could lead to increased ...

July 6, 2015, 7:03 am, 1504067
Federal Reserve governor Lael Brainard. REUTERS

Federal Reserve governor Lael Brainard on Wednesday pushed back against industry complaints that post-crisis reforms to financial regulation are reducing market ...

July 6, 2015, 7:03 am, 1504063
The June jobs report, due out Thursday at 8:30 a.m. EDT, could confirm that the U.S. economy is strengthening, despite rising global turmoil.

July 6, 2015, 7:03 am, 1504060

The Wall Street Journal’s Daily Report on Global Central Banks for Thursday, July 2, 2015:

Sign up for the newsletter:


Hilsenrath’s Take: Jobs Report Seen Confirming Fed’s Growth Narrative Brainard: Little Evidence of Strains in ...

July 6, 2015, 7:03 am, 1504059
Jobs, wages, labor-force participation and more.

July 6, 2015, 7:03 am, 1504061
Greek Prime Minister Alexis Tsipras speaks to supports in Athens after elections in January.  MILOS BICANSKI/GETTY IMAGE

Alexis Tsipras may be about to fulfill the very vision ...

July 6, 2015, 7:03 am, 1504062

Greece isn’t the only country warning that it can’t pay its creditors. The government of the U.S. commonwealth of Puerto Rico said Monday that it ...

July 6, 2015, 7:03 am, 1504056

The U.S. economy added 223,000 jobs in June, which together with a drop in the number of Americans in the labor force reduced the official unemployment rate to 5.3%. The solid hiring gains follow a mild deceleration in growth earlier this year, underscored by downward revisions to hiring numbers ...

July 6, 2015, 7:03 am, 1504058

The U.S. economy created 223,000 jobs in June. WSJ’s Justin Lahart breaks down the employment report and explains the mixed messages behind the headlines.

U.S. employers added 223,000 jobs in June and the unemployment rate fell to 5.3%. U.S. employment has now increased for 57 consecutive ...

July 6, 2015, 7:03 am, 1504054
If the past week brought a flood of data—including a mixed report on June labor markets—this one's as dry as a California reservoir. As Greece remains the focus for investors, here's what to look for on the U.S. economy.

July 6, 2015, 7:03 am, 1504057
The Federal Reserve can be seen from in between trees on the National Mall. CHIP SOMODEVILLA/GETTY IMAGES

The Labor Department‘s June employment report, released Thursday, broadly ...

July 6, 2015, 7:03 am, 1504055
The headquarters of the European Central Bank in Frankfurt. ZUMA PRESS

The European Central Bank on Thursday increased the number of government-backed agencies whose securities it buys ...

July 6, 2015, 7:03 am, 1504050

After Greece’s rejection of its creditors’ bailout terms, the Obama administration returns to a familiar position: prodding the Greeks and their European neighbors to reach a deal but struggling to sway the deeply entrenched sides.

For months, U.S. officials have pushed Greece and its creditors toward what they called a “pragmatic compromise.” If ...

July 6, 2015, 7:03 am, 1504051
Key numbers from a report on Greek debt as the country faces a critical referendum.

July 6, 2015, 7:03 am, 1504052
Vitor Constancio in Riga earlier this year. He said in Vilnius on Friday that it was difficult to speculate on Greece “no” vote scenarios. Associated Press


July 6, 2015, 7:03 am, 1504053
Vitas Vasiliauskas, governor of Lithuania’s central bank, in Vilnius last year. Bloomberg News

VILNIUS, Lithuania—Central banks must remain focused while interest rates are low and be prepared ...

July 6, 2015, 6:44 am, 1504049

July 6, 2015, 6:44 am, 1504048

July 6, 2015, 6:44 am, 1504047

Nobel Laureate Alvin Roth of Stanford University talks with EconTalk host Russ Roberts about his work on matching markets. Examples include marriage, matching kidney donors to kidney recipients, and students to schools in cities that allow choice in their public school systems. Roth also discusses ...

July 6, 2015, 6:34 am, 1504046
● Greece votes no. Now what? ● For starters, the finance minister resigned… ● French Finance Minister says Greece must now make the first move… ● In any case, Greece will have tough time remaining in the euro… ● Meanwhile, eurozone investor confidence rises… ● And European economic sentiment remains ...

July 6, 2015, 5:33 am, 1504043

Kind of reflects my feeling: a plague on both their houses.

Even better: Greeks vs. Germans was anticipated years ago by Monty Python.

July 6, 2015, 5:33 am, 1504042
The overheated Shanghai and Shenzhen markets have lost 29 and 32 per cent respectively over the past three weeks following 7-year highs reached on June 12.

Instead of welcoming a much needed correction, Chinese brokerages and the Bank of China agreed to prop up the market.

Stimulus ...

July 6, 2015, 5:03 am, 1504011

One of the nicer things ever said about the kinds of analysis we do here at Political Calculations recently surfaced over at the ChicagoBoyz blog, as Grurray took on the challenge of explaining the unique brand of stock market forecasting we do.

July 6, 2015, 5:03 am, 1504010

July 6, 2015, 4:05 am, 1504009

From his Facebook page:

So Greece said no to a plan that was no longer on the table. Paul Krugman and Jeffrey Sachs celebrate the decision. They hope to get a debt write-down for Greece. I honestly do not understand their position. To me, the Greek debt is pretty ...

July 6, 2015, 2:44 am, 1503964
The Labor Department released its June jobs report—an important one, coming six years after the end of the recession—and the reviews were decidedly mixed. Here's a look at some of the highlights.

July 6, 2015, 2:44 am, 1503963

July 6, 2015, 2:05 am, 1503962

One striking feature of the Thursday labor market report was the mix of declining unemployment — now down to 5.3 percent — and continuing sluggish wages, not to mention low rates of price inflation; read Neil Irwin.  Normally we would expect all the demands for those new hires ...

July 6, 2015, 2:04 am, 1503961
(July 6, 2015 12:16 AM, by David Henderson) I was reminiscing today with a friend about jobs we had when we were in high school and college. We had both worked in a kitchen for a big restaurant--he in Philadelphia and I at a resort in Minaki, Ontario... (0 ...

July 6, 2015, 1:03 am, 1503940

While eyes are on developments in Greece (and rightly so), I thought it would be useful to spend a moment on the uncertainty regarding the Chinese economy’s course (not that I’m the first to point out).

The wild gyrations in the Chinese stock market are displayed in Figure 1; ...

July 6, 2015, 12:44 am, 1503939

The financial crisis brought with it many challenges, both to prevailing disciplinary tenets, and for research and policy more generally. This column outlines the lessons that can be drawn from the financial crisis – issues like financial market failures, macro-prudential policy, structural changes of the financial system, and the European ...

July 6, 2015, 12:34 am, 1503938

The ...

July 6, 2015, 12:04 am, 1503936
(July 5, 2015 10:18 PM, by Scott Sumner) The Greeks have voted no in today's referendum, which makes it more likely (though not certain) that Greece will leave the euro. Some economists believe that this action would help the Greek economy. Devaluation would be an expansionary monetary shock,... (1 ...

July 5, 2015, 11:33 pm, 1503934
Back in January, I warned Greek citizens to take money out of Greek banks. I also warned not put it in safe deposit boxes. Both comments were dead-on accurate.

Greece Safety Box Controls

Please consider Greeks Cannot Tap Cash in Safe Deposit Boxes Under Capital ...

July 5, 2015, 11:33 pm, 1503933

Arthur Kling explains here why the term “sustainable capitalism” is redundant and why “environmental sustainability” is really “primitivism“:

Capitalism is inherently sustainable, relentlessly producing more human satisfaction using fewer resources. What environmentalists call “sustainability” ought to be called primitivism, producing less human satisfaction using more resources.

Katherine Kersten explains here ...

July 5, 2015, 9:03 pm, 1503915
From Bloomberg: Tsipras Triumphs as Greece Votes Against Austerity

Sixty-one percent of voters backed Prime Minister Alexis Tsipras’s rejection of further spending cuts and tax increases in an unprecedented referendum that’s also taken the country to the brink of financial collapse.

Years ago we discussed how endless austerity and depression ...

July 5, 2015, 8:44 pm, 1503912

Most NFL writers trashed Vince Young’s after his shoulder-pad throwing, walking out on Jeff Fisher blowup on Sunday.  The grilling ranged from moderate such as’s Peter King

And though Young’s played better this year (10 touchdown, three interceptions), I get the sense the coaching staff has tired ...

July 5, 2015, 8:44 pm, 1503913

The Cleveland Indians are getting ready to open a skating track and 10-lane snow tubing hill at Progressive Field during the offseason.

…Senior director of merchandising and licensing Kurt Schloss declined to specify financial goals. He says the aim is attracting fans downtown during ...

July 5, 2015, 8:44 pm, 1503914

July 5, 2015, 8:44 pm, 1503911

Here’s Arsene Wenger, via Duncan White  in the Telgraph:

“What the statistics have done, is that they have kicked out of the game all the players who cannot run. Suddenly the English level is much higher. You play against a team and you know it.”Where Wenger has really noticed the ...

July 5, 2015, 8:44 pm, 1503910

A novel means of financing has been proposed by an investment banker and Buffalo Bills fan, Steven Brady. The idea is to finance an anticipated purchase of the team from 92 year old owner Ralph Wilson with “Bills Bonds”, which would pay below market interest as long as the team ...

July 5, 2015, 8:44 pm, 1503905

The Badger Herald has named the names of the worst people on the University of Wisconsin.  Seems that these people had the audacity to engage in arbitrage of Wisconsin Badger bowl tickets.

The above students had the nerve to put their Rose Bowl tickets up for ...

July 5, 2015, 8:44 pm, 1503906

Most of the commentary following FIFA’s award of the 2018 and 2022 World Cups to Russia and Qatar has focused on the voting process, the objectives of FIFA, and potential corruption.  But for me, FIFA’s decisions are remarkable for their consistency.  They are allocating the right to host the tournament ...

July 5, 2015, 8:44 pm, 1503907

Today FIFA announced that the 2018 World Cup will be held in Russia, while the 2022 version will be held in Qatar, a country roughly the size of Connecticutt that has never qualified for the tournament and has essentially no existing sports infrastructure.

Qatar beat out the U.S. for the right ...

July 5, 2015, 8:44 pm, 1503908

Among the title or presenting sponsors: The Dish Network Orange and White Game at Tennessee, the Golden Flake A-Day Game at Alabama (Children’s Hospital, the U.S. Navy and Cook’s Pest Control also are sponsors), the Auburn A-Day Game Presented by the U.S. Navy, the Super Bulldog Weekend presented by Regions ...

