The US Petroleum Trade Balance

As oil prices start heading up, the usual questions arise regarding the macro implications. One view is that with the revolution in tight oil production, the US will experience less of a negative impact than before. This conclusion relies on a set of assumptions, possibly including the US being substantially less dependent on oil imports. Is this true?


Figure 1: US petroleum trade balance (blue), and negative of US petroleum imports (red). NBER defined recession dates shaded gray. Source: BEA, 2018Q1 advance release, NBER, author’s calculations.

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Guest Contribution: “The ECB’s Strong Euro Problem”

Today, we are fortunate to present a guest contribution written by Ashoka Mody, Charles and Marie Visiting Professor in International Economic Policy, Woodrow Wilson School, Princeton University. Previously, he was Deputy Director in the International Monetary Fund’s Research and European Departments.

The euro has appreciated 10 percent against the Swiss franc (CHF) over the past year. The U.S. dollar and the Japanese yen have not made similar gains vis-à-vis the franc. Tracking the franc’s movements relative to the major currencies gives an unusual window onto the deflation-fighting credentials of the world’s major central banks. It illustrates, in particular, the European Central Bank’s half-hearted efforts to fight the risk of price deflation. Financial markets have come to believe that the ECB will prematurely tighten monetary policy: hence, despite brief episodes of depreciation, the euro will tend to stay strong, hurting economic prospects in several eurozone member countries.

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The Reagan Tax Cuts and Defense Buildup: Supply-Side Miracle or Keynesian Stimulus?

I keep on hearing about the supply-side miracle associated with the the Reagan era tax cuts. What do changes in estimated potential versus actual output suggest?


Figure 1: Year-on-year growth rate of real GDP (blue), and of potential GDP (red), calculated as 4th differences of logged values. Dashed lines at effective dates for Economic Recovery Tax Act of 1981 and Tax Reform Act of 1986. Source: BEA, CBO.

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Is Xenophobia the Dominant Motivation in the WV Republican Electorate?

As widely noted, Republican Senate candidate Don Blankenship has recently (starting on May 3) verbally targeted “China people” and McConnell’s “China family”. I wondered whether such appeals to atavistic fears would work in 2018. Prediction markets seem to suggest the answer is “yes”.


Source: PredictIt, accessed 5/8 9AM Pacific.

As an economist, I do wonder how Senator McConnell has created “millions of jobs for China people”.

Guest Contribution: “The European Central Bank’s Lack of Accountability Has Consequences”

Today, we are fortunate to present a guest contribution written by Ashoka Mody, Charles and Marie Visiting Professor in International Economic Policy, Woodrow Wilson School, Princeton University. Previously, he was Deputy Director in the International Monetary Fund’s Research and European Departments.

The European Central Bank (ECB) was set up as the most independent of all central banks. Its independence also made it unaccountable. Freed from public accountability, the ECB’s decisions have been swayed by its management’s ideological preferences and by national interests. The consequence is that some eurozone countries are now subject to long-term deflation risk and are locked into a currency that is too strong for their economies.

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Arthur Laffer’s RSPS Economic Outlook Ranking and Subsequent State GDP Growth

Using today’s state level GDP release, we can assess how highly ranked states like Kansas performed subsequently, as compared to poorly ranked states like California.


Figure 1: Log California real GDP (blue), Kansas (red), and US (black), normalized to 2011Q1=0. NBER defined recession dates shaded gray. [##] denote Rich States, Poor States 2013 Economic Outlook rankings for 2013 (based on 2012 data). Source: BEA, May 2018, NBER, ALEC, and author’s calculations.

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