The new semester has begun, and I was reviewing economic trends in my macro courses. In my lectures, I highlighted the sharp drop-off in consumption. In the following, I discuss how well my predictions for consumption from last November have held up.
Author Archives: Menzie Chinn
Guest Blog: Financial Crisis and Reform Déjà Vu
By Simon van Norden
Today, we’re fortunate to have Simon van Norden, Professor of Finance at HEC Montréal (École des Hautes Études Commerciales), as a guest blogger.
“Once you’ve seen one financial market crisis…you’ve seen one financial market crisis.”
— Attributed to Federal Reserve Board Governor Kevin Warsh by former US Treasury Assistant Secretary for Economic Policy Phillip Swagel in The Financial Crisis: an Inside View, March 2009, p. 4.
State and Local Employment and Spending Trends
In a recent Economix post, Casey Mulligan asserts that aid to the states and localities is unwarranted given that state and local government employment is doing just fine. His graph highlighting cumulative gains/losses ends in January 2009, to show what had transpired by the time the stimulus bill was being debated. How do things look if one extends the sample to August 2009? And what about spending as opposed to employment?
The Cyclically Adjusted Budget Balance
My article with Jeffry Frieden and the decomposition of the 2001-07 change in the deficit discussed in The Lasting Legacy of the Bush Tax Cuts inspired lots of vigorous debate regarding the role of the Bush deficits in the current crisis. Here is the CBO‘s take on the cyclically adjusted budget balance:
The Lasting Legacy of the Bush Tax Cuts
From The 2009 Budget Deficit: How did we get here? by John Irons, Kathryn Edwards, and Anna Turner:
This Issue Brief examines the details and causes of the current budget deficit and the role the current recession has played. The years between 2001 and 2007 saw a large deterioration in the budget balance, which was driven chiefly by legislated policy changes. The Bush-era tax cuts are the largest contributors to this period of policy-induced increases to the federal budget deficit. . . .
Of Ideologues and Ranters
From Arnold Kling‘s entry yesterday:
Kwak goes on to endorse Chinn’s ideological rant that the Bush tax cuts caused the financial crisis. Yes, I know that Chinn is speaking in the tone of economic analysis rather than a rant, but only a left-wing ideologue would take the thesis seriously. I bet Kwak cannot find a blog post of Chinn’s where he made a policy point against Democrats/liberals or for Republicans/conservatives.
I Am Even More Confused Now…
By Richard Posner’s math…On August 25th he wrote, regarding Dr. Romer’s August 6 speech:
Reflections on the Causes and Consequences of the Debt Crisis of 2008
From “Reflections on the Causes and Consequences of the Debt Crisis of 2008,” in the La Follette Policy Report by Menzie Chinn and Jeffry Frieden:
In late 2008, the world’s financial system seized up. Billions of dollars worth of financial assets were frozen in place, the value of securities uncertain, and hence the solvency of seemingly rock solid financial institutions in question. By the
end of the year, growth rates in the industrial world had gone negative, and even developing country growth had declined sharply.
OMB and CBO Economic Projections
The WHite House has just released the Mid Session Review and the CBO the Budget and Economic Outlook: An Update. Here are the economic projections:
Richard Posner Misunderstands Numbers, Yet Again
Richard Posner displays his failure to understand the difference between expenditures (reported on Recovery.com) and tax rebates (not reported online, but have to be estimated).