We have had previous experience with episodes of tax cuts unmatched by spending reductions, in terms of the impact on external balances. Below I plot the evolution of the Reagan twin deficits, and the evolution of the G.W. Bush twin deficits.
Guest Contribution: “The Impact of Real Exchange Rate Shocks on Manufacturing Workers: An Autopsy from the MORG”
Today we are pleased to present a guest contribution written by Douglas L. Campbell (New Economic School, Moscow) and Lester Lusher (UC Davis).
Two Trade Policy Terms to Remember: VER and ERP
Voluntary Export Restraint (VER)
With Robert Lighthizer going to USTR, it’s useful to remember that he was “implementer” of many VER’s, or “Voluntary Export Restraints” on steel imports, during his last stint at USTR during the Reagan Administration.
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Guest Contribution: “China’s Growing Influence on Asian Financial Markets”
Today we are pleased to present a guest contribution written by Serkan Arslanalp, senior economist at the IMF. This post is based on the paper by the same title, coauthored with Wei Liao, Shi Piao, and Dulani Seneviratne (all of the IMF).
Artemisia: An Opera of Passion, Betrayal and Art
Music composed by Laura Schwendinger, libretto by Ginger Strand.
The Kansas Palmer Drought Severity Index, Unit Roots, and Snakes in a Room
In my post on modeling the Kansas economy, Rick Stryker takes me to task for modeling the Palmer Drought Severity Index (PDSI) for Kansas as an I(1) process:
I wouldn’t bother with the ADF test, since its null is non-stationarity and it has low power to reject. I would focus on the KPSS, since its null of stationarity is almost certainly what’s really true.
The Year in Review, 2016: The Triumph of the Blowhards
Last year’s recap was subtitled “Ascent of the Blowhards”. Let’s hope the triumph is only temporary, and rational policy analysis once again becomes a valued commodity.
Guest Contribution: “Demonetization on Five Continents”
Today, we present a guest post written by Jeffrey Frankel, Harpel Professor at Harvard’s Kennedy School of Government, and formerly a member of the White House Council of Economic Advisers. A shorter version appeared on December 22nd in Project Syndicate.
Trends in Kansas GDP
Both Missouri and BEA Plains region (ex-Kansas) outpace Kansas GDP growth.
A 10% Across-the-Board Tariff?
Today the idea of a 10% across-the-board tariff rate increase was mooted. As Noland et al. (2016), pp.9-10 observe, the President has authority to undertake such measures. However, as a member of the WTO, other members have a right to dispute. More likely, they’ll retaliate.