Events, particularly these days, tend to outrun the best laid plans to anticipate research trends. And it might seem that this was true in the case of this conference, sponsored by UCSC’s Santa Cruz Center for International Economics, the Journal of International Money and Finance, and the Federal Reserve Bank of San Francisco. The conference was planned last year, at a time when most academic researchers were aware and concerned about the incipient economic slowdown, and whether the major economies would “de-couple”, and in turn how these factors would impact the constellation of global imbalances.
Author Archives: Menzie Chinn
What Does the Collapse of US Imports and Exports Signify?
The Collapse in Relation to GDP
In an earlier post, I discussed the startling decline in US imports [0]. Brad Setser has also reported on this phenomenon. This decline is not restricted to the United States, as noted in an OECD report released last week (h/t Torsten Slok):
Some Reflections on CEA Chair Christina Romer’s JEC Testimony
This is a slightly revised version of a piece that appeared on the Washington Post’s The Hearing today.
In her testimony before the Joint Economic Committee today, Dr. Romer, Chair of the CEA, presented an explication of the progress of the financial crisis and the economic downturn, the anticipated effects of the measures undertaken and planned, and the outlook going forward. On most points, we’re in agreement, so I’ll only highlight some key issues of interest.
The Decline in US Imports
I’ve been thinking about trying to convey exactly how startling the drop in U.S. imports has been. First, take a look how much non-oil goods imports (in real terms) have dropped, relative to, for instance, GDP.
Figure 1: Log GDP (blue, left scale), log goods import ex.-oil from NIPA (red, right scale), estimated from trade release (purple, right scale), all in Ch.2000$, SAAR. 2009q1 estimate is based on actual January and February data and March estimate incorporating continued 5% decline from February. NBER recession dates shaded gray. Source: BEA, GDP final release of 26 March 2009, February trade release, NBER, and author’s calculations.
Two Books
…and the Financial and Economic Crisis
I don’t read very many books. At least not during the academic year. But I have read two books recently that are quite germane to thinking about the buildup to the financial crisis, and thinking about how to respond to the current economic downturn. The first is Akerlof and Shiller’s Animal Spirits. The second one is actually not yet out — it’s Justin Fox’s The Myth of the Rational Market (I got a prepublication copy; here’s a hint of it). They are both important books, well worth reading.
The Great Recession Goes Global
One of the most interesting “boxes” in the IMF’s World Economic Outlook (in Chapter 1) is the one entitled, somewhat innocuously “Global Business Cycles”, by Marco Terrones, Ayhan Kose and Prakash Loungani at the IMF. Yet, it’s important to read until the ending paragraph:
To summarize, the 2009 forecasts
of economic activity, if realized, would qualify this year as the most severe global recession during the postwar period. Most indicators are expected to register sharper declines than in previous
episodes of global recession. In addition to its severity, this global recession also qualifies as the most synchronized, as
virtually all the advanced economies and many emerging and developing economies are in recession.
Growth Forecasts for 2009-2010 from the IMF
The IMF’s World Economic Outlook (Chapter 1), released this morning, is grim:
The IMF’s Global Financial Stability Report Is Out
Tables 1.3 and 1.4 (tables) in Chapter 1 bear particularly close attention, although the entire text is useful.
Hi Frequency Output Indicators
The advance release for 2009Q1 GDP will come out on April 29. Until then, we have some readings from the monthly GDP nowcasts, two of which were released on April 15. e-Forecasting identifies an annualized 9.6% decline in first quarter GDP. Macroeconomic Advisers (whose monthly estimates only extend to February) writes “Our latest tracking estimate of a 5.1% decline in GDP in the first quarter includes a 1.2% decline in monthly GDP in March, reflecting a partial reversal in net exports and weakness in PCE and inventory investment.” A lot hinges, then, on what happens to net exports.
The Allocation of Stimulus Funds
From Daniel Wilson, “Are Fiscal Stimulus Funds
Going to the ‘Right’ States?” at the SF Fed (h/t Torsten Slok at DB):
…While
it is too early to tell whether the overall stimulus
package will have its intended effects, this review
suggests that, by and large, the distribution of federal
stimulus funds is indeed tilted toward those states most
likely to spend the funds quickly and effectively.