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- Donald Trump, Treasury Debt and the Dollar
by Stephen G. Cecchetti in Huffington Post Business, 2016-05-24 04:01:07 UTC
Note to editors: This post is coauthored with authorized HuffPo blogger Kermit Schoenholtz .
The time has come to start weighing in on presidential candidate Donald Trump's statements on economic policy. In this post we examine his comments about U.S. government debt. After saying that he is the " king of debt " and that he "loves debt," Mr. Trump recently went on suggest that if interest rates were to rise, he would seek to " make a deal " on U.S. Treasury debt. In his words , "I could see long-term renegotiations where we borrow long term at very low rates." He also called this action: "ref [...]
- Bad arguments against Marxism
by chris in Stumbling and Mumbling, 2016-05-23 12:57:55 UTC
One of the problems with being a Marxist is that one is the subject of silly misunderstandings. Here are a handful of the bad arguments against Marxism I often see, and my replies.
“Don’t you realize central planning has failed?”
We do. But if you want to find people who still believe in central planning today, you should look not among Marxists but in company boardrooms . It’s bosses who believe complex systems can be controlled well from the top down, not we Marxists.
In fact, many of us point to the abundant evidence that worker (pdf) ownership and control increases (pdf) well- being a [...]
- How the term âmainstream economicsâ became mainstream: a speculation
by Beatrice Cherrier in INET Blog, 2016-05-23 09:18:09 UTC
It's a recurring problem on economic social networks. "Mainstream" is only 9 characters long, therefore much used on twitter, blogs or facebook as a shortcut for
what economists at leading institution publishing in leading journals find acceptable . There is considerable agreement that this sociological definition of "mainstream" offered by David Colander, Ric Holt and Barkley Rosser aptly reflects the common use of the term . Yet, after a few minutes, though, questions inescapably erupt: how much has the mainstream evolved since the 1930s or the 1980s, [...]
- The Phillips Curve and Inflation
by thebusinesscycleblog in The business cycle blog, 2016-05-21 18:08:29 UTC
My slides for the SF Fed Symposium, “The Future of Inflation”: While the reduced-form Phillips Curve appears near death, this can be explained by structural factors and the links between inflation and resource utilization are alive and well.
A lot of related research is reviewed, including reduced-form empirical work ( Ball and Mazumder (2011) , Blanchard (2016) ), the literature on inflation and long-term unemployment ( Ball and Mazumder (2014) , Kiley (2015) ), lack of participation as slack ( Erceg and Levin (2014) ), DSGE models ( Del Negro, Giannoni, and Schorfheide (2015) , Christian [...]
- An empirical equilibrium model of a decentralized asset market
by Christian Zimmermann in NEP-DGE blog, 2016-05-18 02:35:12 UTC
By Alessandro Gavazza
I estimate a search-and-bargaining model of a decentralized market to quantify the effects of trading frictions on asset allocations, asset prices and welfare, and to quantify the effects of intermediaries that facilitate trade. Using business-aircraft data, I find that, relative to the Walrasian benchmark, 18.3 percent of the assets are misallocated; prices are 19.2-percent lower; and the aggregate welfare losses equal 23.9 percent. Dealers play an important role in reducing trading frictions: In a market with no dealer [...]
- Wealth and Income Inequality in the Early Modern Period
by guidoalfani in NEP-HIS blog, 2016-05-17 17:05:07 UTC
Comparing Income and Wealth Inequality in Pre-Industrial Economies: Lessons from 18th-Century Spain
By Esteban A. Nicolini (Universidad Carlos III de Madrid) and Fernando Ramos Palencia (Universidad Pablo de Olavide)
Abstract: In this new working paper on preindustrial inequality, Nicolini and Ramos Palencia build upon their earlier work on income inequality in eighteenth-century Old Castile (Nicolini and Ramos Palencia 2015) by looking into one particularly important, and difficult to assess, aspect: how to reconstruct, for a given preindustrial society, estimates of both income and wealth in [...]
