I was wondering how long real long term (ex post) interest rates remained negative after the onset of the Great Depression. This is obviously interesting given the large amount of slack currently in the global economy, and the rampant fears of crowding out (see [1]) as governments continue to run deficits (and are likely to continue as leaders refuse to raise tax revenues). Fortunately, Lawrence Officer and Sam Williamson have done the profession an enormous service by compiling online historical series on many variables, including interest rates and price, at Measuring Worth. It turns out ex post real rates were really low for a very long time…
Author Archives: Menzie Chinn
International Trade, an Enhanced Petroleum Transportation Network, and Gasoline Prices
Don’t expect a big impact on gasoline prices from opening up an oil pipeline to the coast.
I am a little late to this debate [0] [1] [2], but I wanted to highlight something that is clear from basic international trade theory. Opening up to international trade changes relative prices, and in fact raises some prices. If a pipeline were to be built which could transport oil currently produced in the Midwestern US to the Gulf Coast, then to the extent that oil in the Midwest is lower priced than on the coasts, then average US oil prices may actually rise with completion of the pipeline.
Simon Johnson and James Kwak on Learning — or Not — from the Past
I’ve been reading some history, from Simon Johnson and James Kwak‘s new book, White House Burning. And it strikes me how ahistorical (or just plain ignorant of history) so many of the prescriptions for fixing up the economy are. For instance, the tax cutting ideology of today is merely a recapitulation of what has caused America to come to grief at the Nation’s birth.
Chinn-Ito Financial Openness Index Updated to 2010
The Chinn-Ito KAOPEN index — a measure of de jure financial openness — has just been updated to 2010 (site here). The results show some slight retrenchment in recent years, particularly in LDCs and emerging markets, as shown in Figure 1.
Assume a Can Opener*
Revisiting the Determinants of the Term Premium
In last Thursday’s post, John Kitchen recounted our joint work on what amount of foreign financing would be required to make consistent projections of government debt, and short and long term interest rates. That article from International Finance is now freely available on the Council on Foreign Relations website here.
“The Eurozone in Crisis: Origins and Prospects”
Time to breathe a sigh of relief, with resolution of the Greek bailout? Not so fast. Greece is likely to need re-adjustments to its plan [0] Plenty of challenges remain in the eurozone; PIMCO’s El-Erian says Portugal is next [1]. In fact, as Jeffry Frieden and I argue, the resolution of the problems facing eurozone policymakers is likely to be contentious and prolonged. From an article forthcoming in the Spring issue of the La Follette Policy Report, by me and Jeffry Frieden (since the article is not yet published, the working paper version is here):
Guest Contribution: “Financing U.S. Debt”
In a Guest Contribution today, John Kitchen (U.S. Treasury, formerly Chief Economist, Office of Management and Budget) addresses the issue of “Financing U.S. Debt: Is There Enough Money in the World — and at What Cost?”. The comments are based on a paper recently published in International Finance (Winter 2011), co-authored with Menzie Chinn. The views expressed are the author’s and do not represent the views of the U.S. Treasury.
“Scoring” the Romney Economic Plan
Well, this could be a short blogpost, because in Mitt Romney’s words, “frankly it can’t be scored” [The Hill]. However, I think it of interest to consider what it would take to make the Romney plan deficit neutral, as he has argued it would be.
The Amazing Prescience of the Capitol Steps
I’ve been a fan of the Capitol Steps for decades now, but only recently have I fully appreciated the prescience of their musical insights. I hope Econbrowser readers will too, by singing along to this twenty year old song, “Favored Right Wing” [sample], sung to the tune of “My favorite things”. (This song is so old, that no complete online version exists, and I had to laboriously transcribe the words by hand(!), so apologies if there are a couple errors.)