July 5, 2015, 8:44 pm, 1503909

I’m shocked, shocked I say that this would happen in a case with a publicly-subsidized sports stadium.

Eight years ago, as the St. Louis Cardinals aimed to build a new baseball stadium, team owners signed an agreement with the city worth millions of dollars a year in tax ...

July 5, 2015, 8:44 pm, 1503904

Two years ago, I dissed the hiring of Gene Chizik by Auburn.  I didn’t predict failure but highlighted how poorly his track record fit the hiring of a relatively premier job.

On the downside, and the very, very unusual aspect of this hire is Chizik’s performance as a head coach. ...

July 5, 2015, 8:05 pm, 1503903

And I do mean now.  With the primary surplus gone, this means further cuts in government spending.  Confiscation of bank deposits and banks flat out of cash.  Continuation of capital controls.  Difficulties in consummating international or even domestic transactions.  Problems in paying for fuel, seeds, fertilizer, and medicines.

Austerity now.

Here are ...

July 5, 2015, 7:33 pm, 1503900
Four polls said the Greek referendum was supposed to be "Knife Edge" close.

Instead, Greece Heads for Decisive No Vote.

With 85 per cent of votes counted, the No camp had won 61.5 per cent and was leading in every region of the country, a ...

July 5, 2015, 6:34 pm, 1503891

Greek voters went to the polls today and overwhelmingly rejected the bailout deal that had been proposed by European officials, likely setting their nation up for further economic turmoil:

ATHENS — Greeks delivered a shocking ...

July 5, 2015, 4:44 pm, 1503884

July 5, 2015, 4:34 pm, 1503883

Black Tuesday, October 29, 1929, was “one of those days after which almost everything is different.” That’s how John Kenneth Galbraith described the Great Crash thirty years after the fact – a day of pandemonium on the New York Stock Exchange after a week of declines, the unmistakable end of ...

July 5, 2015, 4:04 pm, 1503882
Paul Krugman uses elementary Keynesian Macroeconomics to argue that the austerity demanded by the Troika would reduce the Greek debt to GDP ratio, if at all, only by causing deflation and increased Greek net exports. This means that it would take a very long time (or forever) to reduce the ...

July 5, 2015, 3:33 pm, 1503880

Gloriously full of win.

July 5, 2015, 3:33 pm, 1503879
Greek Voting Closed

Voting in the Greek referendum is now closed.

Four independent polls, not exit polls, show the 'No' vote against Troika servitude in a slight lead. The polls are within the margin of error.

That all polls show the same direction increases the likelihood ...

July 5, 2015, 3:03 pm, 1503878

Via Vox EU:

De-industrialisation, ‘new Speenhamland’ and neo-liberalism, by Jim Tomlinson: In the run-up to the recent general election, 65 Social Policy professors wrote to the Guardian in the following terms:

"Now the majority of children and working-age adults in poverty live in working, not workless, households. In other words ...

July 5, 2015, 3:03 pm, 1503877
The Financial Times reports: Early results suggest Greece heads for No With about a third of the vote counted, "No" had 61% of the vote and was leading in every region of Greece.

And from the WSJ: First Official Projection Says at Least 61% of Greeks Voted ...

July 5, 2015, 2:05 pm, 1503874

Wintergerst says introducing a new currency typically takes at least six months, and sometimes as long as two years. Artists must draw the notes, security experts then add anti-counterfeiting measures such as watermarks and special inks, and bank officials need to plan how much of each denomination is needed and ...

July 5, 2015, 2:04 pm, 1503873
Greece Interior Ministry Results all regions voting ‘OXI’ = ‘No’ Huffington Post: Live Updates: Greece Votes In Referendum On Bailout Proposal More links as afternoon progresses.

July 5, 2015, 1:33 pm, 1503872

|Peter Boettke|

The Greece Referendum is finishing up as I write this. Millions are voting today on whether or not to accept the terms of the international bailout of their fiscal woes. For the point I want to make, it doesn't matter if they vote YES or ...

July 5, 2015, 1:33 pm, 1503871
The NY Times reports that in Richmond, California (close to Berkeley) that young African-American and Hispanic men are being identified and paid not to commit crimes. This "profiling" (it is argued) reduces crime and it is cheaper than hiring extra police.

A direct quote:

"Once we’d ...

July 5, 2015, 1:03 pm, 1503866
Note: The polls in Greece close at noon ET, and early results might be available around 2:30 PM ET.

The WSJ has a running discussion: Greek Referendum — Live

Paul Krugman wrote this morning: Meanwhile In China

I am, of course, anxiously awaiting the results ...

July 5, 2015, 12:44 pm, 1503865

Today's Greek referendum might look like a high point for democratic accountability, but it is not. When Greek citizens vote on the demands of their government’s international creditors, the outcome will bind Greek politicians, but not the creditors that have prescribed economic policy for Greece since ...

July 5, 2015, 12:34 pm, 1503864

July 5, 2015, 12:34 pm, 1503863

July 5, 2015, 11:03 am, 1503844

July 5, 2015, 10:04 am, 1503841
(Don Boudreaux)

Is America suffering an epidemic of right-wing terrorism?  Megan McArdle explains why the answer is no.  (HT David Henderson)

Writing ...

July 5, 2015, 8:04 am, 1503806
From The Sunday Times, July 5 2015 At the start of this year, things were looking up for the beleaguered Greek economy. Economists polled by Consensus Economics predicted growth of 2% this year, following last year’s modest 0.8% expansion. Unemployment,...

July 5, 2015, 8:04 am, 1503805
(Don Boudreaux)

… is from page 241 of Michael Huemer’s superb 2013 book, The Problem of Political Authority:

If we decide that it ...

July 5, 2015, 7:33 am, 1503803

July 5, 2015, 6:04 am, 1503776
My regular column is available to subscribers on This is an excerpt. Given the sheer unpredictability of events in Greece we cannot be sure that George Osborne’s first post-election budget, his seventh in all, will be the biggest...

July 5, 2015, 5:33 am, 1503775

July 5, 2015, 5:03 am, 1503746

July 5, 2015, 2:05 am, 1503684

Keep in mind that things can go badly under either a yes or no vote today.  (I am not even sure the referendum result will make such a difference, since it is all in the subsequent deal, or lack thereof, and the terms would be different anyway.)  Yet I do ...

July 5, 2015, 1:33 am, 1503454
Okay, so those aren't big surprises to anyone who has visited this blog in past seven years. But I expect they will surprise many readers at, the online magazine of the American Enterprise Institute. Here's a link to my...

July 5, 2015, 1:33 am, 1503453
How is Uncle Sam's credit these days? According to the free market, U.S. Treasury securities are one of the safest investments on the entire planet—in other words, it's about as good as it gets. Uncle Sam is able to sell...

July 5, 2015, 1:33 am, 1503452
Everybody is for "fiscal responsibility" -- but that term has at least four different meanings, not one of which is simple to defend. To see the four possibilities, check out my latest article at "What Does 'Fiscal Responsibility' Mean?"

July 5, 2015, 1:33 am, 1503451
Our past experience with changes in the capital gains tax should be a warning about the potential unintended effects of a Buffett rule. Here's the article at explaining why.

July 5, 2015, 1:33 am, 1503447

As I mentioned in Wednesday's posting, the Center for American Progress held an event on Monday on Spurring Innovation to Lift the Economy (also see the video of the roundtable panel discussion). Like the patent reform discussion described on Weds, ...

July 5, 2015, 1:33 am, 1503449

The House Democrats have released the outline of their American Reinvestment proposal. There is a lot in there, including a number of items to stimulate innovation, such as increased funds for the Technology Innovation Program and the Manufacturing Extension Program, money for R&D facilities and equipment, education, training, ...

July 5, 2015, 1:33 am, 1503450

A few quick tidbits from the patent wars:

First, on Monday, the Center for America Progress had an event which included a panel on patent reform (see second panel of the event video Enabling Economic Recovery Through Innovation -- more on the first panel on ...

July 5, 2015, 1:33 am, 1503446

According to an AP story on, Circuit City has "reached an agreement with liquidators on Friday to sell the merchandise in its 567 U.S. stores after failing to line up a buyer or a refinancing deal." As I noted before, ...

July 5, 2015, 1:33 am, 1503448

The latest issue of BEA's Survey of Current Business contains an article Toward Better Measurement of Innovation and Intangibles:

While all countries account for investment in tangible assets in their gross domestic product (GDP) ...

July 5, 2015, 1:33 am, 1503442

In an earlier posting I noted the need for the stimulus package to be transformative rather than simply boost consumption in an attempt to re-inflate the bubble.

Now, Jonathan Ortmans, President of The Public Forum Institute writing in at the Kaufman Foundation's blog on entrepreneurship makes the ...

July 5, 2015, 1:33 am, 1503445

After a week of Inauguration activities, houseguests and software upgrades - the Intangible Economy is back to blogging.

It has been an exciting week in Washington - with more surely to come on the policy and political front. An indication of how exciting is already evident in the debate over ...

July 5, 2015, 1:33 am, 1503443

A slight piece of good news this morning. The Conference Boards' Leading Indicator Index -- designed to forecast future economic activity -- rose in December for the first time in a number of months. This is somewhat of a surprise. The not-surprising news is that the ...

July 5, 2015, 1:33 am, 1503441

As the stimulus package works its way through the Congressional process, more attention is being paid to the technology part of it -- both pro and con. Critics question whether increased broadband and construction of research facilities is truly stimulative. Proponents argue for the importance of the transformational ...

July 5, 2015, 1:33 am, 1503444

Joff Wild at the IAM Magazine blog passes along this important tidbit:

Comments have been invited on two draft documents with a view to making the valuation of intangibles more transparent and consistent. Issued by the International Valuation Standards Council, Revised Guidance Note no 4, entitled Valuation ...

July 5, 2015, 1:33 am, 1503436

In an earlier posting, I noted that the index of leading indicators went up in December. Well, here is the story why this is not necessarily good news. From the Wall Street Journal Real Economics blog:

On Monday, the Conference Board released its index of leading ...

July 5, 2015, 1:33 am, 1503435

After 26/11, Jack Welch pointed out that the attacks posed a question for India in terms of its ability to manage itself. China, although under authoritarian rule, had managed to pull off the Beijing Olympics, and assured safety for investors. India faced that question, post 26/11.

