The CBO has just released estimates of the cyclically adjusted budget balance (or, specifically, the budget balance without automatic stabilizers). The cyclically adjusted budget balance is a better measure of the fiscal stance. The evolution of this series is interesting.
Monthly Archives: March 2013
Stevenson and Wolfers: “Is Paul Ryan an Inflation Nutter?”
Additional evidence addressing the question asked by Betsey Stevenson and Justin Wolfers.
Why I’m more worried than Paul Krugman about the U.S. debt burden
I have been writing recently ([1], [2]) about my paper Crunch Time: Fiscal Crises and the Role of Monetary Policy, co-authored with David Greenlaw (Managing Director and Chief U.S. Fixed Income Economist for Morgan Stanley), Peter Hooper (Managing Director and Chief Economist for Deutsche Bank Securities Inc.), and Frederic Mishkin (professor at Columbia University and former governor of the Federal Reserve). Our paper has generated some interesting discussion by
Paul Krugman and
Matthew O’Brien, among others, to which I’d like to respond.
Assessing the Economics of the Ryan Plan
The new House budget proposal has just been released. [0] In the section discussing economic effects, I read the following:
Revisions and Conditioning, Again
An interesting new working paper, “Quarterly GDP Revisions in G-20 Countries,” by Manik Shrestha and Marco Marini, documents the fact that at the end of 2008, statistics understated the true extent of U.S. GDP decline.
Does the U.S. risk a fiscal tipping point?
In my previous post
I reviewed the recent experience of a number of countries whose sovereign debt levels became sufficiently high that creditors began to have doubts about the government’s ability to stabilize debt relative to GDP. When this happens, the government starts to face a higher interest rate, which makes debt stabilization all the more difficult. Is there any danger of the same adverse feedback loop starting to matter for the United States?
ECRI’s Lakshman Achuthan: U.S. recession began around the middle of last year
I’m dubious, but I will not “pull a Lazear”. Or a Don Luskin for that matter.
Still in Search of Expansionary Fiscal Contraction
The revisions in Euro zone and UK GDP figures have confirmed the lackluster performance in economies where rapid fiscal consolidation has been implemented. In the Euro zone, estimated growth has now been negative for five quarters. And in the UK, revised figures indicate negative growth for 2012Q4. In contrast, the US has exhibited continued, albeit modest, growth.
Fiscal tipping points
At the recent U.S. Monetary Policy Forum I presented the paper Crunch Time: Fiscal Crises and the Role of Monetary Policy, along with co-authors David Greenlaw (Managing Director and Chief U.S. Fixed Income Economist for Morgan Stanley), Peter Hooper (Managing Director and Chief Economist for Deutsche Bank Securities Inc.), and Frederic Mishkin (professor at Columbia University and former governor of the Federal Reserve). One of the goals of our research was to try to understand the events that can lead a country to a tipping point in which it faces rapid increases in the interest rate on its sovereign debt, as a result of which the country finds itself with an unmanageable fiscal burden.
Eliminating Energy-Related Tax Expenditures
With domestic oil production soaring, and petroleum and coal sector profits rising at a rapid clip, now seems the right time to cut back on tax expenditures related to oil extraction and processing.