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. A shorter version appeared at Project Syndicate.
“The New Fama Puzzle”
or “Do you really know what Uncovered Interest Parity is, and whether it holds?” Published as of today in IMF Economic Review, with coauthored with Laurent Ferrara (SKEMA Business School), Matthieu Bussière (Banque de France), and Jonas Heipertz (Columbia Business School):
Interpreting Growth Rate Changes and Deterministic vs. Stochastic Trends – An Application to Inflation Differentials
Two ways of calculating how prices have moved pre-pandemic and during pandemic, incorporating the ideas of stochastic vs. deterministic trends (e.g., this post, Stock and Watson, JEP, 1988).
Four Questions and Four Answers: US and Euro Area Core Inflation
Or why Jason Furman and I get different answers.
- Is US core inflation faster than Euro Area, during the pandemic? Yes.
- Was US core inflation faster than Euro Area, before the pandemic? Yes.
- Is US core m/m inflation faster than Euro Area during the pandemic period, with statistical significance? Yes.
- Did US core m/m inflation accelerate relative to Euro Area during the pandemic period, with statistical significance? No.
What To Make of the Chinese Sovereign Yield Curve?
The WorldofGovernmentBonds website provides 2s10s, 2s5s and 1s2s spreads for a whole bunch of countries (missing unfortunately my favorite the 3m10s). Here’s the yield curve for China as of today:
“American Power, Prosperity and Democracy” – LaFollette Forum 2022
The La Follette School will host its third La Follette Forum, funded by the Kohl Initiative and the Center for European Studies, on Wednesday, May 4, 2022. With guest speakers Adam Posen (Peterson IIE), Catherine Rampell (WaPo), Paul Blustein (formerly WSJ, WaPo), Oriana Skylar Mastro (Stanford), Jamelle Bouie (NYT), Daniel Ziblatt (Harvard), and discussion by UW faculty.
Climate Change and Mitigation Policies
Teaching Public Affairs 200 “Contemporary public policy issues” this semester, we had the good fortune to have a guest lecture by Greg Nemet (my colleague at La Follette, and a lead author on IWG3 Report of the IPCC Assessment Round 6) on Wednesday. He covered an enormous amount of material in one short lecture, here:
How Much Faster Has American Inflation Been Compared to Euro Area Inflation?
Since the pandemic struck, 0.4 percentage points (headline), 0.7 percentage points (core) [with additional results/graphs, 4/24]
IMF World Economic Outlook Forecasts
The entire IMF April WEO is out, with analytical chapters on private debt/global recovery, greener labor markets, and global trade and value chains. The forecasts are revised downward, at global and at national levels, for certain countries:
Fantasies of the Past
From people who extrapolate from personal observations, while dismissing statistics; to wit:
The chip shortage is ending. My Whirlpool contact told me they are now back to full production and going downstream to a HVAC company I am related to, all chip shortages ended in late summer.
Auto will be over by Halloween. Production of new cars will surge into 2021. Creating deflationary pressures. People like Condon don’t anticipate, they create intellectual fantasies.
That was a comment by Gregory Bott in September 2021.
So read this latest comment (from today) regarding the oil price increase/Russian invasion impact on economic prospects with that prognostication in mind:
I see little actual disruption. My guess by May, this will be reversed. Much like the coming upward revisions to gdp/payrolls in 2020-21. Be careful with struggling government data.
Gregory Bott may turn out to be right in the end. But I’m not betting on it (and I just really don’t know how people can be confident about things when the situation is so fluid).