Why do interest rate differentials point in the wrong direction for subsequent exchange rate changes at short horizons, and not at long? And why have interest differentials at long maturities failed in recent years to predict subsequent exchange rate changes as well as in the past, especially for interest rates near the zero lower bound. Those are two topics taken up in a recent paper by myself and Yi Zhang (University of Wisconsin).
The Low-Pay Recovery, Re-Assessed
From the Senate Republican Policy Committee Chair, John Barrasso, commenting on the December employment report:
The December jobs report, while posting 252,000 new jobs, reveals it’s still too soon to be bullish on an economic recovery. Wage data and labor force participation remain concerning.
Stagnant wage growth remains a weight on America’s economic recovery. In December, average hourly earnings for all employees on private nonfarm payrolls fell by five cents, to $24.57.
Politically Directed Higher Education
From the NY Times today:
… They are out there, hiding in library stacks, whispering in lecture halls, armed with dangerous textbooks and subversive pop quizzes…
Sovereign debt scares– is the U.S. immune?
Many people are finally coming to a realization that should have been evident long ago: Greece’s debts are not going to be repaid. And as discussion turns to who might be next, it seems a good time to revisit the question of whether the United States could some day find itself in similar trouble. I am substantially more optimistic about this than I was a couple of years ago, and here is why.
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Estimated Potential GDP — What Would Milton Friedman Say?
The CBO has revised downward the estimate of potential GDP, implying a relatively small output gap. I wonder about the downward revision (although I have the highest regard for the estimates CBO has generated.)
January 2015 Employment Release: +257K
This is in excess of the consensus of 230K [0] From BLS:
Total nonfarm payroll employment rose by 257,000 in January, and the unemployment rate was little changed at 5.7 percent, the U.S. Bureau of Labor Statistics reported today. Job gains occurred in retail trade, construction, health care, financial activities, and manufacturing.
Walker vs. Walker
Update: PolitiFact rates Governor Walker’s claim as “…not only inaccurate, but ridiculous. Pants on Fire.”
First, it was a drafting error. Now it’s not.
Just a Typo in the Wisconsin Budget Proposal
As of this morning, here was the Governor’s proposed change in language for the University of Wisconsin system in the budget, from this document (page 546):
Governor Jeb Bush on the Desired Trend in Real GDP
From Bloomberg, a quote from the Governor’s speech in Detroit:
… I don’t think the U.S. should settle for anything less than 4 percent growth a year–which is about twice our current average.
Keystone XL Employment Effects
[Updated 2/5]
They’re small. Really small. From the Congressional Research Service (Jan. 5, 2015):
Because job projections, in particular, involve numerous assumptions and estimates, the State Department’s job estimates for Keystone XL have been a source of disagreement. One challenge to State’s analysis is that different definitions (e.g., for temporary jobs) and interpretations can lead to different numerical estimates and “fundamental confusion” about the Final EIS numbers. Consequently, it may be difficult to determine what overall economic and employment impacts may ultimately be attributable to the Keystone XL pipeline or to the various alternative transport scenarios if the pipeline is not constructed.