From the NY Times Room for Debate forum Was the Crisis Avoidable, Jeffry Frieden writes:
The Real Value of the Yuan and Inflation
A recent NYT article highlighted the fact that international competitiveness (as defined by macroeconomists) depends on not just the nominal exchange rate, but also relative price levels. From Inflation in China May Limit U.S. Trade Deficit by Keith Bradsher:
Inflation is starting to slow China’s mighty export machine, as buyers from Western multinational companies balk at higher prices and have cut back their planned spring shipments across the Pacific.
An improving economic outlook
Looking a little better each day.
Thoughts on Rebalancing, Capital Flows, Commodities
Those were some of the topics of a recent Asia-Europe Economic Forum conference that took place at the French Ministry of Economy, Finance and Industry, entitled “G20: Completing the Agenda”, organized by Agnès Bénassy-Quéré and co-sponsored by CEPII, DG-ECFIN, and the Ministry of Economy, Finance and Industry.
UK: No Expansionary Fiscal Contraction Yet
The UK can be seen as a kind of test case for the proposition that contractionary fiscal policy can induce an economic expansion, a proposition forwarded by most recently Alesina and Ardana (2010) [wp version] (following up earlier work by Alesina and Perroti). So far, admittedly early in the process, the evidence is not consistent with the view of expansionary contraction. Here’s Gavyn Davies’ view:
…The statistics were expected to show a significant slowdown in output growth, but nothing like the drop of 0.5% in real GDP (-2 per cent quarter-on-quarter annualised) which was actually announced this morning. …
Geopolitical unrest and world oil markets
Change is on the way in the Arab world, with Egypt the latest focal point. Here I review recent events and their implications for world oil markets.
A modestly brighter GDP report
The Bureau of Economic Analysis reported today that U.S. real GDP grew at an annual rate of 3.2% during the fourth quarter of 2010. That’s about the historically average growth rate. But we expect much better than average at this point in the cycle, and need much better than average to make real progress with the unemployment rate.
Chinese Exchange Rate Pass-Through
Jian Wang had an interesting article on the Chinese rebalancing issue, and how renminbi revaluation would fit in. One point he raised pertained to exchange rate pass through. That inspired me to check the literature on this subject.
Three Years after the Great Recession’s Start
I thought it useful to take a look at a few retrospective macro indicators pertaining the December 2010, three years after the beginning of what some term “the Great Recession”. In particular, recall that some observers were, even ten months into the recession, and a month after Lehman’s collapse, denying the possibility of a truly deep loss in employment, and the idea of a lack of credit availability.
Real-time analysis of the Aruoba-Diebold-Scotti Business Conditions Index
One of the economic indicators to which we frequently call attention is the Aruoba-Diebold-Scotti Business Conditions Index that is maintained by the Federal Reserve Bank of Philadelphia. This uses a number of important economic indicators immediately upon release to get an updated view of the overall level of economic activity. One question that arises in using this index is that the raw data from which the index is constructed can be subject to considerable revision in subsequent data releases. A new analysis by the authors takes a look at this issue.