The Keystone Gulf Coast Expansion Project is now entering its fourth year of regulatory review, and is currently on indefinite political hold. In the mean time, the market is figuring out other alternatives.
Motor Vehicle Output and Sales, Three Years after the Deluge
Here is a summary graph of the state of the US motor vehicle industry, as indicated in the last GDP release.
Guest Contribution: “International Reserves and the Composition of Equity Capital Inflows”
By Xingwang Qian and Andreas Steiner
Today, we’re fortunate to have Xingwang Qian, Assistant Professor of Economics at SUNY Buffalo State and Andreas Steiner, Assistant Professor at University of Osnabrück
,
as Guest Contributors.
Measuring the consequences of the zero lower bound constraint
In a period of deleveraging such as the U.S. has been going through, it is possible for the natural rate of interest to become negative. Since cash is always an option for earning at least a yield of zero, no asset should ever pay less than zero. This lower bound of zero on nominal interest rates can put a constraint on the ability of the economy to self-correct or the Fed to provide stimulus in such a situation.
The Fed still has some tools to try to reduce longer-term yields, namely large-scale asset purchases and
signaling the Fed’s future intentions. A new research paper by Federal Reserve Bank of San Francisco President John Williams and Senior Research Advisor Eric Swanson proposes a creative new approach to measuring when and to what extent the zero lower bound is a relevant constraint on interest rates of any maturity.
The Budget Forecasts. . .
And forecasts in general
The Administration released its budget proposal yesterday. Others have dissected the implications [1] [2] [3]. Here I want to focus on the Administration forecast.
The forecasts, and comparisons against alternatives, are presented in Table 2-2 of the Analytical Perspectives of the Budget.
Send a valentine to the Fed
Have a Valentine’s message you want to send to the Fed? Justin Wolfers and Binyamin Applebaum collect some of the proposals from Twitter:
NPR’s Planet Money: You had me at QE1.
Michael McKee: The sight of you fills me with irrational exuberance.
Annalyn Censky: Our love isn’t transitory baby, it’s gonna be exceptional for an extended period.
NPR’s Planet Money: I’ll be your lover of last resort.
Why not abolish the Fed and return to the gold standard?
Via Mike Shedlock, this item from MarketWatch caught my eye:
Newt Gingrich said that if elected president, he’d name [James] Grant to help run a commission looking at a possible return to the gold standard. And Ron Paul said, if elected president, he’d go all-in and name Grant– one of Wall Street’s best-known gold bugs– as the new chairman of the Federal Reserve….
“Unfortunately, I haven’t heard from Mr. Romney yet,” joked Grant when I called on him in his offices down on Wall Street. “I’m sitting by the phone, I’m ready.”
I presume that Grant would be advising any would-be policy-makers who listen to him the sort of thing that he wrote in 2010:
The classical gold standard, the one that was in place from 1880 to 1914, is what the world needs now. In its utility, economy and elegance, there has never been a monetary system like it.
I thought it would be worthwhile reviewing some of the reasons why I disagree with Grant on this point.
Miscellanea: Deficit Hypocrisy Watch, Conspiracy at the BLS, and Wisconsin’s Continuing Downward Trend
Deficit Hypocrisy Watch
The WSJ editorial page last Thursday remarked upon:
“…the worst fiscal record of any President in modern times…”
Value added
How could we boost American employment and GDP? One philosophy is to try to do more of what’s already working.
A Conference on “Analyzing (External) Imbalances”
Last week I had the opportunity to attend an IMF conference (organized by Olivier Blanchard, Krishna Srinivasan, and Hamid Faruqee) focusing on the critical issue of assessing the sources of the pre-crisis imbalances in systemically key countries. The proceedings also had a forward looking component, highlighting the difficulties of determining when external imbalances are problematic. The conference proceedings are here.