A year ago, Laurent Ferrara and I documented the explanatory power of the term spread for recessions across countries. Here’re the 10yr-3mo spreads in November 2023, and Q/Q GDP growth rates for 2024Q3.
US Economic Policy Uncertainty: Buckle Up!
EPU through yesterday, and VIX as of 2pm today:
“The Impact of the Chinese Exclusion Act on the Economic Development of the Western U.S.”
Paper by Joe Long, Carlo Medici, Nancy Qian & Marco Tabellini.
Risks, 2025
Top of my list:
The Price and Income Elasticities of US Trade Flows
JW Mason asserts that, in focusing on the real exchange rate, I’m on the side of relative prices being the primary determinant of flows.
My Favorite Graph: Lagged RER-NX
Paul Krugman writes on The Dollar and the US Trade Deficit today, and reminds me of my favorite graph (makes an appearance each time I teach macro, and a version shows up in Chapter 13 of Chinn-Irwin International Economics.
A Manufacturing Recession?
Once again, Heritage’s EJ Antoni speaks (on Fox) about a manufacturing recession, focusing on employment. I’ll just point out that, according to the most relevant indicator, the manufacturing sector hasn’t been in a downturn for two years.
Teaching Macro, 2025
I’ve got undergrad upper division and MSc level macro courses (latter w/Charles Engel) to teach this spring (also a stats course, where I use lots of examples from comments as cautionary notes, [1], [2], [3], [4]). Last year I added to the undergrad course climate change and r*. This year, I’m taking suggestions.
Alternative Business Cycle Indicators as of the Year’s Start
The Philadelphia Fed’s Coincident Index is out, 2.1% m/m annualized (2.6% y/y):
“The economists’ word of the year”
From Kristin Schwab and Sofia Terenzio on Marketplace on New Year’s Eve: