Author Archives: Menzie Chinn

Net Fiscal Stimulus

From the abstract to “On the ease of overstating the fiscal stimulus in the US, 2008-9”, by (my sometime coauthor) Joshua Aizenman and Gurnain Kaur Pasricha:

This note shows that the aggregate fiscal expenditure stimulus in the United States, properly adjusted for the declining fiscal expenditure of the fifty states, was close to zero in 2009. While the Federal government stimulus prevented a net decline in aggregate fiscal expenditure, it did not stimulate the aggregate expenditure above its predicted mean. …

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Exports: Productivity, Factor Proportions, and Policy Implications

Bringing New Research Developments to Bear

The President’s goal of doubling exports elicited a lot of discussion, and skepticism. In a previous blog post, I examined the prospects of accomplishing this goal from a macroeconomic perspective. However, a few discussions I’ve had with journalists have reminded me that the frontier of international trade theory has moved considerably over the past few years, even as the much of the economic commentary remains mired in the older models. In this respect, the most recent edition of the Economic Report of the President was extremely welcome, as it brought to bear recent innovations in the trade literature.

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In Search of…Crowding Out

There are various definitions of crowding out. There’s crowding out in the financial markets, and crowding out of actual economic activity. In order for crowding out in the financial markets to translate into a reduction of the interest sensitive components of aggregate demand, one needs to see an impact on interest rates. So, what is happening to real (inflation adjusted) interest rates?

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The Demand for Stimulus Funds

From Bloomberg today:

…more than 100 congressional Republicans and several Democrats who, after voting against the stimulus bill, wrote Transportation Secretary Ray LaHood seeking money from $1.5 billion the plan set aside for local road, bridge, rail and transit grants. The $862 billion American Recovery and Reinvestment Act passed last year with no Republican votes in the House and three in the Senate.

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Macroeconomic Advisers: On the Stimulus Package

From today’s Macroeconomic Advisers blogpost, by Joel Prakken:

Frequently, partisan commentators — and even some economists — exclaim that the stimulus has failed because the unemployment rate now exceeds the peak shown in projections prepared before ARRA was implemented. This argument, which clearly — and perhaps intentionally — confuses the pre-stimulus baseline with the incremental effects of the stimulus, would be laughable if it was not taken so seriously in some quarters. For the record, last spring, as the financial crisis that engulfed the economy worsened unexpectedly — but before the stimulus could possibly have had any real effect on the economy — the unemployment rate already had moved above the Administration’s (and many others’) last pre-stimulus projection. So, this is simple: the baseline forecasts were optimistic, but unemployment would be even higher now without the benefit of the stimulus package.

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The December Trade Release: Implications for GDP Growth, Rebalancing, Doubling Exports and the US-China Deficit

The December trade release surprised some observers in terms of the rise in imports. [0] I think there are some other interesting implications. First, the implied downward revision in GDP is minimal. Second, the drop was less pronounced in the ex-oil trade balance. Third, although real trade flows are rising from their troughs, they have not re-attained pre-Lehman levels. Fourth, the US-China goods trade balance continues to improve.

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