Friday , April 28 2017
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Econbrowser – James Hamilton

Monthly GDP Estimates and a Nowcast

Not spectacular. Figure 1: GDP in billions Ch.2009$ SAAR, from BEA (3rd release) (blue bars), from Atlanta Fed GDPNow (4/27) (dark bold blue line), Macroeconomic Advisers (4/27) (red line), and e-forecasting (4/25) (green line), all on log scale. Atlanta Fed level calculated applying q/q SAAR growth rate to 2016Q4 level. Source: BEA 2016Q4 3rd release, Atlanta Fed, Macroeconomic Advisers, e-forecasting, and author’s calculations. In contrast, Bloomberg consensus is for 1.1% q/q SAAR growth...

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“I am the king of debt. I do love debt. I love debt.”

That’s a quote from candidate Donald J. Trump in May 2016. And today, he re-affirmed his predelictions, in his tax “sketch”. According to the Committee for a Responsible Federal Budget, the ten year central projection is for a cost of $5.5 trillion, resulting a $6.2 trillion augmentation to the debt. Source: CRFB (April 26, 2017). Ignoring dynamic effects, this is the picture (which is not pretty). Source: CRFB (April 26, 2017). There is of course a tremendous amount of uncertainty because,...

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Econometrically Assessing the President’s Tax Plan

Well, we don’t know for certain what he’s going to announce (and maybe even he doesn’t know what he will) — but according to Bloomberg… President Donald Trump plans to propose a 10 percent tax on more than $2.6 trillion in earnings that U.S. companies have stockpiled offshore, said a White House official familiar with the president’s tax plans. Proceeds from the so-called “repatriation tax” would represent a one-time source of sorely needed revenue, which could offset some of the deep tax...

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Guest Contribution: “How to Re-Negotiate NAFTA”

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 on April 22nd in Project Syndicate. The Trump Administration says it is sticking with its core campaign promise to renegotiate NAFTA, which remains unpopular with many Americans even though economists think it has been beneficial. The President said again on April 20 that he...

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State Employment Trends: Some Selected States and ALEC Rankings

Since 2011 — when Scott Walker and Sam Brownback came into power — California has powered far ahead of Wisconsin and Kansas. The newly released Rich States, Poor States, 2017 allows us to look at how four states, both low and high ranked by Arthur Laffer et al., fared, employmentwise. Figure 1: Log nonfarm payroll employment for Wisconsin (red), Minnesota (blue), California (teal), Kansas (green) and the US (black), all seasonally adjusted, 2011M01=0. ALEC-Laffer State Economic Outlook...

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Doug Irwin on “The False Promise of Protectionism”

Why Trump’s Trade Policy Could Backfire That’s a new Foreign Affairs essay out today by Doug Irwin, Professor of Economics at Dartmouth College: Although Trump’s professed goal is to “get a better deal” on trade, his brand of economic nationalism is just one step away from old-fashioned protectionism. The president claimed that “protection will lead to great prosperity and strength.” Yet the opposite is true. An “America first” trade policy would do nothing to create new manufacturing jobs...

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Minnesota Employment Growth Accelerates Relative to Wisconsin (Again)

Wisconsin and Minnesota released March employment figures today. Here, without comment (as none are needed) are year-on-year growth rates relative to the US average for Minnesota (blue) and Wisconsin (red). Figure 1: 12 month log-differences of nonfarm payroll employment for Minnesota (blue) and Wisconsin (red), relative to US. Green shading denotes sample not updated to reflect QCEW-related benchmarking. Source: WI DWD, MN DEED, BLS, and author’s calculations. For a longer term perspective...

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Technically Correct, but Betraying a Certain Mindset

From the Washington Examiner: I really am amazed that a judge sitting on an island in the Pacific can issue an order that stops the president of the United States from what appears to be clearly his statutory and constitutional power” That “island in the Pacific” is the state of Hawaii, a state since 1959. While Hawaii is smaller than Sessions’ state of Alabama, it’s not that particularly small, ranking (by 2015 real GDP) at 44th, compared to Alabama’s 33rd, among the 50 states. Hawaii’s...

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China’s tetralemma

Many countries have three policy objectives: (1) being able to set their own monetary policy, in order to keep their own inflation and unemployment at desired levels; (2) having a stable exchange rate, in order to avoid disruptive shifts in exports or imports; and (3) allowing free capital flows, in order to help the country’s citizens and firms find the most efficient sources and uses of capital. But the famous policy trilemma of international economics claims that any country is going to...

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Treasury Semi-Annual Report to Congress on Foreign Exchange Policies Released

The report, released yesterday, is here. From page 15: Treasury estimates that China intervened heavily in the foreign exchange market to prevent a more rapid RMB depreciation. Treasury estimates that from August 2015 through February 2017, China sold around $800 billion in foreign currency assets to prevent rapid RMB depreciation. The pace of net foreign exchange sales appears to have abated somewhat in early 2017 amid strengthened enforcement of existing capital controls and stronger...

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