A vision of what American economic growth over the next decade could look like might also help us address our immediate economic problems.
Investment Behavior and Policy Implications
Over the weekend, both Professors Barro and Mankiw wrote on investment in the New York Times. As Modeled Behavior observed, the focus on business fixed investment (BFI) or nonresidential investment was somewhat odd because BFI behavior had not been particularly anomalous in the recovery. Here, I extend upon that analysis, and draw some policy implications.
What do low government bond yields signify?
Brad DeLong and
Tyler Cowen point to an interesting exchange in the Financial Times.
We Can All Be Like Texas!
From Fort Worth Star Telegram:
As the Texas Forest Service battles what may be the state’s most destructive wildfire outbreak ever, state lawmakers are facing criticism that they have has taken a penny-wise-pound-foolish approach to funding the agency.
Recovery, or Replaying 1937 (and 2008)?
The President laid out a series of policy measures in today’s speech which are, by textbook standards, entirely reasonable. And yet, many have been declared by the pundits to be DOA. I’ll leave the assessment of political feasibility to others, but the very fact that these specific measures [0] are so reasonable by textbook standards makes me wonder if we have in fact experienced technological regress in our politico-economic discourse. Maybe those shocks in RBC models are just the fact that so many individuals with influence never took an intermediate macro course, let alone an economics course [1] (I highly recommend Robert Hall and John Taylor’s Macroeconomics, or the later editions, by Hall and David Papell).
Following the Swiss lead
Today Econbrowser is pleased to feature a guest post from Johns Hopkins University Professor Jonathan Wright, in which he proposes an option for economic stimulus by the Federal Reserve.
Double Dip or Not? The Data and Policy Implications
We know that in the aftermath of combined housing busts, financial crises, and recessions, recoveries are typically modest if not halting, even if the recession is deep. [0] This characterization appears to have held true, with the question now whether we will enter into a new recession, or merely plug along with growth that technically constitutes a recovery, but is not sufficient to close the output gap with appreciable speed.
Links for 2011-09-06
Swiss National Bank announces it will buy foreign currency in unlimited quantities to achieve a target exchange rate. That’s quantitative easing with real meat on it.
Jim Brown on the importance of immediately opening up Alaska to more oil exploration and development.
Felix Salmon on why it’s depressing to see S&P giving AAA rating to a new security structured from subprime loans.
Felix Salmon again on how to solve the problems with the U.S. Post Office.
K.W. Regan on IBM’s Jeopardy champion (hat tip: Tyler Cowen).
Justin Wolfers reflects on his time in Washington DC (hat tip again to Tyler Cowen).
Journal of Statistical Software on estimating state-space models.
Current economic conditions
The economic data arriving during the last week have been deeply discouraging, though are slightly less grim than some may have been concluding.
The CPI, and Some Key Components
A perennial topic of discussion is the deficiencies of the CPI in measuring the things that are important to “real people”. I actually believe that there is a point to some of these critiques. In particular, we know the CPI is “plutocratic” in that the weights associated with the CPI bundle are consistent with the expenditure shares of a household somewhere in the 4th income quintile. [1] [2] However, I think that other critiques — namely that food, health, and transportation, are missed — are misguided.