From the CEA’s report “The Economic Impact of Recent Temporary Unemployment Insurance Extensions” released earlier today.
Author Archives: Menzie Chinn
Chicken**** Passes House
(That’s not my phrase, it’s Rep. Boehner’s). Or, tax cut extension for income less than $250,000 passes. From The Hill:
House passes middle-class tax bill with three Republicans supporting
By Vicki Needham – 12/02/10 04:00 PM ET
The House passed by a vote of 234-188 a measure that permanently extends expiring middle-class tax cuts and provides a patch for the alternative minimum tax.
BCA, UI and EGTRRA/JGTRRA
Four Acronyms in a Very Depressing Play
Truly we are in a strange world where legislative extension of unemployment insurance payments, which is highly effective at maintaining aggregate demand, is stalled, while giving tax cuts to households with income in excess of $250K (a.k.a. the Todd Henderson households) moves forward despite having very little impact on employment and aggregate demand. In other words, on benefit-cost grounds we would want to do exactly the reverse. Given the sheer incoherence of some of the arguments being propounded, it might be useful to recap some findings.
And This Is Going to Lead to High Inflation?
Core at Zero
At least, month-on-month. Three month annualized inflation — either PCE or CPI — both under 0.5%:
Representative Ryan Requests
And Barry Eichengreen anticipates with an answer
Assessing Fantasy Scenarios
With the EGTRRA/JGTRRA extensions and proposals for tax reform and debt reduction flying left and right, I think it behooves us to review what the theoretical (well, actually undergraduate textbook) literature and the empirical assessments suggest will be the impact of tax rate changes. I want to devote special attention to the hypothesis that there will be large dis-incentive effects on high income households should their tax rates go up, with correspondingly large negative ramifications for overall economic activity.
Cut the Deficit!
The New York Times has provided a neat interactive graphic that allows one to see how various proposals affect the budget deficit in 2015 and 2030, here.
Jeffrey Frankel on QE2, Inflation Hysteria and Actual Facts
Recalling President Reagan’s statement, “Facts are stupid things”, it’s no surprise that the disinformation campaign arguing that the Fed has been pressured into engineering a bout of high inflation continues. Jeffrey Frankel helps bring some facts to the table. From “The pot again calls the kettle red: Republicans, Democrats, the Fed and QE2”.
Losing the Battle, Winning the War?
Or, the Economic Implications of the G-20 Meeting’s Aftermath
The narrative emerging in the wake of the G-20 meetings is that, not only is the rest of the world angry at us over quantitative easing, but we also achieved none of our diplomatic objectives regarding rebalancing (the coverage seemed particularly negative on CNBC). [1] [2] [3] In addition, the outcome has been taken as a harbinger of the end of US dominance over economic policymaking, to the extent the US no longer has the intellectual high ground (given the failure to regulate the financial system in a sensible way) and the relative decline in economic weight.