Now, with ...

July 5, 2015, 1:33 am, 1503437

Bruce Nussbaum makes a great point on his blog about what is happening or not happening in the economic policy debate, as exemplified by the discussions in Davos:

A "transformational crisis" is the term used in the opening session of the World Economic Forum by founder Klaus Schwab to ...

July 5, 2015, 1:33 am, 1503439

Dan Castro and Rob Atkinson over at ITIF have published a new report "Stim-Novation": Investing in Research to Spur Innovation and Boost Jobs:

Scientific research underpins the great technological advances of the past century, from mapping the human genome to the development of the Internet. Increased investment in ...

July 5, 2015, 1:33 am, 1503440

One other follow on to the earlier posting on the Center for American Progress's report on innovation: their look at British Innovation Policy. This paper, by Will Straw at CAP, outlines the highlights, the problems and the evolution of the UK's innovation policy. ...

July 5, 2015, 1:33 am, 1503434

India’s Underground & Hinterland seem to be the topics du jour :-)

In the Wall Street Journal, Peter Wonacott says India Defies Slump, Powered by Growth in Poor Rural States.

Rama Lakshmi of the Washington Post said as much last month: Vast Rural India Sparkles As an Expanding Market

About ...

July 5, 2015, 1:33 am, 1503438

In his Washington Post business column today, Not What the Doctor Ordered, Steven Pearlstein raises concerns over the Pfizer-Wyeth. In the piece, he makes an important point about the drug industry:

Because the bulk of profits in the industry come from temporary monopolies -- government-granted patents -- the ...

July 5, 2015, 1:33 am, 1503426

(I wrote this after my visit to Shanghai and Beijing in May ’10, as part of my MBA program at Duke. I originally circulated it around with friends and other readers with the title “China is at least 2 generations behind the rest”, but that was just needlessly provocative, and ...

July 5, 2015, 1:33 am, 1503433

Social entrepreneurship inching forward in India, albeit slowly and fitfully : India’s Spirit Of Business Booming

Hygiene doesn’t make it too often to the media. However, as anyone who’s spent more than 24 hrs in India knows, the lack of adequate toilets is a huge, huge issue.

Two ...

July 5, 2015, 1:33 am, 1503427

A write-up of mine recently appeared in India Abroad and TCS Daily on Montek Singh Ahluwalia’s talk at the Peterson Institute of International Economics, during the PM’s visit in November.

Here’s the link.

July 5, 2015, 1:33 am, 1503429

“For what it’s worth, a key conclusion from the IMF’s new World Economic Outlook is that recessions caused by financial crisis typically end with export booms, with the trade balance improving,on average, by more than 3 percent of GDP. I find this a disturbing result: we’re now suffering from a ...

July 5, 2015, 1:33 am, 1503428

Nouriel Roubini, of the infamous (and silly) Dr Doom moniker, says India might just do OK.

Despite slowing from highs of 8% to 9% growth, India’s economy will grow close to 6% in 2009. Amid domestic and global liquidity crunch, large domestic savings and corporate retained ...

July 5, 2015, 1:33 am, 1503430

The El Dorado for auto-didacts

Salman Khan, a portfolio manager in California has created hundreds of free educational videos, available on his web site, the Khan Academy and on YouTube. These videos cover the basics of banking, finance and the current credit crisis — I saw a couple ...

July 5, 2015, 1:33 am, 1503432

The Internet may have worked wonders for Obama in the US, but is unlikely to be even half as effective in India

In a nation where a quarter of eligible voters are now between the ages of eighteen and twenty-five, the 2009 elections will see a potential 100 million young Indians ...

July 5, 2015, 1:33 am, 1503431

Kudos to Amit Varma and Reuben Abraham

Amit Varma, India’s foremost blogger and award-winning columnist, has been busy recently.

His first novel, My Friend Sancho releases this week in fine bookstores all across India. Click here for launch details — so far, it’s Mumbai, Delhi, Kolkata, ...

July 5, 2015, 1:33 am, 1503422

I was reeling with annoyance after reading this presidential statement about the dual mandate of the Federal Reserve:

"The challenge is not inflation, the challenge is we've still got too many people out of work." (Read more here.)

July 5, 2015, 1:33 am, 1503423

Anyone who has ...

July 5, 2015, 1:33 am, 1503425
Just when you thought your money was safely insured by the FDIC, here is an article that might cause the hairs to stand up on the back of your neck.

[Image thanks to]

This ...

July 5, 2015, 1:33 am, 1503424
I am convinced that our Federal Reserve Bank's current monetary policy is hurting our economy in a number of ways. One of these is its effect on the business sector.

I have no proof, being the gadfly that I am; but I have an argument. I have laid out ...

July 5, 2015, 1:33 am, 1503421
There are a couple of e-mail circulars that I read regularly, or almost regularly. The top of my list is John Mauldin, author of The End Game (excellent book, a must-read).

Number Two is Casey Research.

Today's scripture from Casey will permit me to be lazy ...

July 5, 2015, 1:33 am, 1503420
I'm living in France at the moment, so what happens here is particularly interesting to me. The ambiance is a mix of anxiety about the future and cautious hope that things can't be as bad as they seem.

July 5, 2015, 1:33 am, 1503418
My weekly reading always includes John Mauldin's "Outside the Box." (You can also subscribe for free here, at the top/right of the page.) This week inhis latest post,he gives us some recent thoughts fromGeorge Gilderon economics.

July 5, 2015, 1:33 am, 1503417

Alan Greenspan is embarrassing himself again (or if not, he should be):

"[Easy money] had absolutely nothing to do with the housing bubble," he says. "That's ridiculous."

[One of my cartoons from April of ...

July 5, 2015, 1:33 am, 1503419
Economics is very closely related to public policy. Freedom, as protected by our Constitution, is an essential ingredient of our high standard of living in America, and it is a sine qua non of all scientific research.

July 5, 2015, 1:33 am, 1503412
Danny Vinik, publishing in Business Insider, discusses the pros and cons of extending unemployment benefits, but in spite of a good presentation of the issue, he draws the wrong conclusion.

July 5, 2015, 1:33 am, 1503411
Publicly funded benefits such as welfare, food stamps, and other kinds of nationalized kindness are sometimes self-defeating. Would parents accept in their house and finance indefinitely the needs of an able-bodied grown person, plus his or her partner and their child, without expectation of a helping hand? Probably not. So ...

July 5, 2015, 1:33 am, 1503409
I always read John Mauldin's weekly newsletter, and in one was a quoted passage that made me gasp in disbelief:

"In the economic sphere an act, a habit, an institution, a law produces not only one effect, but a series of effects. ...

July 5, 2015, 1:33 am, 1503410
The Keynesians are saying that price inflation is not a problem and probably won't arrive. The Austrians and others are saying that price inflation must come at some point, given all the monetary stimulus introduced by the Fed. But could they both be wrong?

I hypothesize that price inflation ...

July 5, 2015, 1:33 am, 1503415
Recently, a good friend asked me to describe the recent research on the subject of "sound money." He is referring to money that is not fiat, money that is anchored in something with real value as contrasted to market-determined value.

Historically, the last time the world had any sound ...

July 5, 2015, 1:33 am, 1503416
I am happy to announce that my biographical sketch of economist, investment advisor, and philosopher Edward C. Harwood is now available. For the print/hard copy, please click on the following link:

If you prefer the Kindle/digital edition, ...

July 5, 2015, 1:33 am, 1503414
Sometimes one finds basic logic in the strangest places. Kristen Bell, a young TV and movie actress writing in last May's Timemagazine to describe the genius of Perry Chen (the inventor of Kickstarter, the "catalyst for the crowd funding economy"), says this:

"There's something so smart and magical about ...

July 5, 2015, 1:33 am, 1503413
I have vented my unscientific opinion about the existence of asset bubbles in our economy. If you are interested in this subject, please be so kind as to click on the following link:

Asset Bubbles, How Do I Love Thee?

July 5, 2015, 1:33 am, 1503405
Price inflation seems to be right around the corner, if it isn't already here, which means that the Federal Reserve may soon have to put their QE genie back in its bottle. At least that's my hope, for the sake of our children's future.

July 5, 2015, 1:33 am, 1503402
I have just finished one of the best books I've read in a very long time. It is this:

Investing Freedom: How the ...

July 5, 2015, 1:33 am, 1503408
This weekend's Wall Street Journal published an article by Taos Turner on price inflation in Argentina. What I take away is that the country is in a state of internal warfare.

The Pertinent Fact:

According to the article, Argentina's public is now confronted with 30 percent annual ...

July 5, 2015, 1:33 am, 1503403
David Theroux of the Independent Institute asks me to post to his keynote talk at a conference in San Antonio, TX, on August 2, 2014. I'm happy to oblige. The title is:

"C.S. Lewis on Mere Liberty and the Evils of Statism"


Click Here

July 5, 2015, 1:33 am, 1503401
If you'd like to read a Gadfly's opinion about holding gold-related investments, please readthis article at Seeking Alpha. Thanks.

[Image from ...

July 5, 2015, 1:33 am, 1503404

[Thanks to for the image.]

History has shown unequivocally that you don't want to monkey with money and credit.

This is thecogent warningrecently issued by ...

July 5, 2015, 1:33 am, 1503407
The penny has officially become worthless. I finally had to admit this the other day when I found a pile of them in a parking lot, just as if they had been smelly old cigarette butts dumped out of a car ashtray by someone in a hurry.

A few ...

July 5, 2015, 1:33 am, 1503406
I'm sitting behind my computer with an amazing view out my window. Europe (for me, France in particular) is beautiful this time of year.

July 5, 2015, 1:33 am, 1503392

A Paper for Discussion

In recent decades, export competitiveness in a changed and increasingly changing world has been at the heart of growth and development debates in almost all countries. Drawing upon the lessons of experience of the most successful exporters in the developing world

July 5, 2015, 1:33 am, 1503391

The post-Washington Consensus has emerged recently as an umbrella denoting the search for pragmatic and context-specific solutions to problems of developing countries. The recent financial crisis, with its epicenter in the rich economies, has demonstrated that the whole world, not just poor countries, is ...

July 5, 2015, 1:33 am, 1503389

Notre Dame Cathedral in Paris, France

We economists tend to see well-being, and poverty in particular, as a matter of finances and income. But ...

