Will policymakers at the Fed raise interest rates at their December meeting? Wall Street oddsmakers increasingly think they will. One simple chart shows why. The chart tracks the economy’s progress toward the central bank’s target of “stable prices and maximum employment.” The Fed’s rate-setting Federal Open Market Committee (FOMC) has operated under this so-called dual … Read more
In a paper on tax policy, leverage and macroeconomic stability published on 10 November, the IMF staff address the issue of excessive leverage or the so-called “debt bias” that poses risks for financial and macroeconomic stability. The “debt bias” has been largely created by more favorable tax treatment of debt relatively to equity. In most … Read more
Hillary Clinton is often said to be a policy wonk, deeply enmeshed in specifics and details, but that may be a mischaracterization. In some ways, her approach seems disturbingly superficial, skipping one perceived problem to another with little attention to their underlying causes. In some cases, Clinton seems to have paid little attention to the … Read more
A healthy economy requires a fluid labor market. Even when total employment and output are stable, the labor market is in constant motion. Jobs disappear when firms close or downsize. Other jobs appear when new firms open or old ones expand. People move freely from one job to another in search of career advancement or … Read more
The unemployment rate published monthly by the Bureau of Labor Statistics is one of the most widely watched of all economic indicators. But why? What does it really measure? The news media, politicians, and voters tend to see the unemployment rate as an index of the social stress of joblessness. There is ample evidence to … Read more
The economy of Russia contracted by almost 4% last year and is expected to decline further this year, according to the IMF (Economist 2016a). Russia being a resource driven economy and one of the top oil exporters globally, a large part of the downturn can certainly be explained by the collapse in oil price. Western … Read more
One of the most common criticisms of social safety net programs is that they discourage work. As House Speaker Paul Ryan has put it, they risk becoming a “hammock that lulls able-bodied people to lives of dependency and complacency, that drains them of their will and their incentive to make the most of their lives.” … Read more
Like most economists, I am strongly inclined toward free trade. I cringe to see the way free trade is under attack, from both parties, during this primary season. The two populist candidates are the worst offenders. Bernie Sanders, whom I support on many other issues [1] [2] [3], goes off the rails when it comes … Read more
Presidential candidate Bernie Sanders has reopened the healthcare debate by urging America to adopt a system more like that of other wealthy countries. “The United States is the only major country on earth that doesn’t guarantee health care to all people,” he says, “And we end up spending far, far more per capita on health … Read more
Stabilizing the national economy is one of the federal government’s key responsibilities. Is that too much to ask? OK, then, can we at least ask that the government not make things worse when instability strikes? Not if you’re Marco Rubio. Sooner or later an oil price meltdown, a banking crisis, or a Chinese hard landing … Read more