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CPI Unchanged in December; Five-Year Inflation Rate Hits 45-Year Low
Economists are sometimes accused, and justly so, of trying to read too much into the latest monthly wiggle in every data series that they watch. To counter that tendency, we can start the discussion of today’s release of inflation data with a longer-term view. Instead of looking at monthly CPI data, let’s look at five-year [...]
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Can Lithuania’s New Government Meet the Economic Challenges Ahead?
Commentators often portray the Baltic countries as laboratories for testing the effects of austerity under fixed exchange rates. Although they share many common traits, Lithuania, Latvia, and Estonia have each followed distinctive paths during the global economic crisis. Estonia maintained tighter fiscal discipline going into the crisis, helping it to win entry into the Euro. [...]
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What is the Liquidity Coverage Ratio for Banks and why should we Care that it has been Watered Down?
“Massive softening of Basel bank rules” read the headline in the print edition of Monday’s Financial Times. “Betrayed by Basel,” wrote Simon Johnson in a blistering post on his New York Times blog. At issue was a rule called the liquidity coverage ratio promulgated by the Basel Committee on Banking Supervision. If you are a [...]
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Inflation Expectations are at a Record Low—or are they Soaring?
Both private investors and policymakers pay close attention to estimates of expected inflation. If investors expect inflation to be high, long-term, fixed-rate securities become less attractive, and market prices of those securities fall. If central bankers see that investors’ inflation expectations are high, they may decide to tighten policy. The trouble is, neither investors nor [...]
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What is Holding Back Natural Gas as the Transportation Fuel of the Future?
The natural gas revolution has brought big changes to the U.S. energy scene. Natural gas prices, which used to move closely together with oil prices, have plunged in the last five years, as the following chart shows. One result has been the rapid displacement of coal by natural gas in electric power generation. According to [...]
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Long-Term Unemployment Falls as U.S. Job Market Ends 2012 on a Quiet Note
The Bureau of Labor Statistics reported on Friday that the U.S. job market ended 2012 on a quiet note. Both the narrow and the broad unemployment rates were the same in December as in November. The economy added 155,000 payroll jobs, almost exactly equal to the month before. A jump of 30,000 in construction jobs [...]
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The Not-So-Simple Economics of Right-to-Work Laws
There was much hand wringing and an equal amount of triumphant cheering last month, when Michigan became the twenty-fourth state to adopt a right to work (RTW) law. It joined Indiana, which went RTW last February, as only the second major industrial state with such a policy. Much of the commentary portrayed the spread of [...]
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The Budget Deal: What We Have Left Undone
Making fiscal policy is never going to be easy, but it would be easier if we broke the process down into a logical sequence of steps. Here are those steps, as I see them: Decide how large a government we want in terms of government purchases and transfer payments. Any such number will necessarily have [...]
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Latest Data Revisions Show Nominal GDP Gap Started to Close in Q3
The third estimate of Q3 2012 US GDP came out on December 20, just as the holiday season was in full swing and as the limited public appetite for economic news was focused on the fiscal cliff. The report deserved more notice than it got. The Bureau of Economic Analysis revised its estimate of real [...]
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Does Robert F. Kennedy, Jr. Harbor Green Illusions about Solar Power?
Ozzie Zehner’s book Green Illusions calls our attention to the sometimes exaggerated claims that are made for alternative energy. Zehner sees these unrealistic ideas as widely shared in the mainstream environmental community. He maintains that they lead to the illusion that if we only muster the will to invest more in solar panels, windmills, and [...]
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Thomas Grennes
Thoughts From Across the Atlantic
Thomas Grennes is a professor of economics at the North Carolina State University and a former visiting faculty member at the Stockholm School of Economics in Riga. His research has dealt with various aspects of international economics, including open economy macroeconomics, international finance, and international trade in agricultural products. Recent research topics have included macroeconomic aspects of the Great Moderation, offshore outsourcing, sovereign wealth funds, and the relationship between government debt and economic growth. Earlier work dealt with emerging market issues in the Baltic countries and Russia and trade and macro policies in Sub-Saharan Africa. Economic history topics include the Columbian Exchange of plants and animals, the effects on food markets of introducing mechanical refrigeration, and the integration of Tsarist Russia into the world grain market. When he is not involved in economics, he enjoys mountain hiking.
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