I recently highlighted grounds for pessimism about the ease with which the U.S. could significantly change our oil consumption habits. Here I highlight some interesting new research by U.C. Davis economics professor Christopher Knittel which offers a more optimistic assessment.
Data Based Assessment of the Unemployment Insurance Impact on UE
From the San Francisco Fed’s Valletta and Kuang (h/t RTE/Derby):
Although economists have shown that extended availability of UI benefits will increase unemployment duration, the effect in the latest downturn appears quite small compared with other determinants of the unemployment rate. Our analyses suggest that extended UI benefits account for about 0.4 percentage point of the nearly 6 percentage point increase in the national unemployment rate over the past few years. It is not surprising that the disincentive effects of UI would loom small in the midst of the most severe labor market downturn since the Great Depression.
Joe Lawler and Joe Stiglitz Agree!
Or, on economic costs versus budget costs
From American Spectator, Joe Lawler writes:
“The cost … to the budget, though, is not the only relevant cost.”
Consumers get more pessimistic
The Reuters/Michigan index of consumer sentiment tumbled four points in April. Could just be measurement noise, or could be that something new is pressing down on consumers.
Granger causality
Hal Varian passes along this amusing result if you query Google Insights for Search for searches on “mixed drinks” and “hangovers.”
Recent estimates of Chinese Yuan misalignment
Yin-Wong Cheung, Eiji Fujii and I have just written a chapter for a VoxEU book The US-Sino Currency Dispute edited by Simon Evenett (link to blog post). After discussing the various approaches to measuring misalignment, we summarize the most recent estimates of CNY undervaluation.
More on oil prices and the economic recovery
On Saturday I commented on whether
rising oil prices threaten the economic recovery. Here are some quick links to perspectives from other observers.
Averting the Consumption Disaster
The CEA has just released the newest quarterly report on the impact of the ARRA. In addition to tabulating the impacts on output and employment, there’s a special section by Chris Carroll (one of the leading authorities on modeling consumption behavior — I used to teach his papers in my PhD macro course), which concludes in the absence of the ARRA “…consumer spending would likely have continued to fall” (which is consistent with my post from a couple days ago).
IMF WEO: “Transitioning out of Sustained CA Surpluses”
[Corrections made 11am Pacific]
“Getting the Balance Right: Transitioning Out of Sustained Current Account Surpluses” by Abdul Abiad, Daniel Leigh and Marco Terrones:
This chapter examines the experiences of economies
that ended large, sustained current account surpluses
through policy actions such as exchange rate appreciation
or macroeconomic stimulus. It subjects these
historical episodes to statistical analysis and provides a
narrative account of five specific transitions, examining
economic performance and identifying key factors that
explain various growth outcomes.
“Where’s the Consumption Disaster?”, Again
Back in November 2009, Casey Mulligan asked this question, and observed:
Both of these [disposable income and consumption] are HIGHER in September 2009 than they were a year earlier.
I observed that it made sense to look at per capita values; and that changed the conclusions substantially.