Yearly Archives: 2009

I Hope They’re Right: The Forecast in the 2009 ERP

The Bush Administration’s last Economic Report of the President [large pdf] (Link updated 1/21/09 12:35pm Pacific) was released on Friday. From Chapter 1:

The Administration’s forecast calls for real GDP to continue to fall in the first half of 2009, with the major declines projected to be concentrated in the fourth quarter of 2008 and the first quarter of 2009. An active monetary policy and Treasury’s injection of assets into financial institutions are expected to ease financial stress and to lead to a rebound in the interest-sensitive sectors of the economy in the second half of 2009.

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Executive compensation

Is there a problem? And is there a solution? My answers: yes, and yes.

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One of My Favorite Papers on Multipliers

Germane to some of the ongoing debates over fiscal policy effectiveness [1] [2]:

Fiscal policy multipliers are central to Keynesian macroeconomics. In this paper I explore a
possible microeconomic foundation for one fundamental theory of income determination, the
‘Keynesian cross’. My model deviates from a Walrasian equilibrium model only by the assumption
of imperfect competition in the goods market. I show that textbook fiscal policy multipliers arise as a
limiting case.

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Industrial Production during Previous Post-War Recessions

Since Minneapolis Fed and others are posting various comparisons of employment and output during recessions (and pseudo-recessions — see the discussion at Spencer at Angry Bear), I thought I’d post an analogous picture of industrial production.

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The Startling Dropoff in Trade Flows

The trade release has already been remarked upon, in terms of the dropoff in both exports and imports signaling a synchronized recession. [1], [2], [3], [4]
I have little to add here, except for plotting the “cliff-diving” in log real terms.

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Bernanke on the Fed’s balance sheet

In remarks in London today, Fed Chair Ben Bernanke let the world know how he views the risks and benefits of the recent dramatic changes in the assets and liabilities of the U.S. Federal Reserve.

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CEA Chair Lazear on the Economy

From Washington Post:

…
“It does look like a great eight years, aside from the last quarter, unfortunately,” Edward P. Lazear, chairman of Bush’s Council of Economic Advisers, said in a recent interview. “In the long term, things look good. The reason things look good is this economy will rebound, and it will rebound strongly. . . . We expect things to turn around, and I would say early in President Obama’s administration.”
…

International Imbalances: Measurement and Implications

Paul Kedrosky has observed that a statistical analysis (word cloud) of the American Economic Association session titles, or even of the papers, leads to the impression that the economics profession has been relatively uninterested in the ongoing financial and economic crisis. Unfortunately, this observation misses ignores the fact that session proposals are submitted a full eleven months ahead of the ASSA meetings. Think back to January 2008, and the terms ascribed to those who warned of a severe slowdown (“alarmist”, etc.), and the whole discussion is cast in a different light.

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