Today I outsource to a couple of links I found interesting:
Dave Cohen on oil prices.
Stephen Gordon on economists’ fatal flaw.
James Morley on the need for a new Fed-Treasury accord.
ZIRP and the exchange rate…and other macro variables
Several months ago, I discussed the implications of a model of the exchange rate wherein Taylor rule fundamentals — the output [0], inflation and exchange rate gaps — were central (post). In that paper [pdf], I showed that Taylor rule fundamentals outperformed purchasing power parity, interest rate parity, and the monetary model of exchange rates in terms of in-sample fit, at least insofar as the dollar/euro exchange rate is concerned.
Federal Reserve balance sheet
Here I survey how we got here, where things currently stand, and what it all means.
Fiscal stimulus: the case for block grants
A few thoughts on how the federal government might best implement a fiscal stimulus.
Credit Crunch or Not
One of the debates regarding the current financial crisis is whether in fact there is a crisis, or whether in fact the financial system is operating normally. I’ve been skeptical myself of the “times are normal view”, but here is some evidence that the credit crunch is real. The findings also reinforces my view that un-nuanced reliance on highly aggregated volume statistics (e.g., Chari et al. 2008) is likely to result in misleading inferences (See the rejoinder from the Boston Fed’s economists). From the conclusion to Tong and Wei (2008) ungated version of Tong and Wei:
The other shoe begins to drop
Chrysler LLC, awaiting a federal rescue as its cash dwindles, will shut all 30 of its plants for at least a month starting Dec. 19 as unsold cars and trucks pile up at showrooms.
Ford Motor Co. said it will idle most of its North American assembly plants for the first week of January, while General Motors Corp. said a new factory making engines for the Chevrolet Volt electric car is being delayed to conserve cash.
The cutbacks showed how far automakers are going to save money and prune output in a year in which industrywide U.S. sales are poised to fall to their lowest levels since 1991. GM and Chrysler say they may run out of operating funds in just weeks without emergency U.S. aid.
Quantitative easing
Today’s announcement from the Federal Reserve marks the end of the road for Plan A (fighting the recession by lowering interest rates), and the beginning of … what?
High Frequency Estimates and Forecasts of GDP
High frequency estimates are falling, while consensus forecasts are for a turnaround in 2009H2. First, consider two estimates of GDP released today.
Finding the exit
How you think we might get out of our current economic problems has something to do with how you think we got into them in the first place.
The Global Economic Crisis
Here’s the video from a panel convened by the University of Wisconsin’s Center on World Affairs and the Global Economy (WAGE) on November 20, 2008. Presenting were
Alison Alter, Associate Director of WAGE; Mark J. Ready, Professor of Finance, Investment and Banking; Darian M. Ibrahim, J.D., Assistant Professor of Law; Menzie D. Chinn, Professor of Public Affairs and Economics; and Mark S. Copelovitch, Assistant Professor of Political Science and Public Affairs, and Edward Friedman, Professor of Political Science.
My powerpoint presentation was posted here if one just wants the slides.