Today’s two sessions — one in the NBER’s International Finance and Macro group and one in Monetary Economics — included papers that tackled multipliers from a variety of directions. The general results indicated to me that, while multipliers are sometimes below unity, for conditions prevailing in the United States in 2011, they are typically above.
Debt ceiling options
As Congress and the President continue to wrangle over raising the debt ceiling, more of us are wondering, what would happen if the debt ceiling isn’t raised? To paraphrase Sherlock Holmes, when you have eliminated the impossible, whatever remains, however improbable, must be Plan A.
The Employment Report, and the Need for Maintaining Stimulus
The Employment Report in Brief
The WSJ RTE post title says it pretty clearly: Economists React: Jobs Report an ‘Unmitigated Disaster’. My two observations are:
- Overall employment is being reduced by continuous reductions in government (primarily state and local) employment. Private sector employment growth was 57,000.
- Hours continue to rise faster than employment in the private sector.
Chained CPI
Recent reports ([WSJ RTE] [Bloomberg] [The Hill]) indicate that under consideration as one approach to curtailing entitlement spending growth is to resort to Chained CPI, as opposed to the current official CPI series, which is based on a quasi-Laspeyres formula.
Ron Paul’s debt default proposal
Congressman Ron Paul (R-TX) is apparently proposing that the U.S. Treasury simply refuse to pay interest and principal on the $1.6 trillion in Treasury securities currently owned by the Federal Reserve. Dean Baker, Greg Mankiw,
Steve Williamson, and
Stephen Gandel all seem to think it’s not a totally crazy idea. Here’s what I think they’re missing.
Will a Tax Repatration Holiday Spur Investment?
If you ask a person prefers to ignore data, the answer might be yes. If you ask a person who looks at the data, the answer is likely no. There are apparently a lot of the former [0]. Anyway, to some analysis. From the abstract of a paper by Dharmapala, Foley and Forbes entitled Watch What I Do, Not What I Say: The Unintended Consequences of the Homeland Investment Act:
This paper analyzes the impact on firm behavior of the Homeland Investment Act of 2004, which provided
a one-time tax holiday for the repatriation of foreign earnings by U.S. multinationals. …
“Effects of Abandoning Fixed Exchange Rates for Greater Flexibility”
At the recent NBER ISOM conference, Andy Rose presented a paper entitled Flexing Your Muscles: Effects of Abandoning Fixed Exchange Rates for Greater Flexibility, coauthored with Barry Eichengreen, following up on this 2010 paper, evaluating the effects of flexing (VoxEU post here).
For purposes of this short paper we examine a
comprehensive data set covering over 200 countries and territories since 1957. …
Hanging in there
Higher oil prices slowed the economy in the first half of this year. But I don’t expect things to get a whole lot worse.
The effectiveness of quantitative easing
This week I attended a conference hosted by the Federal Reserve Bank of St. Louis on quantitative easing. The purpose of the conference, as explained by Bank President James Bullard in his opening remarks, was to answer Stanford Professor John Taylor’s challenge to provide research of real-time usefulness to policy makers. The conference featured analyses by 5 different research teams of the effects of recent quantitative easing measures adopted in the United States and United Kingdom.
Tax Changes, Revenue Impacts, Conditional Statements, and Other Things that Befuddle the Statistically Disinclined
Or, a weblog post for the benefit of those unable to read beyond a technical paper’s abstract, a clarification of what exactly Romer and Romer (2010) found regarding the impact of tax increases on tax revenues. This note is inspired by Econbrowser reader Ricardo (who also goes under the monikers of RicardoZ, Dick, and DickF) who inaccurately (but with inexplicable confidence) characterizes the Romer and Romer findings regarding tax changes in my last post’s comments: