I thought it of interest to see the evolution of Federal debt held by the public, and exactly what Administrations were the most spendthrift.
Data: Spending and Tax Receipts, 1967-2011
I keep on hearing we have a spending problem, but no revenue problem, from you know whom. I decided to appeal to actual data. Below is a time series plot of Federal current expenditures and tax receipts plus contributions to Federal social programs, as a share of GDP, over the 1967Q1-2011Q1 period. The data are based upon the data definitions in the BEA’s national income and product accounts (NIPA), as of June 2011. Outlays are declining, and as of 2011Q1 are at 0.25, which exceeds the previous peak, during the Reagan era, at 0.241 (1982Q4). Federal tax receipts plus social program contributions are at 0.158.
Effects of the Fed’s large-scale asset purchases
Some Federal Reserve officials apparently have a rule of thumb for thinking about the impact of the Fed’s large-scale asset purchases. I was curious to compare those estimates with the numbers that would come out of my own research.
DSGEs, Detrending, and Forecasting
With some implications for the debate over assessing fiscal and monetary policies
Reader Brian writes:
DSGE’s aren’t the answer to everything, but I still find the microfoundations, careful treatment of expectations, etc. still attractive and, in my opinion, the best we have at the moment.
Dividing integrals by integrals versus other calculation
With an application to accurately counting stimulus effects, for the benefit of the numerically challenged
Here I try to explain why dividing a number at a point in time by a cumulative number does not make sense (Warning: some understanding of calculus helpful). Reader Manfred defends the Weekly Standard’s calculation of dividing net jobs created at an instant in time by cumulative spending to obtain a dollars/job figure. Specifically:
Assessing the Stimulus and Its Aftermath
Or, on reading those who can do math, and those who can’t (i.e., yet more from Heritage)
Ending the debt ceiling stand-off
Here’s how I’m hoping this might work out.
Consumers get more worried
Reuters reported yesterday that the preliminary July reading for the Thomson Reuters/University of Michigan’s index of consumer
sentiment fell to 63.8, the lowest level in more than two years. In fact, that’s about as low as this measure ever got in the recessions of 1981-82 or 1990-91, and is well below values for the recession of 2001.
The Moral Imperative for the Continuation of Low Tax Rates for the Top Income Fractiles
Or lack thereof
Reports indicate that one of the reasons the “grand bargain” failed was the refusal of one party to accede to an increase in tax rates on households with AGI above $250,000. [1]. I can understand this reluctance, given that the share of total income going to the top 5% of households fell from 38.7% to 36.5%, going from 2007 to 2008 (just ignore the increase of 17.6 percentage points in the previous 30 years). Below is an updated graph from our forthcoming book Lost Decades by myself and Jeffry Frieden, illustrating the grievous harm that these households have endured.
Evaluating quantitative easing using event studies
Event studies are one method that has been used to try to assess the potential effects on markets of nonstandard monetary policy measures such as QE2. The Federal Reserve Bank of St. Louis recently hosted a conference whose objective was to evaluate evidence on the effects of these policies. Here I relate remarks I made at the conference on some of the challenges from trying to use event studies to answer this question.