A year ago, I observed that the Bush Administration was projecting a balanced budget eventually, by assuming away expenditures. We’re in for a replay.
Author Archives: Menzie Chinn
Thinking about Monetary Policy Efficacy: Back to the Textbooks
As the Fed drops interest rates, I’ve been trying to sort out all the channels that monetary policy will affect output, and which ones are likely to be short circuited this time around.
IMF Cuts Growth Forecasts
Decoupling seems ever more unlikely…
How Much Stimulus? Dollar Amounts versus Efficacy
The stimulus package seems near a done deal, and the critiques are abounding — as they should be. Greg Mankiw says no fiscal stimulus package is necessary, given the current state of the economy. Andrew Samwick says implementing a stimulus package ill conceived given that excessive deficits are what got us into this mess (a view I have some sympathy with). Jim Hamilton argues that a properly constructed fiscal stimulus is unlikely to be implemented in time, and may additionally further erode the dollar’s role as a safe haven. Paul Krugman argues that the structure of the package leaves much to be desired.
Why One Percent of GDP? Opportunity Cost Illustrated (Part III)
As the decoupling thesis becomes more and more tenuous [1], and the rest of the world exhibits greater evidence of a slowdown [2], [3], [4], leading to predictions of a more persistent and deeper slump in the US than previously anticipated [5], I wonder — where did that presciption of a one percentage point of GDP fiscal stimulus come from?
More Thoughts on Fiscal Stimulus: Business Incentives
What does the literature say about the efficacy of incentives for investment?
More Things I Learned at ASSA: Inflation and Labor Cost Measures
One of the AEA sessions I attended (at least in part — I missed the first paper) was titled (excitingly) “Reconciliation of Seemingly Inconsistent Data Series”.
The Implications of a Textbook Analysis of Macro Stabilization via Discretionary Fiscal Policy
From Reuters:
If Bush and Congress are to act at all, they will have to move quickly to have any impact, says Alan Auerbach, an economics professor at the University of California, Berkeley, who has done research on the effects of fiscal stimulus.
“Timing is extremely important,” he says. “Recessions typically last less than a year, so unless you can be pretty quick, it’s not worth doing.”
What Are the Prospects for a Two Recession Bush Presidency?
With recession calls becoming more frequent ([1], [2], [3], [4], [5]) it might pay to revisit the indicators that the NBER looks at in determining the turning points in recessions (The fact that NBER put up some new recession-dating-FAQs just a couple days ago might be a leading indicator of sorts).
International Reserves: Messages from the ASSA
I did not get a chance to go to too many sessions at the ASSA meetings in New Orleans (the AEA agenda is here). That being said, I did manage to squeeze in a few on international economics, and the topic of several papers was foreign exchange reserves.