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Global Macro Channel: Latest Posts
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Global Macro
Sequester in the Time of ZLB
In several weeks, absent action by policymakers, the Federal government will begin implementing $85 billion worth of across-the-board cuts during FY2013 (i.e., in the months before October). [0] According to one narrative, each dollar of spending previously devoted to patrolling the South China Sea and monitoring tornadoes and winter storms will be released to the private [...]
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Global Macro
Fiscal Austerity is Happening Now
Ryan Avent notes that fiscal austerity is happening now: [T]he record shows that total federal government outlays were 25.2% of GDP in 2009, 24.1% of GDP in 2011, and 22.8% in 2012…Both outlays and receipts are, as a share of GDP, below pre-crisis level… the “austerity” of 2011-2012 wasn’t “austerity” but austerity. Federal government spending fell by a meaningful share [...]
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Global Macro
Bank of England Has a Lot to Say
The Bank of England does not normally say anything when there is no change in policy. This time, perhaps influenced by the presence of its new governor Mark Carney in London, it has issued a long statement. Bank Rate stayed at 0.5% and quantitative easing at £375 billion (though £6.6 billion of maturing gilts will [...]
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Global Macro
Past and Future Effects of the Economic Stimulus
Summary: Yesterday we examined the condition of the US economy. Today we look at a major driver of our prosperity, and what might be its long-term effects. Stand by for a boom! . Contents How we got here What do we have to show from 5 years of massive stimulus? Why continue the stimulus? Putting the stimulus [...]
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Ed Dolan's Econ Blog
Strong Job Growth and Upward Revisions Contrast Sharply with Reported GDP Decrease
Wednesday’s data release from the Bureau of Economic Analysis surprised us with a reported decrease of 0.1 percent in GDP for Q4 2012. Now, just two days later, a report from the Bureau of Labor Statistics shows robust job growth throughout the last quarter and continuing into January. The two offer sharply contrasting indications of [...]
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Global Macro
Improving Our Understanding of Recessionary Dynamics, and Developing More Advanced Strategies for Reparative Interventions
There are fundamental errors in the conventional analysis of, and approaches to, current macroeconomic problems, the results of which are disappointing or ineffectual outcomes to policy interventions, along with a dangerous loss in public confidence for the US government’s capabilities to intercede effectively. In contrast to economic projections that predict a slow and precarious recovery, [...]
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Global Macro
Interesting Anecdote
Looking at the Reuters report on the latest consumer confidence numbers, this caught my attention: “The increase in the payroll tax has undoubtedly dampened consumers’ spirits and it may take a while for confidence to rebound and consumers to recover from their initial paycheck shock,” Lynn Franco, director of economic indicators at The Conference Board, said in [...]
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Nouriel Roubini's Global EconoMonitor
Preparing for a Perfect Storm
The global economy this year will exhibit some similarities with the conditions that prevailed in 2012. No surprise there: We face another year in which global growth will average about 3 percent, but with a multispeed recovery—a subpar, below-trend annual rate of 1 percent in the advanced economies, and close-to-trend rates of 5 percent in [...]
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Global Macro
Currency Wars in the Era of Unconventional Monetary Policies
Interpreting Monetary Policy’s Impact on Exchange Rates (and Economic Activity) Over a week ago, Bundesbank President Jen Weidmann warned against the politicization of Japanese monetary policy, as the BoJ was pressured for more expansionary policy. [1] Nouriel Roubini warned that a currency war could be self-defeating as each country’s laxer monetary policy merely resulted in higher commodity [...]
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Great Leap Forward
Global Financial Crisis Explained: The Theory of Social Costs
I recently came across a video of one of my talks on the Global Financial Crisis, or, Global Economic Crisis, that provides a clear antitdote to orthodox thinking. You can view it here: “The Financial Crisis Viewed from the Perspective of the Social Cost Theory”, Social Cost Workshop, Wright State University, Ohio, April 27, 2012; [...]