July 5, 2015, 1:33 am, 1503394

By Dr. Jayanta Roy

India’s economic performance in the last decade has been stellar. The average GDP growth has been about 9% in the last five years, with the same trend foreseen despite the major global economic upheaval. Inflation is stable, with a slight hiccup ...

July 5, 2015, 1:33 am, 1503388

This newpaper provides a basic understanding of: (i) the concepts of Export Development and Export Diversification, (ii) what the theory says about Export Development and Diversification? and (iii) what empirical evidence shows on the links (correlates) between export diversification, exports growth, and ...

July 5, 2015, 1:33 am, 1503390

Productivity is the efficiency in converting inputs to outputs. It is also called TFP (total factor productivity) and measured as a residual – the difference between outputs and a set of inputs (e.g. labor, capital, and intermediate goods, including energy, land and buildings). Measurement ...

July 5, 2015, 1:33 am, 1503398

Keynes is best known for suggesting fiscal stimulus policies and programs to increase aggregate demand to get out of a deep recession. Since the marginal propensity to consume is positive and less than one; the bigger it is, the larger the fiscal multipliers will ...

July 5, 2015, 1:33 am, 1503399

The global financial and economic crisis of 2008 has brought an urgency to focus on shorter-term policy issues related to managing bubbles, analyzing current development paradigms, and drawing out policy lessons for future action, particularly lessons learned during the past two years. At the ...

July 5, 2015, 1:33 am, 1503400

by Rebekka E. Grun

Why save the banks, and not their clients?

The current financial crisisis not the first for economists or central bankers. What was relatively new though is that many proven tools do not seem to work. Monetary impulses, liquidity – for a long ...

July 5, 2015, 1:33 am, 1503387

Trade theory has always been lagging behind reality. From Ricardo ‘s (1817) explanation of trade based on relative productivity/technology differences among nations, it took over a century for Eli Heckscher and Bertil Ohlin (1933) to formalize a model that would explain inter- industry trade ...

July 5, 2015, 1:33 am, 1503397

by Ejaz Ghani

China and India are both racing ahead economically. But the manner in which they are growing is dramatically different. Whereas China is a formidable exporter of manufactured goods, India has acquired a global reputation for exporting modern services. Indeed, India has ...

July 5, 2015, 1:33 am, 1503396

Do you remember The Bottom Billion, Paul Collier’s 2007 book which became a classic? If you do, you will certainly like his latest work, The Plundered Planet. He came to launch his new book to the Bank this week, and ...

July 5, 2015, 1:33 am, 1503395

In 21 industrial economies during 1970-2008, there have been about 47 housing price busts and about 90 stock price collapses. Sometimes they both overlapped, other times not. There is now concern that stock markets in Emerging Markets have expanded rather rapidly since their lows ...

July 5, 2015, 1:33 am, 1503393

What do we learn from the troubles of Goldman Sachs, British Petroleum, Enron, Satyam, and other modern day corporations? These are the most sophisticated corporations ever formed yet victims of their own governance failures.

Public sector governance problems are known from time immemorial. The first ...

July 5, 2015, 1:33 am, 1503377
Shahid ...

July 5, 2015, 1:33 am, 1503378

Join Aleem Walji, formerly of, nowthe Practice Manager of WBI’s Innovation Team andone of the lead authors for a webinar to mark the launch of a special issue of Development Outreach magazine on “The Power of Innovation.”

In a post-crisis ...

July 5, 2015, 1:33 am, 1503375

July 5, 2015, 1:33 am, 1503374

The labor market has the unenviable task of not only absorbing the additional workers entering the labor force each year (as a result of population growth) but also dealing with the unemployed workers as economies. The Keynesian view of unemployment is ...

July 5, 2015, 1:33 am, 1503386

The current recovery in advanced economies is now exhibiting several signs of fragility. Their medium term growth prospects also look difficult. In this environment two questions arise: Will developing economies experience a renewed downward “recoupling” as a result of a low-growth scenario in advanced ...

July 5, 2015, 1:33 am, 1503373

July 5, 2015, 1:33 am, 1503379

What? E-learning course on
Policies for Growth
When? October 1-31, 2010
How to Apply? Please follow this link

Tentative Agenda

The story of growth and poverty reduction is much debated in ...

July 5, 2015, 1:33 am, 1503376

Greedy speculators in housing and private bankers, financial innovation and failure of risk models, regulators and credit rating agencies were all deservedly blamed for the recent financial crisis. Behind this all is public policy that worsened the ...

July 5, 2015, 1:33 am, 1503384

Ngozi Okonjo-Iweala (left)and Il Sakong (right)

At the same time that red jersey fever was building across ...

July 5, 2015, 1:33 am, 1503380

All over the world, countries have put in place fiscal stimulus packages as a response to the global crisis. In the US and UK, despite the large fiscal stimuli, the economies are stalling and unemployment rates are still high. Now, Paul Krugman is advocating ...

July 5, 2015, 1:33 am, 1503383

The World Bank estimates that there are more than 1.4 billion people in the world who live below the poverty line of $1.25 per day. It will be interesting to see what happens to children born in poverty: to follow them from womb to ...

July 5, 2015, 1:33 am, 1503382

After all is said and done, this crisis had its genesis in US and European countries living beyond their means. This was reflected in large current account deficit which was financed by emerging economies of China, Russia, Brazil, Korea and others. This was in ...

July 5, 2015, 1:33 am, 1503381

Seventy percent of all trade is trade in goods. World trade volume declined by over 20% from peak levels trough April 2008 to January 2009, and this decline was observed across the board – advanced economies recorded a decline of over 23%, Asia ...

July 5, 2015, 1:33 am, 1503385

July 5, 2015, 1:33 am, 1503372

The traditional micro-prudential regulations of bank-by-bank audit and supervision proved inadequate during the recent global financial crisis. There is now a new thinking on (i) how to reform the global financial system and how to reduce the vulnerability of the ...

July 5, 2015, 1:33 am, 1503371

July 5, 2015, 1:33 am, 1503367
In a recent piece on hisblog, David Beckworth has taken another swingat the secular stagnation hypothesis. Secular stagnation is a term coined by Alvin Hansen in a 1938 article in which he claimed that public expenditure might ...

July 5, 2015, 1:33 am, 1503366
I have just written a new working paper, 'Global Sunspots andAsset Prices in a Monetary Model', that isavailable on the NBER website here. The paper is a continuation of research on financialmarkets that I began in 2002, (2002a,

July 5, 2015, 1:33 am, 1503368
If you thought that the Greek debt crisis was over; think again. Tomorrow, the Greek parliament will try, for the third time, to agree on who will be the next president. If parliamentarians cannot agree (and that now seems likely) we are headed ...

July 5, 2015, 1:33 am, 1503369
I have lost count of the number of times I have heard students and faculty repeat the idea in seminars, that “all models are wrong”. This aphorism, attributed to George Box, is the battle cry of the Minnesota calibrator, a breed of macroeconomist, inspired by

July 5, 2015, 1:33 am, 1503370
I've followed, with a great deal of interest, the debate between John Cochrane and Paul Krugman. I have a lot in common with both of them.

I agree with Paul that, for the most part, the IS-LM model ...

July 5, 2015, 1:33 am, 1503365
Mrs. Merkel and Mr. Schäuble are worried. The ECB is planning to buy the sovereign debt of its member states and Mr. Schäuble doesn't trust his southern European partners. He thinks that Portuguese, Spanish and Italian debt is risky and he knows that Greek debt is.

July 5, 2015, 1:33 am, 1503359
My pal David Andolfatto doesn't like it when I say that some unemployment is involuntary. Here is my response:

DavidI am happy with the way you characterize my beliefs in the first paragraph of your blog. ...

July 5, 2015, 1:33 am, 1503364
A long time ago, in a galaxy far far away, there were two planets orbiting a star, not unlike our own sun. The inhabitants of these planets share a common ancestry but, over theyears, they have developed somewhat different temperaments.

July 5, 2015, 1:33 am, 1503360
Updated data at the request of Andrew Sentence on participation and unemployment in the U.S.

Business cycles are about unemployment; not about changes in the participation rate.

July 5, 2015, 1:33 am, 1503361

July 5, 2015, 1:33 am, 1503362

July 5, 2015, 1:33 am, 1503363
In a recent post on the (non)-importance of debt buildup worldwide, Antonio Fatas makes the point that debt is not necessarily a problem. While I agree with that statement: a great deal hinges on the qualification “not necessarily”.

July 5, 2015, 1:33 am, 1503355

The price of bitcoin is a capricious thing. Imagine that you've saved enough bitcoin to take your significant other out to a fancy restaurant. When the bill comes you discover ...

July 5, 2015, 1:33 am, 1503354

Canada trails the U.S. is a common refrain, but not when it comes to ...

July 5, 2015, 1:33 am, 1503356

The upcoming Greek election has renewed interest in the idea of Grexit. This option is often presented to the Greek public as desirable given that it would restore an ...

July 5, 2015, 1:33 am, 1503358

Two things worth noting:
As many of you know by now, the Swiss National Bank (SNB), Switzerland's central bank, just reduced the rate that banks earn on deposits held ...

July 5, 2015, 1:33 am, 1503353

For lazy central bankers, this post describes three lite strategies for getting interest rates below the zero lower bound. Rather than requiring drastic action, these methods can be ...

July 5, 2015, 1:33 am, 1503357
Swiss National Bank share certificates
Gavyn Davies blames the Swiss National Bank's corporate structure for the floating of the Swiss franc. Paul Krugman intimates ...

July 5, 2015, 1:33 am, 1503348

Central bankers are usually classified as either hawks or doves. This post is devoted to a third and rare breed; today's monetary policy canaries. Having taken their respective deposit rates to ...

July 5, 2015, 1:33 am, 1503347
Here's a conundrum. Many commentators have been trying to puzzle out why stocks have been continually hitting new highs at the same time that bond yields have been hitting new ...

July 5, 2015, 1:33 am, 1503349

Here's an interesting fact. Remember all those worthless Zimbabwe paper banknotes? The Reserve Bank of Zimbabwe (RBZ), Zimbabwe's central bank, is officially buying them back for cancellation. According to its recent monetary policy ...

July 5, 2015, 1:33 am, 1503352

The Swedes really don't like cash. First, consider that Sweden is the only country in the world that I'm aware of where reliance on paper money is in decline. Second, no country's central bank has produced a ...

July 5, 2015, 1:33 am, 1503350

Paul Krugman has two posts discussing the effective lower bound to interest rates. The first I agree with, albeit with a caveat, and the other I don't.

