December 09, 2013
Compensation, Productivity and Labor Share
Productivity outpaces real wages, deflated using the output deflator, or using the CPI.
December 07, 2013
Current economic conditions
The economy is slowly improving.
December 06, 2013
The Output Gap: Cumulative Losses, 2013Q3
Today, I gave a presentation in the Wisconsin Alumni Association's Global Hot Spot series, entitled America's Macroeconomic Policies and the Global Economy. One figure from the presentation bears highlighting.
December 05, 2013
Coincident Indices for Wisconsin, Minnesota, California and the US
The Philadelphia Fed coincident indices for October are out. Figure 1 presents the log series, normalized to January 2011 = 0.
December 04, 2013
Trade Financing Use of China's Yuan
China's yuan currency overtook the euro in October, becoming the second-most used currency in trade finance, global transaction services organization SWIFT said on Tuesday.
December 03, 2013
Some Observations on the Efficacy of Monetary and Fiscal Policy
Inflation and output are up. So too is gross fixed capital investment. The yen is weaker, and the real quantity of net exports is higher.
November 30, 2013
Presidents and the economy
An interesting new research paper by Princeton Professors Alan Blinder and Mark Watson examines differences in performance of the economy under Democratic versus Republican presidents. The paper begins:
The superiority of economic performance under Democrats rather than Republicans is nearly ubiquitous; it holds almost regardless of how you define success. By many measures, the performance gap is startlingly large--so large, in fact, that it strains credulity, given how little influence over the economy most economists (or the Constitution, for that matter) assign to the President of the United States.
November 27, 2013
Fiscal Drag in 2013
From Torsten Slok at Deutsche Bank:
[F]iscal drag in 2013 is 2.4%, ie if GDP growth in 2013 ends up being 1.7% then if we had not had the fiscal drag then GDP growth would instead have been 4.1% (=1.7% + 2.4%). ..
November 24, 2013
Forward rates and monetary tightening
The Federal Reserve has been trying hard to communicate that it intends to keep short-term interest rates low for quite some time. The market seems to have embraced the message.
November 21, 2013
Wisconsin Employment: October 2013
Two numbers to remember: 84 thousand and 107 thousand
Jeffrey Frankel: "The Dollar and Its Rivals"
From today's Project Syndicate:
November 20, 2013
JEC Chair Brady and the Inflation Outlook
From a statement by the Joint Economic Committee Chairman, October 9th, 2013:
I fear that the Federal Reserve through current policies of Quantitative Easing and maintaining extraordinary low interest rates may be providing the fuel for igniting high inflation.
"Fiscal Policy: Accomplishments, Challenges and Opportunities"
That's the title of CEA Chair Jason Furman's presentation at the University of Wisconsin at Madison on Monday. Introduced by UW Chancellor Becky Blank, his discussion covered a wide range of issues. From WisBusiness:
Jason Furman, chairman of Obama’s Council of Economic Advisers, said Congress should invest in infrastructure at today’s low borrowing rates, reform the tax code, approve an immigration reform bill projected to cut the deficit and agree on long-term debt reduction, instead of implementing short-term cuts like sequestration that impede economic growth.
November 18, 2013
Apocalyptic Macro: Inflation Edition
From an opinion piece by Sean Fieler in USAToday:
If easy money delivers what it always has throughout history — growing inflation, growing inequality and growing government — a Republican embrace of sound money will offer America a way back to prosperity and the GOP a way back to a governing majority.
November 17, 2013
Lower gasoline prices
"U.S. gasoline prices have fallen to their lowest level in nearly 33 months amid a boom in domestic oil drilling", the Wall Street Journal declared last week. That's a true statement, but there's more to the story.
November 14, 2013
Assessing the Crowding Out Hypothesis: An Undergraduate Textbook Analysis
Consider this statement:
"Borrowing and spending by the public sector will crowd out investment and growth in the private sector." Paul Ryan, “Path to Prosperity” (April 2012).
1.1 In a standard IS-LM model, where investment spending is given by:
(7’) I = b0 - b2i
Will higher government spending crowd out investment? Use a graph to help explain your answer.