Archive for the ‘Economic Growth’ Category

The economy’s speed limit is a policy variable

February 22nd, 2016

Many economists accept the concept of “hysteresis,” which sounds like, and is, a disease that occurs when persistent periods of weak demand chip away at what I call the “big two” supply-side variables: labor supply and productivity. The figure below reveals the serious consequences of our latest bout with hysteresis. In today’s WaPo, I tout… Read more

Charles Manski on the importance of accounting for policy uncertainty

February 20th, 2016

I forgot to post this here yesterday, as I think OTE’ers would quite like it, within a confidence interval, of course. Charles Manski, an economist/econometrician who’s thought deeply about the importance of accounting for errors in economic data and forecasts, and who also miraculously speaks fairly plainly about it, agreed to answer some questions I… Read more

Not to be negative, but…a critical comment on negative interest rates.

February 15th, 2016

With most economic variables, I think we make too big a deal about crossing zero on the number line. I don’t feel great if real GDP’s growing at 0.2% and horrified if it’s at -0.2%. Deflation with price growth at -0.5% isn’t terribly worse than disinflation with price growth at +0.5%. But with nominal interest… Read more

How states can stop wasting their taxpayers’ money

February 8th, 2016

[This post was written jointly with Ben Spielberg] Most state governors want to bring more businesses and employment to their states and maintain sustainable budgets. An important new paper from two of our colleagues, Michael Mazerov and Mike Leachman (M&L), provides a new and important insight in this regard: incentives in the form of tax… Read more