A year ago, Jeff Frieden and I forecast (along with others) in Politico Magazine a boom in output. In light of today’s third release for 2014Q3 real GDP, clocking in at 5% SAAR [1], it’s reasonable to ask, are we there yet?
Do falling oil prices raise the threat of deflation?
The spectacular drop in oil prices means that inflation is going to fall even further below the Fed’s 2% target. Does that raise any new risks for the economy? I say no, and here’s why.
Guest Contribution: “Why Are So Many Commodity Prices Down in the US… Yet Up in Europe?”
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.
Russia: Seems Like Old Times
As I watch the financial meltdown in Russia (and work on a chapter on financial crises), I am pervaded by a sense of déjà vu.
Guest Contribution: “Transparency and the Global Transmission of Financial Shocks”
Today we are fortunate to have a guest contribution written by Luis Brandão-Marques, Senior Economist, Gaston Gelos, Chief of the Global Financial Stability Analysis Division, and Natalia Melgar, Economist, all at the IMF. The views expressed herein are those of the authors and should not be attributed to the IMF, its Executive Board, or its management.
Oil prices as an indicator of global economic conditions
West Texas Intermediate sold for $105 a barrel at the start of July, but ended last week at $58. The most important factor has been surging U.S. production. But another reason oil prices have slid so much is weakness in demand for the product, which may be related to a slowdown of overall world economic growth. Here I comment on the importance of that second factor.
Symmetric Application of Dynamic Scoring
Republicans are keen to sacrifice CBO’s role as impartial arbiter of fiscal measures on the altar of “dynamic scoring” of tax measures.[0] But there is no economic reason for restricting this approach to only tax measures.
“Asia and Global Production Networks—Implications for Trade, Incomes and Economic Vulnerability”
That’s the title of a book edited by Benno Ferrarini (ADB) and David Hummels (Purdue).
New estimates of the effects of the minimum wage
A large literature has examined the effects on employment of raising the minimum wage, with different researchers arriving at conflicting conclusions. The core reason that economists can’t answer questions like this better is that we usually can’t run controlled experiments. There is always some reason that the legislators chose to raise the minimum wage, often related to prevailing economic conditions. We can never be sure if changes in employment that followed the legislation were the result of those motivating conditions or the result of the legislation itself. For example, if Congress only raises the minimum wage when the economy is on the rebound and all wages are about to rise anyway, we’d usually observe a rise in employment following a hike in the minimum wage that is not caused by the legislation itself. UCSD Ph.D. candidate Michael Wither and his adviser Professor Jeffrey Clemens have some interesting new research that sheds some more light on this question.
And in Russia
Government borrowing costs are spiking.