The Shoveling Must Continue
Bill Beach has retired, and the Heritage Foundation no longer “scores” budget plans. Yet there is still so much … stuff … out there to debunk. Without further ado, here are my top ten examples of delusion in 2013.
All quiet on the southern front
After a wild ride in 2011-2012, interest rates have settled down on European sovereign debt. For now.
British Economic Triumphalism in Perspective
Updated, includes summary of an econometric analysis of impact of austerity in the UK
Prime Minister Chancellor of the Exchequer Osborne has lauded the recent UK growth numbers as validation for the policy of austerity [1] (recently relaxed, although he doesn’t mention that).
Reason for Optimism?
Despite the best efforts of some policymakers to reduce aggregate demand by way of austerity measures [0], there are glimmers of hope for more rapid growth.
U.S. tight oil production surging
The U.S. Energy Information Administration last week issued an early release of its Annual Energy Outlook 2014, which shows substantially more optimism about near-term U.S. crude oil production compared to the AEO 2013 assessment completed just eight months ago.
Wisconsin Employment in November
Figure 1 shows private employment relative to trend implied by Governor Walker’s pledge of August 2013 to create 250,000 net new jobs; Figure 2 shows employment normalized to January 2011 for Wisconsin, as compared to Minnesota and the Nation.
Phillips Curve Nonlinearities in the Data
Over the period of the Great Moderation, has inflation responded linearly to the output gap?
Links for 2013-12-19
Quick links to a few items I found interesting.
The Government Spending to GDP Ratio: Down, Down, Down
Assessing the importance of direct government expenditures on goods and services [Edits to clear up ambiguity in terminology for readers Salim and Jeff — MDC 12/18].
Federal Reserve control of the short-term interest rate
Once upon a time, U.S. monetary policy was conducted with its primary target defined in terms of the fed funds rate, which is the interest rate on an overnight loan of Federal Reserve deposits between private banks or other institutions that hold accounts with the Fed. A bank that ended the day with more deposits in its account with the Fed than needed to meet its required balances could lend those funds to another bank that found itself short. The interest rate on these loans was very sensitive to the total level of excess reserves in the system. The Fed’s direct control of available reserves gave it near control of the interest rate on loans of fed funds, which was what made the fed funds rate a credible target for implementation of the FOMC’s policy directives.