Macroeconomic Advisers estimates second quarter growth at around 0.6% SAAR. [0] Is it because of the sequester and the ending of the payroll tax rate reduction? In part, Jeff Frankel thinks so; see also [1]. Macroeconomic Advisers had predicted something over a 1% reduction in growth rate (SAAR) relative to baseline in the second quarter [2]
Author Archives: Menzie Chinn
What Were They Thinking?
As the Fed sets in place the road map to withdrawing monetary stimulus, I wonder how it is that so many believed the Fed’s implementation of unconventional monetary policy would lead to surging high inflation. Examples include House Budget Committee Chair Paul Ryan, who stated in November 2008 2010:
Assessing the Trilemma
From “Rounding the Corners of the Policy Trilemma: Sources of monetary policy autonomy,” by Michael Klein and Jay hambaugh:
A central result in international macroeconomics is that a government cannot simultaneously opt for open financial markets, fixed exchange rates, and monetary autonomy; rather, it is constrained to choosing two of these three. …
Inflation and Debt
From Debt and Incomplete Financial Markets: A Case for Nominal GDP Targeting, by Kevin Sheedy (LSE), presented at the NBER Summer Institute:
This paper has shown how a monetary policy of nominal GDP targeting facilitates efficient risk
sharing in incomplete financial markets where contracts are denominated in terms of money….
Ever Expanding Government Employment Assessed, Yet Again
(It is expanding as long as down is redefined as up)
How Competitive Is China?
Newly developed indicators suggest eroding international competitiveness.
Another Item for the Annals of Innumeracy (and PoMo Math)
In response to what I thought were straightforward renditions of the data indicating reductions in government spending, reader W.C. Varones writes: “Cutting government spending” is a real stretch.” In a (perhaps vain) attempt to convince him that indeed spending is declining, I present data from BEA and CBO (I am hoping that he hasn’t joined the Jack Welch view of government statistics gathering).
Fiscal Drag and 2013Q1 Growth
The third release of 2013Q1 GDP suggests even more tepid growth than originally thought. Government spending at all levels, state/local, and both Federal defense and nondefense, is deducting from growth (in contrast to the previous two recoveries).
“Global Spillovers and Domestic Monetary Policy”
If QE1 through QE3 and other unconventional monetary policy (UMP) measures had little impact upon implementation, why did the hint of a stepback induce such large reactions in international markets?
The ECB’s OMT and the German Constitutional Court
The Outright Monetary Transactions (OMT) program undertaken by the ECB has been key in stabilizing sovereign yields in the euro area periphery. Helmut Siekmann and Volker Wieland have evaluated the (German) legal concerns surrounding the program, here.