On the road today, headed for a debate tonight with the daddy of supply-side, Art Laffer, at Oberlin college. If you’re out there, check it out–should be fun. We’ve debated before and tend to disagree (strongly) without being disagreeable.
Over at the NYT Economix blog.
Turning to the actions of more functional governments for a moment—which very much extends one’s palette these days–a number of people have asked me about this move by the Abe government to both increase taxes and stimulus spending. Does the tax increase imply that the Japanese Prime Minister is departing from his aggressive push to [...]
Bin Appelbaum makes a fair point, via Federal Reserve governor Jeremy Stein, that clarity and predictability are important communication skills that the Fed could sharpen these days. It’s a view that’s derived from the confusion markets experienced when the FOMC (the committee that decides on monetary policy) surprised everyone—(though not me!)—by holding off on when they [...]
I’ve already given Ben&Co. a shout out for holding off on the taper, i.e., continuing their monetary stimulus at the same pace instead of beginning to dial back the asset-buying program. Clearly and appropriately, they were motivated by continued weakness in the macro-economy and the job market. The recovery remains fragile, and higher interest rates [...]
Though not of the change of guard part that’s understandably the rage this AM. This is about the pressing matter of their FOMC meeting this Tues/Wed, wherein they’ll decide whether to start tapering off the amount of their monthly asset purchases, current $85 billion/month. The thinking on the street is that the Fed will decide [...]
…neither of which is original, but whadyagonnadoaboutit? First, it’s pretty well understood at this point that the tick down in unemployment last month, from 7.4% to 7.3% was a function of weakness not strength: the rate fell not because more folks got jobs but because more folks left the job market. But will they come [...]
Over at the NYT Economix blog, I argue for no tapir taper in Sept.
Working on a book chapter on figuring out how to turn fiscal policy right-side up again, riffing off of my CDSH hobby horse: Me, I think the best position is to be a Cyclical Dove and a Structural Hawk (CDSH). If you’re a CDSH, your fiscal question in recessions and sloggy periods like the US [...]
Beyond pointing out that I don’t want either of them to mow my lawn, I’ve remained neutral in the debate over Yellen vs. Summers for Fed chair. I continue to think they’re both fine choices and that the differences between what they bring to the job and how they’d run the Fed are far more [...]
CNBC’s John Harwood interviewed Treasury Sec’y Jack Lew this morning and I thought Lew made an interesting point. He was giving the White House talking point that “we won’t negotiate over the debt ceiling” and Harwood was like, OK, but you will negotiate over the budget…why is it OK to negotiate over one but not [...]
While much of DC has gone to the beach, apparently my CNBC pal Jimmy P (aka, James Pethokoukis) has decided to spend August challenging my posts. He raises some good points to which I’ll briefly respond. But broadly speaking, I’m unsurprisingly unconvinced. In both posts he’s written about, I was careful to point out that [...]
Over at the NYT Economix blog. You’ll like the chart and table, I’ll bet.
Back when we used to argue about the Keynesian stimulus known as the Recovery Act, I posted charts like those you see here: very simple pictures showing that real GDP started growing shortly after the Act’s implementation at the same time that job losses decelerated. I’ll be the first to admit that there’s lots of [...]
After wiggling around in the 1.5% to 2% range over the past year, the yield on the 10-year Treasury bond is now in the mid-twos and higher, closing at 2.7% today. There are numerous reasons for this, including the specter of the Federal Reserve beginning to taper its asset purchases next month, a possibility that [...]
I didn’t hear Treasury Secretary Jack Lew on TV yesterday, but I read this AM that he was asked “how come the Obama administration bailed out the banks but isn’t talking about doing so for Detroit?” Fair question. The answer is, I think: the correct motivation for federal bailouts–meaning some combination of managing a bankruptcy, paying [...]
To review, I recently suggested that based on Janet Yellen’s version of the Taylor rule (really, my slightly tweaked version of her version), the Fed should be following the accommodative stance suggested by Bernanke last week as opposed to the slightly more hawkish view he sorta kinda espoused the week before. John Taylor, he who [...]
I’ll have a longer piece up shortly about the unfortunate, albeit predictable, developments in Detroit. There’s a fair bit of happy talk out this AM about how bankruptcy provides a clean slate, and there’s some truth to that. But there’s a lot of pain between here and there, especially for stakeholders with public pensions and [...]
“With unemployment still high and declining only gradually, and with inflation running below the Committee’s longer-run objective, a highly accommodative monetary policy will remain appropriate for the foreseeable future.” That’s Fed chair Ben Bernanke today speaking to the House about Fed policy and the economy. His key points were: –The economy is getting better, but [...]
Maybe not the hottest debate you’ve joined today, but here’s a bit more on the impact of using different Taylor rules, as per my mild disagreement with John Taylor himself this morning. Again, one hesitates to argue with Whitney about how the cotton gin works, but it seems pretty clear that following Taylor’s 93 versions [...]
There’s an old Gary Larson cartoon where this drunk is standing at a bar next to a kangaroo, pointing a finger in its face and saying, “Now let me tell you a little something about marsupials.” This is by way of saying, “don’t argue about the Taylor rule with a guy named Taylor.” That’s John [...]
Given the recent confusion as to the Federal Reserve’s current stance, it seems like a fine time for a quick look at the “Taylor rule.” That’s an equation economists and Fed watchers like to use to see what the central bank’s federal funds rate ought to be given broad conditions in the macroeconomy. The inputs [...]
That’s my advice, over at the NYT’s Economix blog. If Mr. Bernanke continues to feel compelled to speak out, he should do so in Zen terms, emulating more the “I Ching” than monetary textbooks. Some suggestions: On tapering: “Though the rains have led to a rich bounty, they must cease and allow the sun to [...]