- Green Jobs Revisited: Will Efforts to Combat Climate Change Increase Income Inequality in the Short Run?
by Matthew Kahn in Environmental and Urban Economics, 2016-05-17 13:27:00 UTC
Tom Steyer may want to call up some Berkeley economists this morning. Here is a direct quote from the NY Times that refers to him ; “We object to the political agenda of the A.F.L.-C.I.O. being sold to a job-killing hedge fund manager with a bag of cash.” What is the story here? First, who is Tom Steyer? He made a hedge fund fortune and he is now actively involved in progressive politics as he seeks to elect officials who will tackle climate change. I respect his Risky Business effort to educate the public about the risks of climate change. Why are the construction unions so angry with [...]
- Will a News Surge in San Francisco Nudge Local Officials to Tackle the Homeless Challenge?
by Matthew Kahn in Environmental and Urban Economics, 2016-05-17 01:01:00 UTC
June 29th 2016 will offer an interesting natural experiment regarding San Francisco's homeless problem. � The New York Times reports today� �that all of the local media outlets (including the San Fran Chronicle and other Internet, radio and TV) will "flood the zone" with extensive reporting and coverage of the homeless challenge. � The goal here is to cause a change in public policy by raising awareness and by suggesting solutions that might be cost effective. Given the great interest in estimating "causal effects", this will be an interesting test of whether "the media matters". �Can extensiv [...]
- Ethiopian Rural Household Surveys
by Masa in Devecondata, 2016-05-16 12:14:00 UTC
A panel household survey conducted by Stefan Dercon and his colleagues in 1989, 1994, 1995, 1997, 1999, 2004, and 2009. The details are available on his website . Panel data conducted 1989-1995 are downloadable at the above webpage. 1997 can be obtained by contacting IFPRI. Sample 15 villages with 1477 households in total were surveyed three times, twice in 1994 and once in 1995. Six of the 15 villages were surveyed in 1989 as well. For more detail, see this documentation . In the 1997 survey, 9 additional villages were surveyed. Variables Household composition, education, asset ownership, cr [...]
- Donald Trump, Treasury Debt and the Dollar
by Steve Cecchetti and Kim Schoenholtz in Money, Banking and Financial Markets, 2016-05-16 11:56:15 UTC
The time has come to start weighing in on presidential candidate Donald Trump’s statements on economic policy. Today, we examine his comments about U.S. government debt. After saying that he is the “king of debt” and that he “loves debt,” Mr. Trump recently went on suggest that if interest rates were to rise, he would seek to “ make a deal ” on U.S. Treasury debt. In his words , “I could see long-term renegotiations where we borrow long term at very low rates.” He also called this action: “refinance debt with longer term.” Mr. Trump appears to assume that his sensibilities as real estate mogul [...]
- Risks Associated with Low Inflation
by thebusinesscycleblog in The business cycle blog, 2016-05-14 22:31:58 UTC
Recent papers from the Federal Reserve on
The factors that influence the degree to which low inflation impedes economic performance: Arias, Erceg, and Trabandt (2016)
The interaction of the zero-lower bound on nominal interest rates and the expected rate of inflation in a standard class of macroeconomic models: Hills, Nakata, and Schmidt (2016) [...]
- Who do you trust and why does it matter?
by brianmlucey in Brian M. Lucey, 2016-05-14 06:59:36 UTC
Would you trust a banker? Stop laughing now…you there, in the back, stop it… Now, seriously, would you? More to the point perhaps, would a banker trust you? And what matter if they did or didn’t? Generalising, how much trust do you place in your business partners up and down the supply chain? In others in the financial system? And does it matter?
There is increasing evidence that trust matters for economic and financial outcomes. Trust is something intangible, but measurable. The World Value Survey , a survey of tens of thousands of persons which takes place every few years, includes question [...]
- Union Giveaways in Air Traffic Control Act Set a Bad Precedent
by James Sherk in The Foundry, 2016-05-13 13:48:50 UTC
The Aviation Innovation Reform and Reauthorization (AIRR) Act contains several reforms that move in the right direction. Notably, it removes America’s air traffic control system from the Federal Aviation Administration (FAA) and establishes it as a federally chartered, non-profit corporation.
But the legislation includes troubling labor provisions. Its supporters seem intent on buying government union support by giving them even more leverage over the public than they now possess.
This sets a terrible precedent for future privatization efforts. Congress should modernize America’s air traffic c [...]
