I organized the International Economics and Finance Society panel on “Financial Integration and Global Rebalancing” at the
Allied Social Sciences Association meetings in Chicago. In the end, the papers fit together much better than I had anticipated; they all dealt with with the factors driving the puzzling pattern of current account balances — and how policy can possibly influence those patterns.
Author Archives: Menzie Chinn
Lost Decades at ASSA/Chicago
For those of you attending the Allied Social Sciences Association (and AEA) meetings in Chicago, January 6-8, I’ll be at the W.W. Norton booth in the exhibition hall, Friday afternoon, particularly 5PM onward, ready to talk about Lost Decades: The Making of America’s Debt Crisis and the Long Recovery.
Looking Forward in the New Year: Crowding Out and Hyper-Inflation Watch
In my previous post, I cited Jeff Frieden’s and my proposal for a conditional inflation target. Yet, according to several observers, we are either on the brink of crowding out due to elevated government deficits [0], or high to hyperinflation, due to monetary base expansion [1]. As has been noted, none of these outcomes have yet materialized, despite months of such warnings. [2] [3] Here, I wanted to evaluate where market expectations stand on these views.
A Call for Action: Conditional Inflation Targetting
From an article by myself and Jeffry Frieden in the newly released Foreign Policy:
[We need] inflation — just enough to reduce the debt burden to more manageable levels, which probably means in the 4 to 6 percent range for several years. The Fed could accomplish this by adopting a flexible inflation target, one pegged to the rate of unemployment. Chicago Fed President Charles Evans has proposed something very similar, a policy that would keep the Fed funds rate near zero and supplemented with other quantitative measures as long as unemployment remained above 7 percent or inflation stayed below 3 percent. Making the unemployment target explicit would also serve to constrain inflationary expectations: As the unemployment rate fell, the inflation target would fall with it.
The Year in Review: Fantastical Pseudo Economics
Since the media are full of “year in review” pieces, I thought I’d make a contribution of my own. One of the best things about being a blogger is being able to comment quickly on the most outrageous, nonsensical assertions presented in the guise of analysis. Here are my “ten best” (actually — most hilariously deluded) excursions into the fantasy world from my postings to Econbrowser. The inspirations range from Speaker Boehner’s math to the Heritage Foundation’s simulations (where have you gone, Bill Beach!)
Regulatory Uncertainty, Macro Policy Uncertainty, and Demand
With the Republicans in the House maximizing policy uncertainty, I think it useful to recount some of the recent research on how uncertainty is affecting output. In particular, I want to go beyond the talking point which asserts that regulatory uncertainty is depressing output (data free analysis here), given that we know empirical results asserting the level of regulation depresses output are not robust [1].
Guest Contribution: US Federal Regulatory Budget and Macroeconomic Outcomes: What Do We Know?
By Tara M. Sinclair
Today, we’re fortunate to have Tara M. Sinclair, Associate Professor of Economics and International Affairs and a scholar at the GW Regulatory Studies Center at The George Washington University, as a Guest Contributor.
There has been a lot of debate lately about the costs of regulation for the US economy. In a Regulatory Policy Commentary posted on December 19th, Kathryn Vesey, a research associate at the GW Regulatory Studies Center, and I discuss our preliminary findings from a study of the macroeconomic impacts of changes in the “regulators’ budget,” i.e. the part of the US federal government budget allocated to developing and enforcing federal regulations.
Dispatches (XVII): “Things are continually and gradually moving in the right direction”
That’s the concluding line from the release issued by the Wisconsin Department of Workforce Development’s Secretary Reginald Newson. The preceding sentence is “The job numbers are a lagging indicator for economic conditions, and we will continue to move forward.” Here are two graphs, with updated DWD data incorporating revisions, and preliminary data for November, that place those comments in context.
“Are Chinese Trade Flows Different?”
The answer is no, and yes.
From the paper by that title, coauthored with Yin-Wong Cheung (UCSC, CUHK) and Xingwang Qian (SUNY Buffalo State). (This is a revision of the paper discussed here.)
For the “no” part:
We find that Chinese trade flows respond to economic activity and relative prices — as
represented by a trade weighted exchange rate — but the relationships are not always precisely or
robustly estimated. Chinese exports are generally well-behaved, rising with foreign GDP and
decreasing as the Chinese renminbi (RMB) appreciates….
Dispatches (XVI): Measuring Progress in Wisconsin
Macroeconomic indicators turning downward.
There is a recurring commercial going out over Wisconsin airwaves arguing for progress [0], link to . This impelled me to consult some metrics regarding progress in the state, following up on this
post from a month ago.