In ...

July 5, 2015, 1:33 am, 1503351

If you've been reading Bill Gross's last few letters, you'll know that he's been a bit grumpy of late. It's that dang new trend that has hit bond markets, negative interest rates. Gross has ...

July 5, 2015, 1:33 am, 1503342

By Bill Testa

The housing sector has made halting progress throughout the five-year recovery from the Great Recession. Beginning in June 2013, progress began to slow as mortgage rates jumped, thereby hampering affordability and lending viability. Even as home mortgage rates and lending standards were beginning to ease, this ...

July 5, 2015, 1:33 am, 1503340

By Rick Mattoon

In a forthcoming article in the bank’s Economic Perspectives, I profile the economic development efforts underway in the five largest cities in the Seventh District—Des Moines, Indianapolis, Milwaukee, Detroit, and Chicago. (For a complete profile of all five cities see, Industrial clusters and economic development ...

July 5, 2015, 1:33 am, 1503343

By Bill Testa

Few would take issue that the U.S. economy is propelled by innovation. To stay ahead of their competitors, virtually all enterprises engage in innovation of one form or another. Such innovations take the form of improvements to products, services, and internal processes of production and delivery. In ...

July 5, 2015, 1:33 am, 1503345

by Thom Walstrum and Scott Brave

A summary of economic conditions in the Seventh District from the latest release of the Beige Book and from other indicators of regional business activity:

• Overall conditions: Growth in economic activity in the Seventh District was moderate ...

July 5, 2015, 1:33 am, 1503339

By Rick Mattoon

This is a second in a series of blogs that highlights findings from an upcoming Economic Perspectives article on economic development efforts and industry trends in the largest metropolitan areas in the Seventh District. (For a complete profile of all five cities see, Industrial ...

July 5, 2015, 1:33 am, 1503346

By Bill Testa

As the US economic recovery approaches the five-year mark, a look back shows that it has been far from a smooth and upward ride. Since the end of the Great Recession, the economy has grown at a generally disappointing pace with fits and starts due to repeated ...

July 5, 2015, 1:33 am, 1503344

By Emily Engel and Jere Boyle (via)

Community Development and Policy Studies at the Chicago Fed recently published profiles of a group of 10 cities that experienced significant manufacturing job loss in recent decades.

The Industrial Cities Initiative (ICI) includes, Aurora and Joliet in Illinois; Fort Wayne ...

July 5, 2015, 1:33 am, 1503341

By Thom Walstrum and Scott Brave

A summary of economic conditions in the Seventh District from the latest release of the Beige Book and from other indicators of regional business activity:

• Overall conditions: Growth in economic activity remained moderate in June and contacts ...

July 5, 2015, 1:33 am, 1503333

By Rebecca Friedman

In a recent Chicago Fed Letter, Scott Brave and Thomas Walstrum discuss a business conditions survey that the Chicago Fed has been conducting in conjunction with the Beige Book since March 2013. To measure economic activity in the Seventh District, they construct a set of diffusion ...

July 5, 2015, 1:33 am, 1503338

By Rick Mattoon

Milwaukee is the focus of this third blog examining the economic structure and development plans of the five largest cities in the Seventh Federal Reserve District. (For a complete profile of all five cities see, Industrial clusters and economic development in the Seventh District’s largest cities.) ...

July 5, 2015, 1:33 am, 1503334

By Thom Walstrum and Scott Brave

A summary of economic conditions in the Seventh District from the latest release of the Beige Book and from other indicators of regional business activity:

• Overall conditions: Growth in economic activity remained moderate in July and August, and contacts ...

July 5, 2015, 1:33 am, 1503335

By Bill Testa and Jacob Berman

There is no question that the U.S. labor market has been gradually but steadily healing after the Great Recession. The national unemployment rate peaked at 10% in October 2009, but it has since fallen to 6.2% (as of July 2014). The nation experienced a net ...

July 5, 2015, 1:33 am, 1503332

By Bill Testa

Recently released data on U.S. foreign trade for July from the U.S. Census Bureau and U.S. Bureau of Economic Analysis (BEA) show an improvement in exports of U.S. goods. On a month-over-month basis, exports increased $1.8 billion, to $138.6 billion. This rise in exports—which helps to narrow ...

July 5, 2015, 1:33 am, 1503337

By Rick Mattoon

Detroit is the focus of this blog examining economic development issues in the five largest cities in the Chicago Fed’s District. (For a complete profile of all five cities. see “Industrial clusters and economic development in the Seventh District’s largest cities”). Relative to ...

July 5, 2015, 1:33 am, 1503336

By Rick Mattoon

This last blog in our series on the largest cities in the Chicago Fed’s District focuses on Chicago. (For a complete profile of all five cities, see Industrial clusters and economic development in the Seventh District’s largest cities.) Chicago holds a different place in the ...

July 5, 2015, 1:33 am, 1503331

Asian Inflation Begins to Sting U.S. Shoppers:

The free ride for American consumers is ending. For two generations, Americans have imported goods produced ever more cheaply from a succession of low-wage countries — first Japan and Korea, then China, and now increasingly places like Vietnam ...

July 5, 2015, 1:33 am, 1503330

Has any instructor other than me found that the Mankiw website is impossible to navigate? This makes the promised instructional resources impossible to find and integrate into one's course.

I'm discouraged.

July 5, 2015, 1:33 am, 1503327

July 5, 2015, 1:33 am, 1503329

From the Morganton News Herald (The Worst of Times), Mark Strazizich forecasts the probability:

"I don't think we're ever going to see another Depression," Strazicich said.

Here is the full Strazizich section:

Could it happen again?

Whether the country is in a recession depends ...

July 5, 2015, 1:33 am, 1503328

Another one from the Southwick Associates winter newsletter:

In 2005, Hurricane Dennis passed through Walton County, Florida. Following this hurricane, 250 permits to coastal property owners were issued to allow installation of temporary emergency structures to protect their property from shoreline erosion. This resulted in the installation ...

July 5, 2015, 1:33 am, 1503324
The federal government is trying to involve private investors in programs that seek to solve societal problems, an economist and a White House official write.

July 5, 2015, 1:33 am, 1503325
In 2011, there were 117 tax returns that showed both total income of at least $5 million as well as unemployment insurance income.

July 5, 2015, 1:33 am, 1503323
The shift of women into the workplace is one of the less heralded drivers of economic expansion. If American women didn't work, the economy would be about 11 percent smaller.

July 5, 2015, 1:33 am, 1503326
The Great Moderation -- that period of relatively steady growth -- is still with us, but it's a little more nuanced, says Jason Furman, head of the president's Council of Economic Advisers.

July 5, 2015, 1:33 am, 1503321
The Affordable Care Act imposes economic burdens that are the equivalent of taxes, an economist writes.

July 5, 2015, 1:33 am, 1503322
If the rich are getting richer, and the middle class incomes are stagnating, it seems fair that the rich pay more in taxes, writes an economist.

July 5, 2015, 1:33 am, 1503320
Much progress has been made on overseeing the largest banks, but a good deal more must be done to toughen standards and end government subsidies, an economist writes.

July 5, 2015, 1:33 am, 1503319
New car sales are up by more than 10 percent in Ireland, Greece, Spain and Portugal, which signals stronger economic growth there, even if sales are still far below 2007 levels.

July 5, 2015, 1:33 am, 1503312

I've spend a bunch of time on this blog trying to understand who played what roles in both the run up to, and the meltdown of the recent financial bubble. But I've not, until now covered Matt Taibbi's exposés, or "screeds" as some call them. [Note: I got ...

July 5, 2015, 1:33 am, 1503311

One of my economic dreams, albeit implausible, is that governmental entities could learn to live within their means, and do so without the need for drama and crisis. Like many economists I see little harm in not balancing the budget in any given year, but see little good (and eventually ...

July 5, 2015, 1:33 am, 1503309

Killing the messenger has been around for a very long time. In our day, we mostly don't shoot them (at least not in so-called "civilized countries"), but "it is still worth a man's neck to disturb an emperor's image. Nowadays the axe falls more subtly and the execution ...

July 5, 2015, 1:33 am, 1503313

Here in the US, the libertarian right tells us that we are doomed by a federal debt that will soon wreak havoc on the world's financial system, with much pain to be felt here at home. Perhaps they are correct, but I doubt it. If anything a debt problem will ...

July 5, 2015, 1:33 am, 1503310

I took Rajiv Sethi's advice and read all Ashwin Parameswaran's posts at Macroeconomic Resilience. I promised myself early last year that I'd keep up on posts at Macroeconomic Resilience. Instead, I got swept up in despair over the BP oil spill, TEA Party emergence, and continued ...

July 5, 2015, 1:33 am, 1503315

Over at Fed Watch, Tim Duy reminds us to be keenly aware of the subtleties of international finance — and simpleton thinking that there are quick fixes. If everybody tries to export their way out of their finance problem all will lose. So too if even a bunch of countries ...

July 5, 2015, 1:33 am, 1503318
The higher cost for borrowers in a Senate bill reforming Fannie Mae and Freddie Mac corresponds to the protection for taxpayers that was missing in the old system, writes an economist.

July 5, 2015, 1:33 am, 1503317
Economix is coming to an end, but it will be succeeded by The Upshot, a new politics, policy and economics site.

July 5, 2015, 1:33 am, 1503316

I've been thinking about the public debt problem lately. Is the problem really a non problem or at minimum a problem of creeping gradualism, as many Keynesians seem to argue? Or is the problem acute: the next big bubble to burst, as argued lately by Doug Noland in various posts ...

July 5, 2015, 1:33 am, 1503308

I spent most of my working life in the US Forest Service, battling fundamentalism. Most of the battles dealt with economics. My first job was to coordinate use of a linear programming model (FORPLAN) in the development of forest plans. The model may (or may not) have been useful in ...

July 5, 2015, 1:33 am, 1503314

I have been keeping an eye on various proposals to "reinstate" Glass-Steagall for quite some time. Sometime I ought to post a more comprehensive list as to who is in favor (and in what sense) and who is opposed. Clearly the folks at New Economic Perspectives (from Kansas City ...

July 5, 2015, 1:33 am, 1503306

Today, the Global Forest Coalition and the Global Justice Ecology Project strongly condemn—on both human rights and environmental accounts—recent carbon trade announcements/resolutions at the UN Bali Glogal Climate Change Conference. "They are going to use the failed model of carbon trading to supposedly protect forests, but just like agrofuels, the ...

