Australia is no longer immune to the stagnation in the West. Despite a resilient housing market, Australia’s economy is slowing. With a worsening labor market, consumption is eroding, along with business confidence. In the past two years, the benchmark interest rate has been almost halved to 2.5 percent. Still, Australia’s real GDP growth is likely [...]
“Our taxpayers don’t want to subsidize somebody’s drug addiction.” - Governor Scott (R-Florida). Unless, of course, that somebody is U.S. House of Representatives member Trey Radel (R-Florida) who was recently convicted of cocaine possession and is on one year probation. In his case, the Congressional GOP leadership thinks taxpayers should continue to subsidize him, and likely pay for his [...]
The pervasiveness and relevance of asset price booms and busts in modern economies has now been fully acknowledged. So has the case for combining prudential regulation and monetary policy in the complementary pursuit of financial and macroeconomic stability. This is a key issue particularly for policy makers in emerging markets, where the interaction of real [...]
It's a Bird, It's a Plane, It's a...Bubble?
Animal spirits are no longer as exuberant as they once were.
Must ReadEd Dolan's Econ Blog
Environmentalists often pillory China, with its opaque city air, dirty water, and contaminated food as the leader of a race to the bottom. By spending as little as possible on pollution control, they say, it keeps production costs to a minimum and boosts exports. If Chinese producers had to bear the full external costs their [...]
On the liquidity trap: we have discovered, unfortunately at great cost, that the zero lower bound can indeed be binding, and be binding for a long time—five years at this point. We have also discovered that, even then, there is still some room for monetary policy. The bulk of the evidence is that unconventional policy can systematically affect the term premia, and thus bend the yield curve through portfolio effects. But it remains a fact that compared to conventional policy, the effects of unconventional monetary policy are very limited and uncertain.