“The Day of Infamy”

A post on VoxUkraine by Yuriy Gorodnichenko (Dept. of Economics, UC Berkeley):

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February 24, 2022 is the day of infamy too: Russia attacked Ukraine, bombed Ukrainian cities, killed innocent Ukrainians on the Ukrainian soil. It can’t be clearer: Russia is the aggressor; Ukraine is the victim. Ukraine has only one threat to Putin: Ukraine can be a free and successful country and thus give hope to Russians to become one day a free, successful country too. As I said before, this is the war with far reaching consequences for the global order, for the free world, and for the security for each of us no matter where we are.

It is a test for all of us.

Entire post here.

 

Predictions – Oil Prices and Recoveries and Recessions

A bit over 12 years ago, one prognosticator Steven Kopits wrote:

With the 9.4% unemployment report WTI oil prices are, I believe, effectively at a post-crash high.

I think the economic news suggests that we are running up the back of the “V”.
This is good news and bad news. The good news: an unexpectedly sharp recovery. The bad news: Our analysis suggests the US falls back into recession above $80 oil, and I think we’ll have a chance to test the hypothesis relatively soon.

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Russia EMP Watch

One way to assess external financial stress is to look at exchange market pressure (EMP) – the change in the exchange rate, change in reserves, and change in interest rates, possibly weighted by inverse of standard deviations. or otherwise (see e.g., Patnaik, et al. (2017) for several different versions).

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Interpreting Macroeconomically a War Scenario, Graphically

Most of the discussion of the macro implications of an expanded Russian invasion of Ukraine presumes elevated oil prices (e.g., [1]). This makes sense, certainly for the short run. However, if oil prices rise sufficiently (keeping in mind for Brent have already risen from about $70/bbl to $90/bbl), they will kick the economy into a slowdown. Slowdowns tend to push down oil prices. I think in terms of graphs; this is how I see the short term, and (potentially) medium term.

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A Wisconsin Labor Shortage?

I talked briefly on WPR’s Here and Now yesterday, on the Wisconsin “labor shortage”. After making my obligatory comment that economists would not use the term  “shortage” to characterize Wisconsin’s situation, as there were (and are) no barriers to private firms to raising wages and benefits (see this post). However, supply could be constrained — either because of the presence of benefits (e.g., enhanced pandemic-related unemployment insurance), accumulated savings from the previous pandemic rescue packages, perceived increased disutility of work, or fear of illness. But higher wages and more flexible working situations could mitigate the high ratio of job openings to employment.

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