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Econbrowser – James Hamilton

Spot the Incipient Recession

Most accounts these days suggest the risk of recession has abated, given the strength of various indicators, and the un-inversion of the yield curve. This made me wonder what two key indicators look like in real time on the eve of a recession. Take a look at these two graphs, to see which one denotes data just before a recession. Figure 1: Nonfarm payroll employment, 000’s (blue, left log scale), industrial production (tan, right log scale). Each tick denotes a month. Red arrow and...

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Guest Contribution: “Carbon Prices, not Monetary Policies, Are the Tools to Fight Climate Change”

Today, we present a guest post written by Jeffrey Frankel, Harpel Professor at Harvard’s Kennedy School of Government, and formerly a member of the White House Council of Economic Advisers. A  appeared in Project Syndicate  January 17th. Everyone agrees that Climate Change is one of the top one or two most important policy issues that we face – everyone except some Trump supporters who apparently believe that it is all a hoax.  Identifying the problem, however, is not much...

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Judy Shelton to the Fed?

From the White House: Well, this is a crazy nomination. Documentation: Judy Shelton Confuses Me (Part 2,432,671) [embedded content] What Does Judy Shelton Believe GDP Growth and Inflation Are in 2019? [embedded content] Judy Shelton Confuses Me: On Interest Rates, Currency Manipulation [embedded content] “White House Considers Economist Judy Shelton for Fed Board” [embedded content] This Makes No Sense [embedded content] This graphic summarizes my feelings:

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A “Critique” of Confidence Intervals

Steven Kopits opines on statistics: I don’t like confidence intervals for two reasons: First, the word ‘confidence’ can be misleading. If the underlying data is bad, if the survey method is weak, if respondents lied, if the sample is not random (but not known to be so), and if the analyst cherry picks data, then the confidence interval can be wildly misleading. If the public reads ‘a 95% confidence interval’, then they think that surely the true mean must be within that interval in all...

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David Romer: “In Praise of Confidence Intervals”

That’s the name of a new NBER working paper, and a paper presented at ASSA (slides; I didn’t get to see myself). As I get to teach applied econometrics for public policy this semester, I thought this was interesting paper. From the abstract: Most empirical papers in economics focus on two aspects of their results: whether the estimates are statistically significantly different from zero and the interpretation of the point estimates. This focus obscures important information about the...

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Business Cycle Indicators as of Today

December industrial production (red line) adds to the (mixed) picture… Figure 1: Nonfarm payroll employment (blue), industrial production (red), personal income excluding transfers in Ch.2012$ (green), manufacturing and trade sales in Ch.2012$ (black), and monthly GDP in Ch.2012$ (pink), all log normalized to 2019M01=0.  Source: BLS, Federal Reserve, BEA, via FRED, Macroeconomic Advisers (12/30 release), and author’s calculations. As noted previously, employment is likely to be revised...

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The US China Phase 1 Deal Interpreted: Break Thing, Claim to Fix Thing, Repeat

Through 2018M03, US exports to China were growing smartly. The Section 232 and Section 301 actions were announced. The “deal” essentially restores real exports to China to the pre-shock trend for 2020, above for 2021 (if you believe!). If the commitments to the deal’s export provisions are upheld, then there is a quantitatively important impact, at least insofard as the US-China bilateral balance is concerned. However, what if nothing had happened in the US-China trade war. Well, me might...

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GAO: “Office of Management and Budget—Withholding of Ukraine Security Assistance”

From GAO today on “the drug deal”: In the summer of 2019, the Office of Management and Budget (OMB) withheld from obligation funds appropriated to the Department of Defense (DOD) for security assistance to Ukraine. In order to withhold the funds, OMB issued a series of nine apportionment schedules with footnotes that made all unobligated balances unavailable for obligation. Faithful execution of the law does not permit the President to substitute his own policy priorities for those that...

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EconoFact: “What is the Toll of Trade Wars on U.S. Agriculture?”

By Menzie Chinn and Bill Plumley, at EconoFact, posted a few minutes ago: U.S. agriculture has been caught in the tit-for-tat of the trade wars. Retaliation by China, Canada, Mexico, Turkey and members of the European Union to tariffs imposed by the Trump administration have taken a bite out of U.S. agricultural incomes. Tariffs on imports of steel and aluminum in the United States have also raised costs for machines, equipment and structures used by the agriculture sector. Agriculture...

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