Inflation Expectations: Distorted by Biases

In a recent article, Amity Shlaes asserts official statistics mismeasure how we experience inflation. I’m going to agree, but not for the reasons you might think. It’s not because John Williams’ Shadowstats, which she appeals to, is right (Jim has comprehensively documented why each and every person who cites that source should be drummed out of the society […]

What to Do About the ‘Crazy Euro?’

From today’s FT: ECB under pressure to tackle ‘crazy’ euro Pressure is mounting on the European Central Bank to take action against a persistently strong euro with a leading industrialist calling on Frankfurt to tackle the “crazy” strength of the currency…Fabrice Brégier, chief executive of Airbus’s passenger jet business, said the ECB should intervene to push […]

Russia Stalls

From Reuters today: Russia’s economy is stagnating as data showed on Wednesday that capital worth $75 billion has left the country so far this year following sanctions on Moscow over its involvement in Ukraine. “We have for now a period of stagnation, or a pause in growth,” Deputy Economy Minister Andrei Klepach was quoted as saying in […]

Imminent Wage Increases in Sight for U.S. Workers?

How tight is the labor market? A recent article summarizes the argument that wage pressures are building. From K. Madigan in WSJ Real Time Economics: Economists now are debating whether the Fed has set its Nairu sights too low. And they point to two reports out Tuesday as proof. The first report was the small business survey done […]

Curious Correlations: Wage Hikes and Crises

Some argue that minimum wage hikes cause labor crises [1] or recessions [2] [3]. Is this true?   Source: Idiosyncratic Whisk. This graph is at first glance highly persuasive. But then I realized the graph plots the minimum wage divided by the average level of compensation, so it’s tracking a ratio. Hence, average compensation (which declines during a recession) is also […]

Russian FX Reserves and Balance of Payments Vulnerabilities

Russian foreign exchange reserves, while large, are declining. Since reserve holdings (or lack thereof) are one of the best predictors of balance of payments/currency crises, it’s worth taking a look at their trajectory. (See Frankel and Saravelos, 2012 for a recent example) First, consider a long span of quarterly data (through end-2014Q1): Figure 1: Russian international reserves ex.-gold, […]

Expansionary Fiscal Policy Is Very Expansionary During Extreme Recessions

From a paper by Carlos Vegh, (John Hopkins University), Daniel Riera-Crichton (Bates College) and Guillermo Vuletin (Brookings Institution) presented at the USC-JIMF conference “Financial Crisis in the Aftermath of Global Crisis” (described here):   Abstract: Using non-linear methods, we argue that existing estimates of government spending multipliers in expansion and recession may yield biased results by ignoring whether government spending is increasing or decreasing. For […]

State Employment Trends: Does a Low Tax/Right-to-Work/Low Minimum Wage Regime Correlate to Growth?

It’s interesting how “pro-business” policies do not appear to be conducive to rapid employment growth. Employment in Governor Walker’s Wisconsin, as in Governor Brownback’s Kansas, has lagged behind that of the United States (and behind that of Governor Dayton’s Minnesota and Governor Brown’s California). Figure 1: Log nonfarm payroll employment in Minnesota (blue), Wisconsin (red), Kansas […]

An Economic Sanctions Menu Targeting Russia

As Russia fosters heightened instability in the eastern portions of Ukraine [0], we should be considering what methods will impose maximum pain on Russian policymakers. Already, the Russian economy has taken a hit, even while in an already fragile state.[1] [2] From Robert Kahn at CFR: Direct bans on business trade and investment can meaningfully reduce Russian wealth and […]

1 2 3 32