Recent news items have noted the fears of several individuals that QE2 will spark rapid inflation, e.g. [1]. For instance, Representative Paul Ryan, expected to become the Chairman of the House Budget Committee in January, stated: “I think it’s going to give us a big inflation problem down the road.”
Here are what various market-based indicators suggest.
By Willem Thorbecke
Today, we’re fortunate to have Willem Thorbecke, Senior Research Fellow at Asian Development Bank Institute, and consulting fellow at Japan’s Research Institute of Economy, Trade and Industry (RIETI) as a guest contributor. The views expressed represent those of the author himself, and do not necessarily represent those of ADBI, RIETI, or any other institutions the author is affiliated with.
The Employment situation release for October surprised on the upside: the Bloomberg consensus was for 60,000 increase and the actual was 151,000. And yet I receive emails from the JEC-Republican stating:
The use of emergency rooms for routine care fell, as did hospital admissions for treating preventable conditions, and the proportion of uninsured among hospital inpatients (by 36%), while there was no increase in the growth of hospital costs. From the NBER Digest article summarizing NBER working paper 16012 [ungated version] by Jonathan T. Kolstad and Amanda E. Kowalski:
Typically, economists assume that news, defined as information that induces revisions to expectations of the future value of relevant variables, should affect asset prices simultaneously, and in a consistent manner. That’s why today’s announcement of QE2 has somewhat surprising effects, if one is to believe that QE2 had already been priced in [0].
Tax cut version
Not that there’s anything wrong with that!
I have been pondering two seemingly separate issues — the first, what constitutes an “elite”. David Brooks says it’s bobos; Charles Murray says it’s those who “…spend school with people who are mostly just like them — which might not be so bad, except that so many of them have been ensconced in affluent suburbs from birth and have never been outside the bubble of privilege. Few of them grew up in the small cities, towns or rural areas where more than a third of all Americans still live.” Personally, I always thought American elites were football players and the folks highlighted on Entertainment Tonight, given the amount of attention devoted to those two groups. (See other recent commentary here) The second, as a social scientist, what interests should one expect the U.S. Chamber of Commerce to be lobbying for [1] (since we do not have direct observation on the funding of the group, we need to infer the interests). I have come to a single answer that partly addresses both of these two questions:
And Implications for US Exports
Nearly two years ago, I noted the collapse in world trade, and observed that various explanations for the decline ranged from the drying up of trade financing, to amplification due to vertical specialization, to the composition effect (the fact that durables are over-represented in trade relative to GDP).
By Assaf Razin
Today, we’re fortunate to have Assaf Razin, Friedman Professor of International Economics at Cornell University, and Professor Emeritus at Tel Aviv University, as a Guest Contributor.