Has spending on international travel to and tourism in the US dropped more than expected based on world GDP and the value of the dollar? Yes.
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Guest Contribution: “Bill Nordhaus & Paul Romer, Nobel Prize winners”
Today, we present a guest post written by Jeffrey Frankel, Harpel Professor at Harvard’s Kennedy School of Government, and formerly a member of the White House Council of Economic Advisers.
The Tourist “Trump Slump”
As international tourist arrivals have risen globally, those for the US have declined, as noted here.
The Mini-Recession of 2015-16?
Neil Irwin at the NYT has an interesting article on the localized recession in 2016. One conclusion he makes:
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US Tariff Levels Now at Emerging Market Levels
The following graph compares average tariff levels across countries.
One can take comfort from the fact US tariff rates are historically low.
I have two observations:
- We live in an era of global value chains, so that the value added has been chopped up and split across nations. In this context, a tariff of 10% on final value is a lot more than 10% on value added.
- This shock to global value chains comes on the back of an already stretched logistics network.
The latter point is highlighted by the following graph:

The latter is perhaps a temporary phenomenon, likely to end when the economy goes into recession. However, the former is likely more persistent.
Global value chains have been built up over decades; rejiggering these chains to accommodate tariffs of indefinite duration is sure to be disruptive, possibly inflationary (although that depends on monetary policy).
Does the Fed Care about the Rest-of-the-World?
That’s a title I borrowed from a paper by Barry Eichengreen; the actual title is “International environment and US monetary policy: a textual analysis” written by Laurent Ferrara and Charles-Emmanuel Teuf:
What role does the international environment play in shaping US monetary policy decisions? To measure its influence, we construct an international indicator extracted from minutes of Fed monetary policy committee meetings.
“Spreads between U.S. & Brazil Soybean Export Prices Widen to a Record”
That’s the caption to this graph:
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Council on Foreign Relations International Affairs Fellowship in International Economics
The International Affairs Fellowship (IAF) in International Economics, sponsored by Kimberly Querrey, offers business economists as well as university-based economics scholars hands-on experience in the U.S. government to expand their range of thinking and work on international economic policy. Possible host placements for the fellowship appointment include but are not limited to the U.S. Department of the Treasury, U.S. Department of Commerce, the Federal Reserve Bank, and relevant parts of the U.S. Department of State and the White House [so the Fed, the IMF, the World Bank, the Treasury or any other policy institution are also possibilities]. The IAF in International Economics aims to enrich the teaching, scholarship, and research of academics, inform the practice of business economists, and expose policymakers to cutting edge scholarly research and academic debates.
For more information, see here.
Why Is Mr. Trump Saying 70% Power Outage on Eve of Hurricane Maria Strike?
Following up on yesterday’s tweets on estimates of excess mortality, official statement on twitter:
Official White House Statement on Post-Hurricane Mortality in Puerto Rico
“When Trump visited the island territory last October, OFFICIALS told him in a briefing 16 PEOPLE had died from Maria.” The Washington Post. This was long AFTER the hurricane took place. Over many months it went to 64 PEOPLE. Then, like magic, “3000 PEOPLE KILLED.” They hired……..GWU Research to tell them how many people had died in Puerto Rico (how would they not know this?). This method was never done with previous hurricanes because other jurisdictions know how many people were killed. FIFTY TIMES LAST ORIGINAL NUMBER – NO WAY!