In today’s NY Times, Peter Eavis writes about the message in “soaring bond prices”:
…a huge bond market with a strong track record for predicting economic problems is flashing a warning sign right now. … The prices of Treasury bonds are rallying fiercely.
For academic researchers who are readers of this blog (and I know you’re lurking out there), I wanted to call attention to my new paper on Macroeconomic Regimes and Regime Shifts:
Many economic time series exhibit dramatic breaks associated with events such as economic recessions, financial panics, and currency crises. Such changes in regime may arise from tipping points or other nonlinear dynamics and are core to some of the most important questions in macroeconomics. This chapter surveys the literature on regime changes. Section 1 begins with an interpretation of the move of an economy into and out of recession as an example of a change in regime and introduces some of the basic tools for analyzing such phenomena. Section 2 provides a detailed overview of econometric methods that are appropriate for time series that are subject to changes in regime. Section 3 summarizes the ways in which changes in regime can be incorporated into theoretical economic models and briefly reviews applications in a number of areas of macroeconomics.
I was interested to take a look at our recent weak economic performance from a longer-term perspective.
I am a little slow responding to the stunning revision to the first-quarter GDP estimates that came out two weeks ago, but here are my thoughts about the new estimates.
From a paper by Carlos Vegh, (John Hopkins University), Daniel Riera-Crichton (Bates College) and Guillermo Vuletin (Brookings Institution) presented at the USC-JIMF conference “Financial Crisis in the Aftermath of Global Crisis” (described here):
From an article in the La Follette Policy Review:
In 2010 as the Great Recession was releasing its grip on the world’s economy, the United Kingdom’s newly elected Conservative-Liberal government embarked upon a policy of fiscal consolidation—higher taxes and drastically reduced spending—with the aim of stabilizing the ratio of government debt to gross domestic product (GDP) while spurring economic growth….
If a collapse in aggregate demand is not at fault, then was an aggregate supply shift? A quick-and-dirty evaluation using some back-of-the-envelope calculations
It was five years ago that the ARRA was passed…and thence arose a fierce storm of criticisms, ranging from the idea that the stimulus would occur after the recovery was complete (e.g., Ed Lazear), to the Treasury view (government spending would crowd out completely private spending, e.g., Eugene Fama). Time to take stock. The Council of Economic Advisers has released its last report on the ARRA, and other stimulus measures, discussed in a blogpost by CEA Chair Jason Furman.
The Bureau of Economic Analysis announced today that U.S. real GDP grew at a 3.2% annual rate in the fourh quarter. That’s two quarters in a row now of above average growth. Given recent experience, that sounds pretty good.
Yesterday the BEA finally reported GDP numbers for the third quarter, a month later than originally scheduled owing to the earlier shut-down of federal operations. The U.S. economy is estimated to have grown at an annual rate of 2.8%. That’s below the historical average, but better than the previous three quarters.