July 5, 2015, 1:33 am, 1503300

It is nice to see that Willem Buiter shares my skepticism about Cap and Trade Carbon schemes relative to Carbon Taxes. It is nice because his London School of Economics credentials eclipse mine, and those are just the beginning of why he is held in high esteem in both ...

July 5, 2015, 1:33 am, 1503299

Over at Mother Jones, Kevin Drum declares Cap and Trade dead as a doornail. Drum adds that "we're not going to get a lovely and elegant carbon tax in its place. For now, carbon pricing is dead."

To better understand why this is not such a ...

July 5, 2015, 1:33 am, 1503298

I've been thinking about changing the name of this blog for quite a while. I never intended to steal the trademark name "Ecological Economics" from its rightful owners. Instead, my hope was that I might draw a few key players from that arena into the blogosphere to add ...

July 5, 2015, 1:33 am, 1503297

Jeffery Sachs nails the essence of our American grown policy problem: Never a thoughtful discussion, always a bunch of talk show hosts (some masquerading as news outlets) batting around trivia. Even when so-called experts are called in, there is seldom a thoughtful vetting of who ought to be in the ...

July 5, 2015, 1:33 am, 1503307

The "Occupy Wall Street" movement is moving to Main Streets across the globe. It's about time. But I fear that the movement will be captured by the far left, just as the TEA party movement has been captured by the far right. If Occupy Wall Street will evolve to represent ...

July 5, 2015, 1:33 am, 1503301

On mainstream news this morning I heard our Utah Governor declare US gas prices "outrageous". Memorial Day national news coverage labeled them "sky high." Wrong! Gas prices only seem outrageous to we Americans who George W. Bush correctly noted are "addicted to oil".

Europeans, by contrast, have lived ...

July 5, 2015, 1:33 am, 1503305

Can you envision a country that plans to rid itself of both Coal and Nuclear Energy source-dependence? Germany is on track to do so:

July 5, 2015, 1:33 am, 1503302

Until a few days ago I had no idea that people were playing with the idea of using compressed air to power vehicles. Now it looks like we may see some within the next few years. Add in a hybrid gas engine to compress more air and compressed ...

July 5, 2015, 1:33 am, 1503304

Tired of being told to "go shopping" whenever a national or international crisis occurs?

Tired of hearing that "recycling" will save us?
Note: Recycling is a very good idea, just "not enough."

Want to know how our so-called Consumer Society was manufactured?

Want to know why the linear "produce, manufacture, CONSUME" model is ...

July 5, 2015, 1:33 am, 1503303

Via Brad DeLong who says, "This is, I think, very good work--and the worst news about the human future I have learned in months." :

Forecasting the Path of China's CO2 Emissions Using Province Level Information, Maximilian Auffhammer and Richard T. Carson (2008)

ABSTRACT: Our results ...

July 5, 2015, 1:33 am, 1503296

In this TEDx talk, Bob Litan shows how economic insights shaped the web economy, from dating to search to travel to logistics.

July 5, 2015, 1:33 am, 1503295

Suppose your aunt decides to start a business making pizza ovens. She will design and build the ovens, and her daughter will manage operations. A bank is ready to lend her $100,000 to get started, but it wants someone to co-sign and be on the hook if she misses any ...

July 5, 2015, 1:33 am, 1503294

Dane Stangler at the Kauffman Foundation debunks four myths about entrepreneurship:

Spoiler: 20-somethings make headlines, but founders in their 30s and 40s are more important.

(Disclosure: The Kauffman Foundation funds some of my research at the Urban Institute.)

July 5, 2015, 1:33 am, 1503291

The Department of Energy snookered the media last week with a report that seems to show that its clean energy lending programs are profitable. “Remember Solyndra? Those loans are making money,” went a typical headline.

Unfortunately, that’s not true. Taxpayers are losing money on DOE lending. Less than originally ...

July 5, 2015, 1:33 am, 1503292

Treasury closed the financial books on fiscal 2014 last week. As my colleague Howard Gleckman noted, the top line figures all came in close to their 40-year averages. The $483 billion deficit was about 2.8 percent of gross domestic product, for example, slightly below the ...

July 5, 2015, 1:33 am, 1503293

Lending programs create special challenges for federal budgeting. So special, in fact, that the Congressional Budget Office estimates their budget effects two different ways. According to official budget rules, taxpayers will earn more than $200 billion over the next decade from new student loans, mortgage guarantees, and the Export-Import ...

July 5, 2015, 1:33 am, 1503289

The House recently changed the rules of budget scoring: The Congressional Budget Office and the Joint Committee on Taxation will now account for macroeconomic effects when estimating the budget impacts of major legislation. Here are three things you should know as we await the first official dynamic score.

1. Spending and ...

July 5, 2015, 1:33 am, 1503290

Our tax system includes many provisions to boost business investment, particularly by startups and innovative firms. In a new Tax Policy Center study, Joe Rosenberg and I find that those incentives are often blunted by other features of the tax code:

We examine how tax policies alter investment incentives, with a ...

July 5, 2015, 1:33 am, 1503285

July 5, 2015, 1:33 am, 1503287

July 5, 2015, 1:33 am, 1503286

July 5, 2015, 1:33 am, 1503288

July 5, 2015, 1:33 am, 1503282

July 5, 2015, 1:33 am, 1503283

July 5, 2015, 1:33 am, 1503284

July 5, 2015, 1:33 am, 1503281

July 5, 2015, 1:33 am, 1503277

July 5, 2015, 1:33 am, 1503276

July 5, 2015, 1:33 am, 1503280

July 5, 2015, 1:33 am, 1503278

July 5, 2015, 1:33 am, 1503279

July 5, 2015, 1:33 am, 1503272

3 conference announcements of interest to historians of economics have come in recently:

1 )from Steve Medema) The 40th annual UK History of Economic Thought
Conference will be held at the University of Edinburgh, Scotland, over 3-5 September,
2008. The conference will retain its traditional ...

July 5, 2015, 1:33 am, 1503273

Here's a taste of what David will talk about at the Robbins conference in London. We've obtained a number of Rawls' copies of books by economists, including Rawls' copy of The Nature and Significance. So we can see what struck Rawls as he read Robbins. Here, you can see ...

July 5, 2015, 1:33 am, 1503271

The annual /History of Political Economy/ Conference -- this year on the topic "Robert Solow and the Development of Growth Economics" -- will be held 25-27 April 2008 at Duke University. Further information, including the tentative program, can be found on the Duke History of Economy Group website ...

July 5, 2015, 1:33 am, 1503275

Readers know that I studied with Sam Hollander. Perhaps because of this, I have long felt that Sam's teacher, Lionel Robbins, deserves more recognition than he has been given by the profession. So I am very pleased that N&S is now 75 years old; we can ...

July 5, 2015, 1:33 am, 1503274

The Robbins conference website is now set to go!

July 5, 2015, 1:33 am, 1503270

On my on again off again issue -- I plead the increased expectations related to being a dean of a School! I do intend to return to this blog site systematically again. I'm teaching Competition, Cooperation and Choice this ...

July 5, 2015, 1:33 am, 1503267

For Smith, impartiality is the means by which we come to know and do what's right. Since we all wish to be praiseworthy, we'll at least try for impartiality and so come to do what deserves praise. Here's a key passage on this

The man who is conscious to himself that ...

July 5, 2015, 1:33 am, 1503266

Is there a future for the robust sort of capitalism favoured by Adam Smith or have we reached a limit to Anglo-American capitalism as the engine of human betterment? Over the last few decades scholars from many points of view have found the basis for a uniquely ...

July 5, 2015, 1:33 am, 1503268

Reading for my class today, TMS part 1.

The chapter on ambition begins with the lovely passage:

It is because mankind are disposed to sympathize with more entirely with our joy than with our sorrow, that we make parade of our riches, and conceal our poverty. Nothing is so mortifying as ...

July 5, 2015, 1:33 am, 1503269
The 2009 FEE Prizes in Austrian Economics

The Society for the Development of Austrian
Economics is pleased to announce that nominations
are now open for the 2009 Foundation for Economic
Education Prizes for the best book and the best
article recently ...

July 5, 2015, 1:23 am, 1503264

July 5, 2015, 1:23 am, 1503265

July 5, 2015, 1:23 am, 1503263

July 5, 2015, 1:23 am, 1503262

July 5, 2015, 1:23 am, 1503259

July 5, 2015, 1:23 am, 1503260

July 5, 2015, 1:23 am, 1503261

July 5, 2015, 1:23 am, 1503255

July 5, 2015, 1:23 am, 1503254

July 5, 2015, 1:23 am, 1503257

July 5, 2015, 1:23 am, 1503258

July 5, 2015, 1:23 am, 1503253

July 5, 2015, 1:23 am, 1503256

July 5, 2015, 1:23 am, 1503250

July 5, 2015, 1:23 am, 1503252

July 5, 2015, 1:23 am, 1503248

July 5, 2015, 1:23 am, 1503247

July 5, 2015, 1:23 am, 1503251

July 5, 2015, 1:23 am, 1503249

July 5, 2015, 1:23 am, 1503241
Don't think you can win taking on the big box retailers? See how the Toy House in Jackson, Michigan has found a way to compete and hold off the category killer at this video clip from Business on Main. Note that ...

July 5, 2015, 1:23 am, 1503240
Jeff Wuorio shares a collection of 2011 lessons learned from various entrepreneurs that he posted at Business on Main.

Here are two of my favorites:

"The biggest lesson I learned in 2011 was for our business to question our ...

July 5, 2015, 1:23 am, 1503239
One of the biggest mistakes I made during my days as an entrepreneur was raising too much money.

Because our business was successful, we had investors eager to offer us money. But by taking money when we really did not need ...

July 5, 2015, 1:23 am, 1503242
A student come up to me before class the week before their business plans were due this past semester looking very dejected.

"My concept just can't work," she said. The more she tried to pivot the business model, the more ...

July 5, 2015, 1:23 am, 1503238
While entrepreneurial success is tied to careful feasibility assessment, business modeling and planning, never underestimate the role that luck plays in an entrepreneurial journey.

I am not suggesting that aspiring entrepreneurs just sit and wait for an opportunity to come to ...

July 5, 2015, 1:23 am, 1503246

July 5, 2015, 1:23 am, 1503244

July 5, 2015, 1:23 am, 1503243
Politicians have been searching for a defining issue to crystallize the "us versus them" game that has been going on in Washington for the past several years.

