We finally get our debt-ceiling deal, only to watch the S&P500 fall 3.7% from Thursday’s close. What gives?
Author Archives: James_Hamilton
Yet another discouraging GDP report
The Bureau of Economic Analysis reported today that U.S. real GDP grew at an annual rate of 1.3% during the second quarter of 2011, and revised down its estimate of first-quarter growth to an even more anemic 0.4%. We knew the first half of the year was disappointing, but this is even weaker than most of us were anticipating.
Relevant economics
University of Oregon economics professor Mark Thoma has an interesting article on the direction economics should be taking.
Effects of the Fed’s large-scale asset purchases
Some Federal Reserve officials apparently have a rule of thumb for thinking about the impact of the Fed’s large-scale asset purchases. I was curious to compare those estimates with the numbers that would come out of my own research.
Ending the debt ceiling stand-off
Here’s how I’m hoping this might work out.
Consumers get more worried
Reuters reported yesterday that the preliminary July reading for the Thomson Reuters/University of Michigan’s index of consumer
sentiment fell to 63.8, the lowest level in more than two years. In fact, that’s about as low as this measure ever got in the recessions of 1981-82 or 1990-91, and is well below values for the recession of 2001.
Evaluating quantitative easing using event studies
Event studies are one method that has been used to try to assess the potential effects on markets of nonstandard monetary policy measures such as QE2. The Federal Reserve Bank of St. Louis recently hosted a conference whose objective was to evaluate evidence on the effects of these policies. Here I relate remarks I made at the conference on some of the challenges from trying to use event studies to answer this question.
Debt ceiling options
As Congress and the President continue to wrangle over raising the debt ceiling, more of us are wondering, what would happen if the debt ceiling isn’t raised? To paraphrase Sherlock Holmes, when you have eliminated the impossible, whatever remains, however improbable, must be Plan A.
Ron Paul’s debt default proposal
Congressman Ron Paul (R-TX) is apparently proposing that the U.S. Treasury simply refuse to pay interest and principal on the $1.6 trillion in Treasury securities currently owned by the Federal Reserve. Dean Baker, Greg Mankiw,
Steve Williamson, and
Stephen Gandel all seem to think it’s not a totally crazy idea. Here’s what I think they’re missing.
Hanging in there
Higher oil prices slowed the economy in the first half of this year. But I don’t expect things to get a whole lot worse.