- Optimal Trade Policy, Equilibrium Unemployment and Labor Market Inefficiency
by Christian Zimmermann in NEP-DGE blog, 2016-05-13 13:00:31 UTC
By Wisarut Suwanprasert
Why do politicians advocate trade protections to save domestic jobs when neoclassical trade models suggest that small open economies should implement free trade? The novel insight of this paper is that trade protections can be rationalized as a second-best policy that improves the domestic welfare when the equilibrium unemployment is different from the constrain-efficient unemployment. To understand the puzzle, I incorporate a Diamond-Mortensen-Pissarides frictional labor market into the standard Heckscher-Ohlin model [...]
- More Mathiness in Climate Econometrics: Doug Keenan's Climate Change Contest
by firstname.lastname@example.org (David Stern) in Stochastic Trend, 2016-05-13 01:54:00 UTC
My colleague Robert Kaufmann got an e-mail from Doug Keenan inviting him to participate in his " climate change contest " without the usual $10 submission fee. I hadn't heard about this contest and went to the site to investigate. So, Keenan has produced 1000 time series of 135 observations each that are somehow derived from random numbers and then added a plus 1 or minus 1 per 100 observations trend to some of these. The series have been calibrated so that the they could potentially reproduce in some way the observed global temperature time series from 1880 to the present without an added t [...]
- A Global Marshall Plan for Joblessness?
by Pavlina Tcherneva in New Economic Perspectives, 2016-05-12 16:17:40 UTC
A Global Marshall Plan for Joblessness?
By Pavlina Tcherneva
(Crossposted from INet )
Global unemployment is expected to surpass 200 million people for the first time on record by the end of 2017, according a recent ILO study, and limitations of official statistics suggest that the problem is much larger . As conventional measures increasingly fail to produce tight labor markets and jobless recoveries become the norm, economists grapple with this new reality by calling it secular stagnation and by adjusting upwards the rates of unemployment deemed ‘natural’ — but the human, social and economic [...]
- A Global Marshall Plan for Joblessness?
by Pavlina Tcherneva in Multiplier Effect, 2016-05-12 16:11:12 UTC
The corrosive social and economic effects of what have now become ‘normal’ unemployment levels require new solutions, and trade without full employment exacerbates the problem.
Global unemployment is expected to surpass 200 million people for the first time on record by the end of 2017, according a recent ILO study, and limitations of official statistics suggest that the problem is much larger . As conventional measures increasingly fail to produce tight labor markets and jobless recoveries become the norm, economists grapple with this new reality by calling it secular stagnation and by adjust [...]
- The trouble with the Brexit debate
by chris in Stumbling and Mumbling, 2016-05-12 12:49:30 UTC
How should the Brexit debate be structured, and presented in the media? Two things I’ve seen today pose this question: Vote Leave’s anger at ITV inviting Nigel Farage to debate against David Cameron; and the letter from 196 economists in favour of Remain.
These raise two general issues, which I’m not sure the media handle well.
One is: what to do about counter -advocacy, the fact that some proponents of a case are so awful that they detract from what might be a strong argument?
Vote Leave’s unhappiness at their case being represented by Farage is, I think, justified. He is likely to put the ca [...]
- Does Puerto Rico's Debt Crisis Foreshadow Similar Defaults Threats in U.S Urban Public Sector Union Strongholds?
by Matthew Kahn in Environmental and Urban Economics, 2016-05-12 00:34:00 UTC
Without mentioning the witches from Macbeth, the NY Times engages in some foreshadowing today as it offers the following conjecture; the challenges that Puerto Rico faces today of crumbling services and unpaid bills will play out soon enough in many U.S cities. A Direct Quote: "But mainland residents should not look smugly at Puerto Rico. Across America, dozens of cities, counties and states may be heading down the same financial rabbit hole. Illinois, New Jersey, Philadelphia, St. Louis and Jacksonville, Fla., to name just a few, are all facing their own slowly unspooling financial disasters [...]