The latest is the temporary $1,000 payroll tax cut that is set to expire ...

July 5, 2015, 1:23 am, 1503245

July 5, 2015, 1:23 am, 1503230
Most entrepreneurs dream of that one big break. For some businesses it is getting the one big customer. For others it may be betting that magical "shout out" from a national thought leader or big time media outlet.

Should you always ...

July 5, 2015, 1:23 am, 1503229
But delegating often turns out to be easier said than done. There are three common mistakes that entrepreneurs can make when delegating.

The first mistake is being hesitant to delegate.

When first beginning to delegate to employees, some entrepreneurs feel ...

July 5, 2015, 1:23 am, 1503237

So what can small businesses expect for 2012? My general advise continues to be cautious! While we are seeing some of the small business surveys showing optimism increasing and more ...

July 5, 2015, 1:23 am, 1503231
If we have any hopes of entrepreneurs leading us into a new period of economic growth the evidence is that they will come from two generational groups -- the Millennial Generation and their parents the Baby Boomers.

A lot has been ...

July 5, 2015, 1:23 am, 1503232
Developing a sound business model is key to the successful launch of a business.

But you should never assume the business modeling is finished once the business begins to grow. Keeping a business model current is critical for long-term success.

July 5, 2015, 1:23 am, 1503236
"I've developed this really cool product and I have applied for a patent."

"I want to show you this awesome app that I helped design."

"We've got a great idea for a website."

Those of us who work with ...

July 5, 2015, 1:23 am, 1503234
One of the bootstrapping techniques I like folks to consider is keeping your day job while your venture to getting up to speed. This has become a more common financing strategy now that the weak economy has put a hit on the ...

July 5, 2015, 1:23 am, 1503235
I have written often about the challenges for entrepreneurs of finding balance between the strong, often conflicting pulls from family and from their business.

Toddi Gutner offers three case studies on entrepreneurs who have worked at finding this balance in ...

July 5, 2015, 1:23 am, 1503233

Entrepreneurs face a difficult challenge in how they should be spending their time as a business grows.

The dilemma is commonly referred to as needing to "work on the business rather than work in it."

Typically, entrepreneurs are heavily ...

July 5, 2015, 1:23 am, 1503212
ERA Transformers providing encapsulated transformers that are manufactured to strict UL safety standards.

July 5, 2015, 1:23 am, 1503213
Ozone billiards offering a great selection of pool tables with free shipping.

July 5, 2015, 1:23 am, 1503211

July 5, 2015, 1:23 am, 1503210

July 5, 2015, 1:23 am, 1503201

Captain Renault is shocked.

July 5, 2015, 1:23 am, 1503203
Here is a link to a Luann comic strip that offers a chance to really explore choices, trade-offs, opportunity cost and even psychic income.

July 5, 2015, 1:23 am, 1503200
As we approach year's end and the traditional holiday season, and with the failure of the Supercommittee to achieve anything of substance beyond finger-pointing, here is something courtesy of XKCD to fill those odd classroom moments.

July 5, 2015, 1:23 am, 1503199
I suspect many of you are busy today. Our family had our dinner yesterday because one of my sons is working on Thanksgiving Day. But when you get a chance, you might want to review this column by Jeff Jacoby of The Boston Globe. (HT to Carpe Diem ...

July 5, 2015, 1:23 am, 1503198
First, I'm a bit late with this, but for those of you who haven't sought it out already, PNC Bank has it's CPI (Christmas Price Index) up and running, showing the price changes in the gifts from the carol, The Twelve Days of Christmas. As always, it's an interesting ...

July 5, 2015, 1:23 am, 1503204
Here is a piece from Bloomberg Businessweek (HT Arts & Letters Daily) on how behavioral economists may have shaped a tax policy. The summary of the research is that the plan didn't work. However, the study is based on survey data, which is not as reliable as actual ...

July 5, 2015, 1:23 am, 1503202
Here's an editorial from today's edition of The Wall Street Journal that describes the process simply.

July 5, 2015, 1:23 am, 1503205
Courtesy of

July 5, 2015, 1:23 am, 1503209
Opportunity cost, cost/benefit and marginal analysis, it's all here.

July 5, 2015, 1:23 am, 1503207

July 5, 2015, 1:23 am, 1503208

July 5, 2015, 1:23 am, 1503206
Here's a funny video (HT Econlog) with a comedian explaining how to use Halloween candy to explain taxes. It's a great visual, although the last line is over the top.

July 5, 2015, 1:23 am, 1503194

July 5, 2015, 1:23 am, 1503195

July 5, 2015, 1:23 am, 1503197
Which of Schumpeter's five roles of the entrepreneur is/are illustrated here?

July 5, 2015, 1:23 am, 1503193
Greg Mankiw posts a great piece from a colleague at the University of Chicago.

Generation Gap Alert: I just talked about this with my freshmen at one of the universities where I teach. None of them knew the Abbott & Costello routine "Who's on First?" Consequently, you may ...

July 5, 2015, 1:23 am, 1503196
Actor/writer Rick Moranis has a very amusing piece in the opinion section of today's edition of The Wall Street Journal. What struck me was how good it would be in setting up a discussion of opportunity cost. It really harkened back to Bastiat's "that which is seen and that ...

July 5, 2015, 1:23 am, 1503189
Courtesy of Wondermark.

July 5, 2015, 1:23 am, 1503192
If you discuss the Chevy Volt with your students, you might want to use this. (HT to Carpe Diem.)

July 5, 2015, 1:23 am, 1503188
It's early in the semester and many of us who are teaching principles or survey courses are either just into choice or only recently moved on. Here's a great article from today's edition of The Wall Street Journal that sets up a choice that is sure to promote discussion.

July 5, 2015, 1:23 am, 1503190
Our natural propensity to "truck and barter" as Adam Smith would say:

(HT to Greg Mankiw)

July 5, 2015, 1:23 am, 1503191
This is not appropriate for use in high schools. However, those of you who teach at the college or university level may find this helpful. Econgirl at EconomistsDoItWithModels has a great illustration of non-price determinants of demand with the help of "the most interesting man in the world."

July 5, 2015, 1:23 am, 1503187
Economist James Buchanan has passed away. Buchanan, along with Gordon Tullock, won the Nobel Prize for Economics in 1986 and is known for his work on public choice theory.

You can read his Nobel Prize lecture here.

I had several opportunities to hear Dr. Buchanan speak ...

July 5, 2015, 1:23 am, 1503181
Should the Federal Reserve should eliminate cash as a way to avoid the zero lower bound (ZLB) problem? Ken Rogoff says yes in arecentpaper. John Cochrane, on the other hand, is not ready to give up cash and is convinced that even if we did it ...

July 5, 2015, 1:23 am, 1503180
Long-term treasury interest rates are falling again with the 10-year treasury briefly dipping below 2% this week. Some observers see this decline in yields as an omen for the U.S. economy:

The United States economy is accelerating... Yet a huge bond market with a strong track ...

July 5, 2015, 1:23 am, 1503182
Marc Andreessen recentlylooked at the arguments for and against secular stagnation. He cited my Washington Post article when examining the case against secular stagnation. One of the points I make in it is that the proponents of secular stagnation incorrectly invoke the long decline of real ...

July 5, 2015, 1:23 am, 1503186
Inflation-targeting central banks are in an awkward position. Their objective is to stabilize the rate of inflation, but they now face a development that could jeopardize it: the surge in oil production that is driving down oil prices. The decline in oil prices is a much-needed boon to ...

July 5, 2015, 1:23 am, 1503179
Imagine the ECB had not raised its interest rate target in 2008 and 2011, but had lowered it. Also imagine the ECB began its open-ended QE program back in 2009. Would there now be a brighter future for the Eurozone? If the answer is yes, then the Eurozone ...

July 5, 2015, 1:23 am, 1503184
My last post made the argument that monetary base injections at the zero lower bound (ZLB) can be effective if they are permanent. I also noted that this understanding is a standard view in macroeconomics and that it implies the Fed's QE programs were muted from the ...

July 5, 2015, 1:23 am, 1503183
Paul Krugman disagrees with a point I made in my last post. Specifically, he takes issue with my claim that amonetary regime change is needed forboth monetary policy and fiscal policy to effective at the zero lower bound (ZLB). To make my case, I gave as an ...

July 5, 2015, 1:23 am, 1503185
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 ...

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, 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, 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, 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, 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 ...

July 5, 2015, 1:23 am, 1503171
Ben Bernanke is back and mulling over low interest rates. From the Washington Post:

Blogging isn't dead. At least, Ben Bernanke, former chairman of theFederal Reserve, doesn't think so: He's now blogging at the Brookings Institution. Inhis first post,he says he wants ...

July 5, 2015, 1:23 am, 1503170
Former Fed chair Ben Bernanke blogged about secular stagnation today and he's not buying it:

Does the U.S. economy face secular stagnation? I am skeptical, and the sources of my skepticism go beyond the fact that the U.S. economy looks to be well on the ...

July 5, 2015, 1:23 am, 1503161

After the recent Draghi press conference announcing new measures to ease monetary policy in euroland, I responded to live questions from the Financial Times: “The ECB Eases,” podcast,  FT Hard Currency, June 5, 2014 (including regarding my proposal that the ECB should buy dollar bonds).

And also to questions in writing from El ...

July 5, 2015, 1:23 am, 1503160

U.S. federal courts have ruled that Argentina is prohibited from making payments to fulfill 2005 and 2010 agreements with its creditors to restructure its debt, so long as it is not also paying a few creditors that have all along been holdouts from those agreements.  The judgment is likely to ...

July 5, 2015, 1:23 am, 1503159

I visited Korea earlier this summer and gave a talk on effects of U.S. Tapering on Emerging Markets.  (This was also the subject of comments at an Istanbul conference sponsored by the NBER and the Central Bank of Turkey in June.)

An interview on the effects of policy at ...

July 5, 2015, 1:23 am, 1503162

Widespread recent reports have trumpeted: “China to overtake US as top economic power this year.”  The claim is basically wrong. The US remains the world’s largest economic power by a substantial margin.

The story was based on the April 29 release of a report from the ICP project of the World ...

July 5, 2015, 1:23 am, 1503164

My post last month was a proposal for the European monetary authorities to pursue Quantitative Easing, not by buying euro bonds, but by buying dollar bonds.   I also presented this idea in a speech at a conference sponsored by the Dallas Fed, April 4, “Why the ECB ...

