Even before the newest portents of a slowdown, [0] it was clear that 2012 gains in world output were going to be highly reliant on Chinese growth. Figure 1 shows that the Eurozone switches to a net drag on world growth. China’s contribution is thus a much larger share of total world growth.
Monthly Archives: May 2012
Links for 2012-05-30
Quick links to a few items of interest.
Alexander Field (and Santayana) on Financial Regulation
As some in policy circles advocate unilateral financial disarmament, I think it is useful to think about what history tells us about the financial crisis of 2008, which seems to have already receded in people’s collective consciousness. Here I turn to Alexander Field’s new volume on the Great Depression, A Great Leap Forward. From Chapter 10, “Financial Fragility and Recovery”:
The regulatory or policy failure was not simply or primarily a matter of interest rate policy. Rather it was a failure to control, or really be interested in controlling, the growth of leverage. …
Commodity index funds and oil prices
In my previous post
I described a new research paper with University of Chicago Professor Cynthia Wu on the Effects of Index-Fund Investing on Commodity Futures Prices. Previously I discussed what we found for the prices of agricultural commodities. Here I review our findings about oil prices.
Dispatches XXIII: Wisconsin Government Diverts Funds from Foreclosure Relief
Unsurprising to me, but still of note.
From ProPublica, insight into Wisconsin (among other states):
States have diverted $974 million from this year’s landmark mortgage settlement to pay down budget deficits or fund programs unrelated to the foreclosure crisis, according to a ProPublica analysis. That’s nearly forty percent of the $2.5 billion in penalties paid to the states under the agreement.
Expansionary Fiscal Contraction in Action (or Not)
The recession in the UK is even worse than first reported.
Dispatches XXII: Wisconsin and US Employment Growth Compared
Updated 5/27 — added Figure 2 showing Wisconsin’s poor performance vis a vis US as measured by coincident indices.
Governor Walker has been touting on numerous (!) radio and television ads employment gains using the Quarterly Census of Employment and Wages (QCEW) based figures [0], and (apparently) adding on reported changes in employment, as recorded by BLS. I wanted to highlight exactly how lackluster the record looks even with Governor Walker’s preferred numbers.
Commodity index funds and agricultural prices
I’ve just completed a new research paper with University of Chicago Professor Cynthia Wu on the Effects of Index-Fund Investing on Commodity Futures Prices. Here was our motivation for writing the paper:
The last decade has seen a phenomenal increased participation by financial investors in commodity futures markets. A typical strategy is to take a long position in a near futures contract, and as the contract nears maturity, sell the position and assume a new long position in the next contract, with the goal being to create an artificial asset that tracks price changes in the underlying commodity. Barclays Capital estimated that exchange traded financial products following such strategies grew from negligible amounts in 2003 to a quarter trillion dollars by 2008 (Irwin and Sanders (2011)). Stoll and Whaley (2010) found that in recent years up to half of the open interest in outstanding agricultural commodity futures contracts was held by institutions characterized by the Commodity Futures Trading Commission (CFTC) as commodity index traders.
State Dependence and Fiscal Multipliers
Or, are there nonlinearities in the real (macro) world?
Fiscal stimulus
My colleague UCSD Professor Valerie Ramey has an interesting new paper looking at the effects of higher government spending on GDP.