- A Global Marshall Plan for Joblessness?
by Pavlina R. Tcherneva in INET Blog, 2016-05-11 10:00:00 UTC
Global unemployment is expected to surpass 200 million people for the first time on record by the end of 2017, according a recent ILO study, and limitations of official statistics suggest that the problem is much larger . As conventional measures increasingly fail to produce tight labor markets and jobless recoveries become the norm, economists grapple with this new reality by calling it secular stagnation and by adjusting upwards the rates of unemployment deemed 'natural' — but the human, social and economic costs of this growing problem are rarely conside [...]
- Lessons from âToo Big to Failâ in the 1980s
by Banking Blogger in NEP-HIS blog, 2016-05-11 09:09:58 UTC
Can a bank run be stopped? Government guarantees and the run on Continental Illinois
Mark A Carlson (Bank for International Settlements) and Jonathan Rose (Board of Governors of the Federal Reserve)
Abstract: This paper analyzes the run on Continental Illinois in 1984. We find that the run slowed but did not stop following an extraordinary government intervention, which included the guarantee of all liabilities of the bank and a commitment to provide ongoing liquidity support. Continental’s outflows were driven by a broad set of US and foreign financial institutions. These were large, sophist [...]
- Economics vs bankers
by chris in Stumbling and Mumbling, 2016-05-10 12:42:52 UTC
Simon Wren-Lewis says that “finance gets away with so much partly through a process of mystification”, and that economists must help to cut the sector back to size. This is an important point.
One of the great ideological tricks of bankers has been to present their own vested interests in the language of economic logic, thus giving an apparently technocratic justification for what is in reality mere rent-seeking. Not only have politicians fallen for this, but so too have some on the left. They’ve looked at bankers’ misuse of economics, and inferred that economics is an ideological subject used [...]
- How effective is quantitative easing in stimulating economic activity and raising inflation?
by thebusinesscycleblog in The business cycle blog, 2016-05-09 22:24:10 UTC
My main research contributions on this topic have now each been published.
Quantitative easing lowers Treasury and corporate bond yields, but the pass through to corporate bond yields is more modest than that associated with a lower federal funds rate: Kiley (2016)
As a result, overall financial conditions improve by less with quantitative easing than with similar movements in the federal funds rate: Kiley (2014a)
And this evidence is consistent with the more limited stimulus associated with long-term interest rates relative to short-term interest rates: Kiley (2014b) [...]
- Prosperity for All: Coming Soon to a Bookstore Near You
by Roger Farmer in My Economic Window, 2016-05-06 18:28:00 UTC
This is my first post for a while: so, sorry if you missed me. I've been busy writing books and papers. I received the final galley proofs this week for my new book, Prosperity for All: How to Prevent Financial Crises . You can pre-order it from OUP or Amazon and it will ship on September 1st. I also finished three new working papers that I will say more about in future posts. I've been consistent in my criticisms on this blog of attempts by Paul Krugman to revive the IS-LM framework. That's not because I'm opposed to IS-LM as it appeared in its earliest incarnations; the papers by John Hick [...]
- Weekly links May 6: expensive African cities, lotteries for housing, placebo effects, and moreâ¦
by David McKenzie in Development Impact, 2016-05-05 20:32:00 UTC
I liked the recent Planet Money podcast #698 (a long way home) – there is an interesting discussion of why a lottery is held for access to a housing assistance program in Connecticut, and how they ended up with a lottery rather than other systems of allocating resources – and a great quote about the mishmash of anti-poverty programs in the U.S. which, paraphrasing, is basically “it is not like Congress ever sat down and said what is the best use of the money we set aside to fight poverty” but rather how many different programs have come up over time, all with their own rules and constituencie [...]
- Ethnographic Atlas
by Masa in Devecondata, 2016-05-04 14:12:00 UTC
Compiled by George Peter Murdock (see his obituary in American Anthropologist , 88(3), pp. 682-6, for who he is) and published in 29 successive instalments in the journal ETHNOLOGY between 1962-1980. The data for 862 societies, at the time before their encounter with Europeans, was published in Ethnology , volume 6, number 2 (April 1967) , and then in a hardcover from the University of Pittsburgh Press . Since then, more societies were added, and some of the 1967 data were revised (s ee here �for detail). The final version, compiled by Patrick Gray in World Cultures , vol. 10, issue 1 (1998), [...]