The Republican members on the FCIC released a Financial Crisis Primer that has been debunked by a number of observers (since so many of the old canards were hauled out, this was easily accomplished). [0] [1] But the refusal to allow the phrase “Wall Street” in the final commission report [2] impelled me to quantify the attempts by Wall Street to influence financial legislation in the years leading up to the financial crisis.
Author Archives: Menzie Chinn
Hazards in Interpreting Seasonals
Professor Casey Mulligan has an interesting post, in which he observes that while retail sales are about 15-20% higher in December than in the previous three months, retail employment is only about 4% higher in December than October, thus proving that fiscal stimulus cannot be very effective at raising employment.
Petroleum Prices and the International Dimension
Paul Krugman observes that there are many real side factors that should drive oil prices higher (in an article that cites Jim’s 2009 paper). I certainly don’t have much to add in terms of thinking about oil prices and domestic macro implications, but Krugman’s note did impel me to examine more closely the international aspects of the underlying demand factors.
Consumption, Imports and the Prospects for US External Balances
Most forecasts incorporate a resurgence in the US trade and current account deficits. This projection makes sense to the extent that the US is expected to grow faster than Europe and Japan, and the estimated income elasticity of US imports exceeds that of US exports (the Houthakker-Magee finding [0]). Here’s a summary of forecasts for the current account.
Capital Controls on the Agenda?
At the recent conference related to G20 issues (discussed in this post), capital controls as a means of managing capital inflows was high on the agenda. The World Economic Forum’s Financial Development Report has a nice schematic outlining some key types of controls:
Some Lessons from Recent Global Macro Events
I’ve just attended a conference sponsored by the Reinventing Bretton Woods Committee, entitled “The International Monetary System: Old and New Debates”, which took place against the backdrop of France’s chairmanship of the G-20.
Forgetting about Demand, Once Again
Professor Mulligan asserts that the payroll tax cut will have little effect on output, even in sticky price Keynesian, and New Keynesian, models. He writes:
Trade and Credit, Again
From Off the Cliff and Back? Credit Conditions and International Trade during the Global Financial Crisis, by Davin Chor and Kalina Manova:
The Correlation between Money Base Growth and Inflation
I’ve been reading through undergraduate textbooks, trying to figure out where the idea that money base expansion must necessarily manifest itself in higher inflation. In Stephen Williamson‘s macro textbook, he argues that fears of inflation are motivated by the view that eventually, money base expansion will feed into money expansion (box on pp. 432), despite the fact that there is no obvious contemporaneous correlation between the two variables.
The Hill: “Senate rejects million-dollar tax-cut compromise in Saturday session”
Or more clearly, all Senate Republicans plus one four Democrats reject a tax cut for incomes below one million dollars. From The Hill:
Republicans had held firm in recent weeks that the tax cuts — designed to benefit the wealthiest Americans — should be permanently extended as a whole. Democrats had argued that only the cuts for the middle class should be extended, also blasting Republicans for failing to propose any spending cuts or revenue increases to pay for all of the cuts.