July 5, 2015, 1:23 am, 1503165

         The ECB should further ease monetary policy.  Inflation at 0.8% across the eurozone is below the target of “close to 2%.”  Unemployment in most countries is still high and their economies weak.  Under current conditions it is hard for the periphery countries to bring their costs the rest ...

July 5, 2015, 1:23 am, 1503158
 Has Italy Really “Gone Back Into Recession”?

Italians and the world have now been told that their economy slipped back into recession in the first half of 2014.  This characterization is based on the criterion for recession that is standard in Europe and most countries:  two successive quarters of negative growth.  ...

July 5, 2015, 1:23 am, 1503163

Inequality has received a lot of attention lately, particularly in two arenas where it had not previously received as much: American public debate and the International Monetary Fund.  A major driver is the observation in the United States that income inequality has now returned to the extreme levels of ...

July 5, 2015, 1:23 am, 1503152
‘The Luddite anxiety has been dormant for many years but has recently enjoyed a resurgence’

July 5, 2015, 1:23 am, 1503151
‘Diamonds are costly because we desire them. But what if that isn’t true? What if they are desirable because they are costly?’

July 5, 2015, 1:23 am, 1503150
‘The lesson of all this is that the economy is complicated and textbook economic logic alone will get us only so far’

July 5, 2015, 1:23 am, 1503157

In few policy areas does good economics seem to conflict so dramatically with good politics as in the practice of subsidies to food and energy.  Economics textbooks explain that these subsidies are lose-lose policies. In the political world that can sound like an ivory tower abstraction.   But the issue of ...

July 5, 2015, 1:23 am, 1503153
Bitcoin appeals to libertarians on the basis that governments cannot arbitrarily make more of it

July 5, 2015, 1:23 am, 1503156

Most of the reviews of Thomas Piketty’s book Capital in the Twenty-First Century have already been written.  But I thought it might be best to read it all the way through before offering my own thoughts on this book, which startlingly rose to the top of the best seller lists ...

July 5, 2015, 1:23 am, 1503154
The fact that a few large players have such influence over vital services should make us all queasy

July 5, 2015, 1:23 am, 1503155
We don’t have a good sense of our own fallibility. Checking my answers, it was the one I felt the most certain of that I got wrong

July 5, 2015, 1:23 am, 1503147
One way for central banks to gauge long-term inflation expectations is to look at the \(n\)-year-forward, \(m\)-year-ahead expected inflation rate. For instance, the two-year-forward, three-year-ahead expected inflation is the expected change of prices two years from now, over the following three years. As of December 2014, that would be the ...

July 5, 2015, 1:23 am, 1503148
Over two years ago Jim Hamilton posted that the relationship between the retail price of U.S. gasoline and the price of Brent, empirically, is given by

$$g_t = 0.839 + 0.02499 b_t + e_t, $$

an equation that comes from an OLS regression of weekly prices ...

July 5, 2015, 1:23 am, 1503146
Tim Duy wonders whether predicting the Fed's change of language over the next six months will be as easy as looking at the statements from 2004. On Jan. 28, 2004 the FOMC statement introduced the word "patient", replacing the "considerable period" phrase. The Fed kept "patient" in the ...

July 5, 2015, 1:23 am, 1503149
The long-term unemployed matter. That might be the conclusion from a trio of blog posts by New York Fed researchers, over at Liberty Street Economics. (The authors areRob Dent, Samuel Kapon, Fatih Karahan, Benjamin W. Pugsley, and Ayşegül Sahin.)

In the

July 5, 2015, 1:23 am, 1503143
It's that time of the year when seemingly every economist in the private sector puts together an economic outlook for the year ahead. I'm not foolhardy enough to make predictions, or even to pretend my crystal ball is less cloudy than others'. I'm writing this post because I am bothered ...

July 5, 2015, 1:23 am, 1503145
In the chart below I have displayed the GDP and inflation surprises of 2014, by country.

I define a "surprise" as the difference between the 2014 forecast in December (which should be close to the actual outcome) and the 2014 forecast in January (the one-year ahead forecast). (The data ...

July 5, 2015, 1:23 am, 1503144
Things that Conventional Wisdomgot right about 2014:
1. The Fed tapered asset purchases and ended the quantitative easing program by October.
2. China staged a soft landing, holding growth above 7%.
3. The eurozone's recovery from the recession was slow and uneven. (Here I must say, however, that the majority ...

July 5, 2015, 1:23 am, 1503139
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, ...

July 5, 2015, 1:23 am, 1503140
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 ...

July 5, 2015, 1:23 am, 1503142
Lorenzo Bini Smaghi, former member of the executive board of the ECB, writes for the Financial Times that Greece's debt might be sustainable.

One of the points he makes is

...the sustainability of the debt depends on the dynamics over time rather than on the overall ...

July 5, 2015, 1:23 am, 1503137
Hideki Konishi, Kozo Ueda, andMitsuru 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 ...

July 5, 2015, 1:23 am, 1503141
Following up on a blog post by David Andolfatto, I checked on the deflationary experiences of seven countries during the 19th and 20th centuries.

The mainstream commentary these days is that deflation causes (or at least is associated with) declining real economic activity. Here's an ...

July 5, 2015, 1:23 am, 1503138
The world might not be "deleveraging," but I wouldn't know just by looking at the debt-to-GDP ratio.

The latest updateto 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 ...

July 5, 2015, 1:23 am, 1503136
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

July 5, 2015, 1:23 am, 1503131
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.Time: two hours.

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

July 5, 2015, 1:23 am, 1503133
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 ...

July 5, 2015, 1:23 am, 1503132
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 ...

July 5, 2015, 1:23 am, 1503134
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. ...

July 5, 2015, 1:23 am, 1503135
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 ...

July 5, 2015, 1:23 am, 1503127

Home sales remain weak, and prices have farther to fall. There's light at the end of the tunnel, but it's a long tunnel. Mark Zandi explains why to Bloomberg.

UPDATE: Mark has ...

July 5, 2015, 1:23 am, 1503126

U.S. employment faltered last month. Gasoline prices and supply-chain issues were part of the problem, but what else is wrong? Mark Zandi discusses with the CNBC crew.

July 5, 2015, 1:23 am, 1503125

After the release of May's U.S. employment numbers Friday, Mark Zandi spoke with CNN's "In the Arena" :

Friday morning, the Department of labor released May’s employment report and the news isn’t great. The economy gained a mere 54,000 jobs in the month, a significant slowdown from ...

July 5, 2015, 1:23 am, 1503129

Mark Zandi talks with the New York Times' David Leonhardt about the U.S. housing market's current woes:

Q. I’m struck at how much higher the rent ratio still is in many places, relative to its average from 1990 to 2010. It’s about 18 in Washington (relative ...

July 5, 2015, 1:23 am, 1503130

The UK national debt is the total amount of money the British government owes to the private sector and other purchasers of UK gilts.

In April 2015, public sector net debt excluding public sector banks (PSND ex) was £1,487.7 billion (80.4% of GDP) Source: [1. ONS public sector finances ] (page ...

July 5, 2015, 1:23 am, 1503128

Pete Davis blogs on Mark Zandi's talk before the National Economists Club. An excerpt:

He expects 3% real GDP growth this year, like last year, and 4% next year. "There won't be a lot of progress on the unemployment rate this year [currently 9.0%] because of ...

July 5, 2015, 1:23 am, 1503122

Given the recent spate of disappointing data, are there any reasons for optimism? Mark Zandi discusses with CNBC.

July 5, 2015, 1:23 am, 1503124

As U.S. housing appears to be nearing the bottom of its long slide, it may be time to reconsider the math of ownership. Mark Zandi talks with NPR.

July 5, 2015, 1:23 am, 1503120

Monetary policy

The Federal Reserve is expected to follow through on its commitment to engage in quantitative easing through June 2011. The Fed has stated its intention to purchase $600 billion in Treasury ...

July 5, 2015, 1:23 am, 1503119

Monetary policy

The Federal Reserve will wind down its quantitative easing efforts this month. The Fed’s balance sheet is thus peaking at close to $2.8 trillion, about $2 trillion greater than under more normal circumstances. While the Fed is not expected to engage in another round of QE, it will maintain ...

July 5, 2015, 1:23 am, 1503123

Is the slowdown transitory? Mark talks with Bloomberg News about confidence and the recovery.

July 5, 2015, 1:23 am, 1503121

On Monday, June 20, Mark Zandi and other experts dissected the outlook in a panel discussion at the New York Forum.

July 5, 2015, 1:23 am, 1503092

Policymakers can and likely will do more to support the economy, Mark Zandi tells Bloomberg News.

July 5, 2015, 1:23 am, 1503093

The risks are rising, but skilled policy can keep the U.S. out of recession, Mark Zandi tells CBS News

July 5, 2015, 1:23 am, 1503094

As the economy teeters, what role is there for policy? Mark Zandi discusses the latest developments with Ezra Klein and Jared Bernstein on MSNBC.

July 5, 2015, 1:23 am, 1503091

How did Hurricane Irene affect the U.S. economic landscape? Ryan Sweet examines the impact on PBS' Nightly Business Report (starts at 6:00 minutes).

July 5, 2015, 1:23 am, 1503095

Monetary policy

The Federal Reserve has aggressively eased monetary policy in response to the turmoil in financial markets and weaker economy. Policymakers have all but promised to keep the federal funds rate target effectively at zero through mid-2013.

Long-term interest rates have fallen significantly in response, with fixed mortgage rates closing in ...

July 5, 2015, 1:23 am, 1503087

After a string of bleak numbers, the outlook is looking dimmer but not hopeless. Mark Zandi discusses with CNBC.

July 5, 2015, 1:23 am, 1503085

Washington gridlock nudges up the odds of a new downturn, Mark Zandi tells CBS' "Face the Nation."

July 5, 2015, 1:23 am, 1503086

Even with a plan, the jobless rate may not fall below 9% in 2012, Mark Zandi tells Bloomberg.

July 5, 2015, 1:23 am, 1503088

U.S. payrolls were flat in August, and the unemployment rate stayed at 9.1%. Mark Zandi discusses the numbers with CNBC.

July 5, 2015, 1:23 am, 1503089

The latest FOMC minutes show the central bank trimming its view of U.S. potential growth, Mark Zandi tells CNBC.

July 5, 2015, 1:23 am, 1503090

Export-dependent economies such as the Philippines are vulnerable to external shocks, Katrina Ell tells Bloomberg News.