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.
Author Archives: James_Hamilton
Signs of a thaw
Yes, I saw the discouraging headlines. But I also see signs of hope in last week’s economic news.
December auto sales
On a seasonally adjusted basis, U.S. light vehicle sales remained deeply depressed in December. But at least things don’t seem to be any worse than they had been the previous month.
The oil shock and recession of 2008: Part 2
In my previous post, I presented evidence that the oil price increase over 2007:H2-2008:H1 made a significant contribution to the slowdown in consumption spending in general and decline in spending on domestic automobiles in particular. Here I discuss why this should be regarded as a key development that turned the slowdown in growth into a recession.
The oil shock and recession of 2008: Part 1
This is the first in what I’m planning will be a series of posts discussing the contribution that the energy price spike of 2008 made to our present economic difficulties. In this first installment, I revisit a very interesting research paper on the response of consumer spending to energy price increases written by Lutz Kilian (Professor of Economics at the University of Michigan), and Paul Edelstein (Senior Economist for Decision Economics). I first brought this paper to the attention of Econbrowser readers in the spring of 2007. I thought now would be a good time to take a look at how well the equations in Edelstein and Kilian’s paper can describe what we saw happen in the later part of 2007 and first half of 2008.
Links for 12-24-08
Today I outsource to a couple of links I found interesting:
Dave Cohen on oil prices.
Stephen Gordon on economists’ fatal flaw.
James Morley on the need for a new Fed-Treasury accord.
Federal Reserve balance sheet
Here I survey how we got here, where things currently stand, and what it all means.
Fiscal stimulus: the case for block grants
A few thoughts on how the federal government might best implement a fiscal stimulus.
The other shoe begins to drop
Chrysler LLC, awaiting a federal rescue as its cash dwindles, will shut all 30 of its plants for at least a month starting Dec. 19 as unsold cars and trucks pile up at showrooms.
Ford Motor Co. said it will idle most of its North American assembly plants for the first week of January, while General Motors Corp. said a new factory making engines for the Chevrolet Volt electric car is being delayed to conserve cash.
The cutbacks showed how far automakers are going to save money and prune output in a year in which industrywide U.S. sales are poised to fall to their lowest levels since 1991. GM and Chrysler say they may run out of operating funds in just weeks without emergency U.S. aid.
Quantitative easing
Today’s announcement from the Federal Reserve marks the end of the road for Plan A (fighting the recession by lowering interest rates), and the beginning of … what?