See also Larry Summers’ article in the FT.
Yuan Undervaluation?
As noted in The Hill, from a letter written by key House and Senate leaders to President Obama:
The continued misalignment of China’s currency is unsustainable and unacceptable.
The Return of Policy Uncertainty
From Hatzius et al., in Goldman Sachs Global Macro Research yesterday:
A federal shutdown due to a funding lapse looks no less likely than it did two weeks ago, and we believe the probability is nearly 50%. The Senate is expected to begin voting later this week on a funding extension, but the House looks unlikely to act until shortly before the September 30 deadline.
Guest Contribution: “The 30th Anniversary of the Plaza Accord”
Today we are fortunate to have a guest contribution written by Jeffrey Frankel, Harpel Professor of Capital Formation and Growth at Harvard University, and former Member of the Council of Economic Advisers, 1997-99.
Forecasting interest rates
There was lots of action in financial markets last week, with much of the attention focused on the U.S. Federal Reserve. The interest rate on a 10-year U.S. Treasury bond edged up 10 basis points early in the week in anticipation that the Fed might finally raise its target for the short-term interest rate. But it shed all that and more after the Fed announced it was standing pat for now.
Price of CBOE option based on 10-year U.S. Treasury yield; to convert to the Treasury yield itself divide by 10. Source: Google Finance.
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Kansas: The Collapse Continues
As does the fiscal experiment.
Wisconsin: Where Has the Labor Force Gone?
The Department of Workforce Development released preliminary statistics for August today. Civilian employment remains below the 2008M03 peak; so is the labor force.
“Solving” the Immigration Problem
Mass deportation and elimination of Birthright Citizenship as policy options
I see the resurfacing of proposals to eliminate Birthright Citizenship and the forcible deportation of undocumented to solve the immigration problem. What are the implications of such proposals?
Liftoff: Empirical Assessment of the Implications for the Dollar
I have been stressing the international implications of a potential interest rate increase as a rationale for deferring monetary tightening. Export growth is slowing and economic activity in the tradables sector (manufacturing output, manufacturing employment) as the dollar has appreciated. [1] [2] How much more appreciation should we expect should the Fed tighten?
“Scott Walker’s exaggerated claims of employment trends in Wisconsin”
That’s the title of WaPo’s FactChecker recap of the Governor’s misrepresentations. Three Pinocchio’s!