According to one widely adopted class of economic models, raising the inflation rate would be one of the most helpful things that could happen to economies in the situation currently faced by Japan and the U.S. Here I describe some new research relevant for testing that theory.
Author Archives: James_Hamilton
The end of low interest rates
The yield on 10-year U.S. Treasury securities averaged 1.8% during 2012, the lowest levels in 60 years. But that episode may now be behind us.
It’s not just the Fed
The yield on 10-year U.S. Treasuries has jumped 50 basis points since the start of May, leading some to speculate that the market is already starting to price in anticipation of an end to the Fed’s bond-buying program. There may be some truth to that, but it’s only part of the story.
The more you borrow, the more you’ll pay
A key reason to be concerned about high debt levels is very simple– you’re going to be stuck with the bill for the interest payments for the rest of your life.
Is Social Security running out of money?
On Friday, the trustees for the Social Security and Medicare trust funds released their annual reports. A typical summary in the press is this one from the Los Angeles Times:
The trustees overseeing the finances of Social Security and Medicare issued their latest report on Friday, declaring that a) the Social Security Trust Fund is expected to run out of money in 2035, the same estimate as last year; b) Medicare’s hospital trust fund is expected to run out of money in 2026, a two-year improvement over last year’s estimate; and c) the Disability Insurance Trust Fund is expected to run out of money in 2016, just as projected last year.
Here’s why I don’t believe that’s the correct way to think about these numbers.
Reinhart and Rogoff defend themselves
Carmen Reinhart and Kenneth Rogoff have posted an open letter to Paul Krugman to try to correct some of the misrepresentations of their scholarship that continue to be repeated by people who should know better.
Bernanke says no change for now
In testimony before Congress today, Bernanke explained why the Fed’s large-scale asset purchases are continuing.
Sovereign debt concerns in 2013
Interest rates on government debt for a number of European countries– notably Greece, Portugal, Ireland, Italy, and Spain– shot up considerably during 2010-2012. Those yields have fallen significantly from their peaks, though these five countries still face higher borrowing costs than most other countries in Europe.
How Fannie Mae made its profit
Mortgage buyer and insurer Fannie Mae was in the news again this week.
The soaring stock market
Broad market indicators like the S&P500 have been making all-time nominal highs. What’s the significance of that for investors and the economy?