In a New Keynesian DSGE (or a RBC)
Approximate Geographic Impact of the Sequester
From Wells Fargo (using Pew Center data), a graphic depicting exposure to Federal spending, and hence sensitivity to the sequester.
Yen Depreciation and the Scope for Expenditure Switching
With Haruhiko Kuroda ascending to head the Bank of Japan [1], it is likely that monetary policy will remain fairly expansionary. Even without direct intervention in foreign exchange markets, the yen will likely continue to weaken as expectations of inflation rise. What is the likely impact of trade flows?
The Dorian Gray pill
On Friday I attended the U.S. Monetary Policy Forum in New York City. I will be posting some material about the paper I presented at the conference later this week. But today I wanted to mention an interesting talk at the conference by Harvard Professor Greg Mankiw on health care costs.
Multipliers When Last the Zero Lower Bound … Bound
Empirical evidence on Inter-war multipliers
Minimum wage and unemployment
With the recent proposal to raise the minimum wage, I noticed that California currently has one of the highest minimum wages ($8.00/hour) and one of the highest unemployment rates (9.8%) in the country.
Macroeconomic Advisers on the Sequester’s Impact
Estimated self-inflicted macro harm, from Macroeconomic Advisers today:
Some Environmental Issues Surrounding Keystone XL
Planned crude oil pipelines
The EIA last week released a nice summary of planned additional U.S. pipeline capacity.
Heritage Still at the Cutting Edge
From J.D. Foster, Ph.D., “Budget Cuts Would Not Harm the Economy” (February 14, 2013):
The [basic Keynesian] theory fails because it relies on the unstated fantasy government can magically create demand out of thin air. In fact, government must borrow to finance deficits, and all borrowing subtracts from the funds that would otherwise be available and used in the private sector for private investment or private consumption. …