Crude oil prices surged last spring following disruptions in oil production from Libya, and had been drifting down during the summer and fall. But since the beginning of October, the price of West Texas Intermediate and Brent crude oil have both risen by over 30%, putting them back up near where they had been last spring. What’s changed in the world since the beginning of October?
Famous Conditional Forecasts from the Real Business Cycle Side
Or, who else misunderstood the nature of the financial crisis and recession
As I was reviewing material to use in teaching how new classical models relate to the popular aggregate demand/aggregate supply models [0] used in policy analysis, I ran into this forecast in the real business cycle vein from October 26, 2008.
Barring a nuclear war or other violent national disaster, employment will not drop below 134,000,000 and real GDP will not drop below $11 trillion.
Crude oil and gasoline prices
Crude oil prices this week reached their highest level since last April. What will that mean for U.S. consumers at the gas pump?
The 2012 Economic Report of the President
Markups, Competitiveness, and the Bush Tax Cuts and Deficits
The Administration released the annual Economic Report of the President on Friday. Many topics were covered, but here I’ll remark upon a few issues, motivated by several graphs.
Work-arounds for the politics of Keystone
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.