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From an article in the newest issue of GlobalAsia:

The Budgetary Impact of EGTRRA/JGTRRA Extension and AMT Fixes

Posted by Menzie Chinn at 07:25 AM permalink
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I certainly agree that the most important factor holding back employment growth at the moment is low demand for firms' products and services. But I disagree with those who suggest that this is the only factor.

Following up on my previous post, I want to examine what would happen if the Chinese yuan appreciated in real terms, either because of nominal appreciation, or because of more rapid inflation in China versus its trade partners. Here are some back of the envelope estimates.
Posted by James Hamilton at 05:30 AM permalink
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September 24, 2010 The Yuan's Course, Updated and Extended
Continue reading "The fat lady sings"
Continue reading "Links for 2010-09-15"
September 23, 2010 What's the Fed signaling?
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Today, we're fortunate to have Mark Copelovitch, Assistant Professor of Political Science and Public Affairs at the University of Wisconsin, as a Guest Contributor. He is also author of The International Monetary Fund in the Global Economy: Banks, Bonds, and Bailouts (Cambridge University Press, 2010).

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Posted by Menzie Chinn at 05:00 AM permalink
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Posted by Menzie Chinn at 06:00 PM permalink
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Posted by James Hamilton at 06:56 AM permalink
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...According to the CBO

Quick links on sources of job creation, recession probabilities, and alternative ways to access your favorite economic books.
Donald Marron calls our attention to the report of the CFTC and the SEC on the causes of bizarre prices at which some stocks traded last May.

September 19, 2010 What's holding back employment growth?

Continue reading "Three Graphs Regarding EGTRRA/JGTRRA "

Continue reading "When do recessions end?"

I have decided to forego discussion of the potentially heavy burdens faced by households with incomes in excess of $250,000 should the tax cuts not be extended for income in excess of $250K (see the poignant story here), and focus on the challenges of the unemployed, and what challenges persistent unemployment in turn poses for macroeconomic policy. (Side note: our assessment of the plight of the +$250K income households should be tempered by the knowledge that even those households with income in excess of $250K will see a tax cut under the President's proposal, since household income below the $250K threshold would be taxed at the current lower marginal rate [0])
September 14, 2010 Three Graphs Regarding EGTRRA/JGTRRA
As the conviction grows that the Federal Reserve will adopt a second round of quantitative easing (dubbed by some as "QE2"), I thought it might be helpful to survey some of the different estimates of what effect this might have on long-term interest rates.

Impacts, Transmission and Recovery.
Continue reading "Should the Fed try to depress long-term yields further?"
Posted by Menzie Chinn at 07:53 PM permalink
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I've been sharing with readers my recent research with Cynthia Wu, in which we found that the Fed could likely lower long-term interest rates further by buying more long-term securities, even though the short-term rate is essentially zero and even though the newly created reserves would simply sit idle in banks' accounts with the Fed. Here I'd like to take up the question of whether such a policy would be desirable.
September 30, 2010 IMF World Economic Outlook online
There's an aspect of Tuesday's statement from the FOMC that's not being emphasized by many analysts.
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Continue reading "Prospects for Growth And Rebalancing"
September 20, 2010 The fat lady sings

Fortunately for me, I don't like peanut butter. From NYT, on the Senate bill to expand FDA powers and increase funding:
Only a few months ago, policymakers around the world were confronted with a series of challenges that, while substantial, seemed relatively well defined. International organizations such as the International Monetary Fund and the Organization for Economic Cooperation and Development highlighted the challenges of a two-speed recovery: emerging markets racing ahead, advanced economies plodding along. Global financial imbalances,[link widoczny dla zalogowanych], particularly in current accounts, were a worry, but there were promising signs that growth and rebalancing in the United States and China would prove durable.
"Is the U.S. heading toward another recession?"

Posted by James Hamilton at 08:04 PM permalink
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September 08, 2010 The "Ever-Expanding" Government Sector, Illustrated

And pitfalls in partial equilibrium analyses

Posted by Menzie Chinn at 08:40 PM permalink
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Continue reading "The Incidence of Unemployment and Underemployment, by Income"
Continue reading "The "Ever-Expanding" Government Sector, Illustrated"
Posted by Menzie Chinn at 10:21 AM permalink
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Warren Buffett thinks the U.S. is still in a recession, declaring in a CNBC interview last week:
Posted by Menzie Chinn at 01:38 PM permalink
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Posted by Menzie Chinn at 10:35 AM permalink
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I have been updating graphs for my money and banking course, and here is the graph I generated to illustrate the tremendous impact of government borrowing on interest rates via portfolio crowding out (as argued in this post).
Frank Warnock on Two Myths about the Dollar
Continue reading "Some Policy Implications of the Interdependence of Cyclical and Structural Unemployment"
Posted by James Hamilton at 08:16 AM permalink
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This was the topic of a conference I recently attended, sponsored by the Korean Development Institute and the East-West Center, organized by Maurice Obstfeld, Dongchul Cho, Andrew Mason and Sang Hyop Lee. It was a great opportunity to hear diverse views on the progress of the world economy. The papers are here.
Continue reading "Portfolio Crowding Out, Illustrated"

