There’s a lot of discussion of the flattening of the yield curve, and what it portends, in the US (see this post, Irwin/NYT). Interestingly, yield curves are flattening around the world, even in some emerging markets.
Guest Contribution: “Importer and Exporter Market Share in Exchange Rate Pass-Through”
Today we are pleased to present a guest contribution written by Michael Devereux at the University of British Columbia and Wei Dong and Ben Tomlin at the Bank of Canada. The views expressed below are those of the authors and do not represent those of the Bank of Canada. This post is based on a revised version of this paper.
The Seattle Minimum Wage Increase: Disaster or Not?
Dark warnings were voiced in the wake of the passage of the minimum wage ordinance. “Seattle’s Minimum-Wage Hike Is Sure to End in Disaster”. “Seattle sees fallout from $15 minimum wage” In an early — and widely debunked — assessment, Mark J. Perry writes “New evidence suggests that Seattle’s ‘radical experiment’ might be a model for the rest of the nation not to follow”.
The Real Term Spread and Recessions
There’s an argument being made that because of the zero lower bound, the standard nominal term spread is unlikely to be as accurate a predictor of recessions as it has in the past. A prominent example of this view circulating now is that forwarded by Deutsche Bank’s Dominic Konstam; his analysis indicates a 60% likelihood of recession (WSJ RTE), in contrast to the estimates obtained from the standard model, ranging in the low teens (see for example this post).
Assessing Industrial Policy in Wisconsin
The Wisconsin Budget Project concludes “Costly Tax Credit has Done Little to Boost [manufacturing] Employment”.
Markets post-Brexit
U.S. stock prices fell more than 5% in the two-day aftermath of the British vote to leave the European Union. But equities have since regained those losses and are back near all-time highs.
Continue reading
US Policy Uncertainty post-Brexit Revised Down
But still looks darned high. Wonder what it is in the UK…
Chinn-Ito Financial Openness Index Updated to 2014
The Chinn-Ito index revised and updated to 2014 is now available here.
Guest Contribution: “How to Save the UK (Inside the EU)”
Today, we are pleased to present a guest column 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.
I see a possible way out for the trap that Brits now find themselves in, a way to keep Great Britain great.
Policy Uncertainty (in America) in the Wake of Brexit
I find it remarkable that, going by the numbers, economic policy uncertainty is now higher than after the bankruptcy of Lehman — and even higher than in the days after 9/11.