Spain’s economic problems now form part of such a complex web of cause and effect, action and reaction, that it is getting increasingly difficult for laymen, journalists and politicians alike to get to the core of what is actually happening. “To a herd of rams, the ram the herdsman drives each evening into a special … Read more
US GDP growth accelerated from a crawl to a walk in the first quarter of 2013, according to the advance estimate issued today by the Bureau of Economic Analysis. The reported annual growth rate of 2.5 percent was just a bit faster than the average rate during the recovery, and much stronger than the 0.4 … Read more
Today’s update on jobless claims should dampen worries a bit over the outlook for the economy. New filings for unemployment dropped a healthy 16,000 last week to a seasonally adjusted 339,000. Once again, claims are moving close to the post-recession low of 330,000 reached back in January—a five year low. One number doesn’t mean much, of course, … Read more
Driven by massive monetary stimulus from central banks, the performance of financial markets, especially stocks, have decoupled from that of a moribund real economy. Financiers assume that the strong rise in equity markets anticipates a strong economic recovery. However, there are fundamental reasons why the world may be entering a period of low or no … Read more
The methods and conclusions of an influential paper by Carmen Reinhart and Kenneth Rogoff published in 2010 have recently been challenged by Thomas Herndon, Michael Ash, and Robert Pollin. Here I comment on both the details and broader significance of the dispute. Let me begin by stating what I perceive to be the core policy question: are high … Read more
I just did another interview on Reinhart&Rogoff and the magic, disappearing, 90% debt ratio, centered on the Neoliberal belief in “expansionary austerity”. You can see the original here: http://acemaxx-analytics-dispinar.blogspot.ch/2013/04/interview-prof-l-randall-wray.html Here is the text of the newest interview: Q: Around two years ago, you pointed to an economic error in R & R paper. You said (*See … Read more
Kudos to UMass economists for exposing the flaws in R&R’s empirical work. The conclusion that there is some magic debt ratio beyond which growth slows was never substantiated by R&R’s data–they fudged and flubbed the empirical work. True enough. However, the whole “research” method as well as the “theory” behind it was bunk anyway, as … Read more
I was on the Daily Ticker with Lauren Lyster talking about Japan yesterday. My view is that there is no material negative change in Japan’s sovereign debt outlook nor will there be in the medium term because of Abenomics. The video is at the bottom of this post. Before you watch it let me say a little bit … Read more
On September 28, 2011, the European Commission formally proposed a plan to implement an EU-wide financial transactions tax (FTT)[1]. Unanimity is required to implement such a proposal at the EU level and this is impossible as many member states, notably the United Kingdom and Sweden, oppose it [2]. As a way around this, in Oct … Read more
Carmen Reinhart and Ken Rogoff came as close to celebrity status as an economist can ever come, with their book, This Time Is Different. They claimed that 800 years (!) of financial history proves that high government debt ratios lead to low economic growth. Governments all over the world took heed and downsized, adopting austerity that … Read more