On Tariffs, and Large Country Assumptions

Suppose the US puts a 10% tariff on imports from a foreign country. Will import prices (inclusive of tariffs) rise 10%? It depends on the elasticity of supply of said imports. If the elasticity of supply is less than perfect, then import prices will rise less than 10%. To see this, consider the most basic tariff graph in the known universe (from Feenstra-Taylor) – if you can’t understand it, abandon all hope for comprehension of tariff policy.

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The Times We Live In

From WaPo:

Sen. Mike Braun (R-Ind.) said Tuesday that he would be open to the Supreme Court overturning its 1967 ruling that legalized interracial marriage nationwide to allow states to independently decide the issue.

He later revised and extended his remarks.

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Recession, Inflation – What’s the Market View?

The economy is still likely to grow, according to at least the 10yr-3mo spread. Less definitive indicator from the 10yr-2yr. Expected inflation rates have stopped moving up, and so too have implied future rates 2-3 months ahead; in fact they’ve both fallen in recent days. (For what analysis, rather than markets, think about inflation, see Jim’s Monday post; on recession, see Jim’s Wednesday post.

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