Since China's currency is in the news [NYT], [Reuters] [Economix/Leonhardt], I thought it useful to update and extend the data depictions from the post a week ago.
September 12, 2010 Should the Fed try to depress long-term yields further?
Continue reading "The Budgetary Impact of EGTRRA/JGTRRA Extension and AMT Fixes"

October 06, 2010 Hangin' in there

Chapter 3 is entitled "Will It Hurt? Macroeconomic Effects of Fiscal Consolidation", and Chapter 4 is "Do Financial Crises Have Lasting Effects on Trade?". Also online are Chapters 3 and 4 from the IMF Global Financial Stability Report.
Continue reading "Some thoughts on the IMF reform debate"
September 18, 2010 Keep on Cooking Your Eggs and Washing Your Pre-Washed Spinach Thoroughly
I think we're in a recession until real per capita GDP gets back up to where it was before. That is not the way the National Bureau of Economic Research measures it. But I will tell you that to any-- on any common-sense definition, the average American is below where he was before, or his family, in terms of real income, GDP.
October 03, 2010 QE2: estimates of the potential effects
September 22, 2010 Some Policy Implications of the Interdependence of Cyclical and Structural Unemployment
Posted by Menzie Chinn at 10:45 AM permalink
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Continue reading "Causes of the flash crash"
Posted by Menzie Chinn at 09:40 PM permalink
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The prospects for a sustained global recovery now seem much less certain. ...

September 27, 2010 Portfolio Crowding Out, Illustrated

Posted by Menzie Chinn at 05:10 PM permalink
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Continue reading ""Is the U.S. heading toward another recession?""
Continue reading "Back of the Envelope Estimates of Chinese Trade Elasticities"

As we ponder the plight of the over-$250K household income group (see the poignant story here), I think it worthwhile to examine the unemployment and underemployment rates for lower-income households. In researching statistics for our forthcoming book, Lost Decades,[link widoczny dla zalogowanych], Jeff Frieden and I stumbled upon this study by Andrew Sum and Ishwar Khatiwada, with Sheila Palma, of Center for Labor Market Studies at Northeastern University. They characterized the mid-2010 employment situation as "A Truly Great Depression Among the Nation's Low Income Workers Amidst Full Employment Among the Most Affluent".

Posted by Menzie Chinn at 01:52 PM permalink
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October 07, 2010 Some thoughts on the IMF reform debate
Continue reading "The Yuan's Course"
I don't presume to be able to tell Warren Buffett what investment strategies work best. But I can provide some clarity on how economists use the term "recession," and hopefully shed some light on the issue that Buffett and others have raised.
Posted by James Hamilton at 10:24 AM permalink
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Continue reading "QE2: estimates of the potential effects"

Continue reading "The Yuan's Course, Updated and Extended"

Recent economic indicators tell more of the same story-- disappointingly weak growth.
Posted by Menzie Chinn at 07:40 AM permalink
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September 29, 2010 When do recessions end?
September 16, 2010 The Yuan's Course
Or at least, WEO Chapters 3 and 4.
Continue reading "The Global Economic Crisis"

Continue reading "What's the Fed signaling?"
Posted by James Hamilton at 08:44 AM permalink
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Just some numbers to bring reality into the general discussion:
Continue reading "Frank Warnock on Two Myths about the Dollar"
October 05, 2010 The Incidence of Unemployment and Underemployment, by Income

October 04, 2010 Prospects for Growth And Rebalancing
The NBER Business Cycle Dating Committee issued a statement today declaring that the bottom of the most recent recession was reached in June of 2009, with the economy in the expansion phase of the business cycle during the 15 months since then. This confirms the announcement issued by the Econbrowser Business Cycle Dating Committee last April.
Continue reading "Keep on Cooking Your Eggs and Washing Your Pre-Washed Spinach Thoroughly"

Posted by Menzie Chinn at 07:12 AM permalink
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Posted by Menzie Chinn at 01:35 PM permalink
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The debate over the yuan's value is heating up again. [Free Exchange/RA] [WSJ RTE/Talley] [WSJ RTE] Here is a plot of two relevant time series.

Continue reading "What's holding back employment growth?"
Frank Warnock, an expert on US capital flows and stocks, has just written a piece for CFR entitled Two Myths About the U.S. Dollar. In it, he examines "two factors that could substantially alter the long-run value of the U.S. dollar: the dollar's reserve status and the sustainability of U.S. international debt."
In evaluating the advisability of extending either completely or partially the tax cuts of 2001 and 2003 (aka EGTRRA and JGTRRA), and implementing additional fixes to the AMT, one should consider the impact on the budget.
September 13, 2010 The Global Economic Crisis
September 25,[link widoczny dla zalogowanych], 2010 Back of the Envelope Estimates of Chinese Trade Elasticities
September 15, 2010 Links for 2010-09-15
Continue reading "Hangin' in there"
October 02, 2010 Causes of the flash crash
That was the title of the Minnesota Public Radio's Midmorning show, with Kerri Miller. Charles Wheelan, of The Naked Economist, and I were the guests.
If (1) one is a concerned about budget deficits over the longer term, but (2) is concerned that a reversion to pre-2001 tax rates would hurt short term growth, then one should favor the partial extension of EGTTRA/JGTRRA for only those earning less the $250K ($200K for singles).