This post (an update of this) focuses on issue separate from the mathematics of the index formulation, and has to do with what the typical weights at any given instant in time should pertain to. Should one use the expenditure weights that pertain to all the households aggregated in the economy? Or should one use the expenditure weights that pertain to the “typical” household? Kokoski (2003) [updated link] summarizes the distinction thus:
CPI Skepticism
Every few years, skepticism of officially calculated inflation rates surges, so it seems a good idea to now recap how the CPI measures (and mis-measures) the cost of living, remembering that in the absence of knowledge of the “true” utility function of the “representative agent”, one can’t know the correct approach.
Five Year Breakeven Inflation Expectations
After adjustment for premia, constant over the last three months:
Employment Release and Business Cycle Indicators
Employment figures were released today, showing continued growth. In the context of key macro indicators followed by the NBER Business Cycle Dating Committee:
Guest Contribution: “Policy Rules and Forward Guidance Following the Covid-19 Recession”
Today, we are pleased to present a guest post written by David Papell and Ruxandra Prodan, Professor and Instructional Associate Professor of Economics at the University of Houston.
Steel Employment and Production
Employment and production were declining before the pandemic. March employment is roughly the same as three years ago. Production is down 7.8% in April vs. three years prior.
Debt Dynamics, and the Real Interest Rate
Debt-to-GDP dynamics are described by this expression.
Business Cycle Indicators as of June 1
Monthly GDP figures were released by IHS-Markit today, showing a rebound in April. In the context of key macro indicators followed by the NBER Business Cycle Dating Committee:
Sixty Years of Money, GDP and the Price Level
Looks like this:
Real Borrowing Costs for the US Treasury: May 2021
As of May 2021, the nominal 10 year Treasury rate is 1.6%. The real rate is -0.9%.