Saturday , June 6 2020
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Econbrowser – James Hamilton

Guest Contribution: “Global financial markets and oil price shocks in real time”

Today, we are pleased to present a guest contribution written by Fabrizio Venditti (European Central Bank) and Giovanni Veronese (Banca d’Italia). The views expressed in this paper belong to the authors and are not necessarily shared by the Banca d’Italia and the European Central Bank. The oil market was one of the timeliest gauges of the effect of the Covid-19 shock on global activity. Between February and April 2020 the price of crude plummeted. Containment measures and travel bans...

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Guest Contribution: “Uncovered Interest Rate Parity Redux: Non-Uniform Effects”

Today, we’re pleased to present a guest contribution written by Yin-Wong Cheung and Wenhao Wang (City University of Hong Kong).  The Empirical Failure of UIP Despite the fact that the uncovered interest rate parity (UIP) hypothesis plays a key role in model building and related analytical work in theoretical international economics, its empirical applicability has been seriously challenged. The Fama β-estimate (henceforth, the “β-estimate”) – the estimate of the cross-country interest rate...

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Forward Looking Economic Activity, Pre-Covid19

The economy is collapsing. That’s not news. What is interesting is that nonresidential fixed investment has been falling since 2019Q1. Figure 1: Nonfarm fixed investment in billions Ch.2012$ SAAR (blue, left log scale), and Economic Policy Uncertainty index (red, right scale). 2020Q2 investment is St. Louis Fed nowcast as of 6/1; 2020Q2 EPU is for first two months, as of 6/1. Source: BEA 2020Q1 2nd release, St. Louis Fed FRED, policyuncertainty.com and author’s calculations. Policy...

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Guest Contribution: “How China Compares Internationally in New GDP Figures”

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  May 28th and The Guardian. The World Bank on May 19, as it does every six years, released the results of the most recent International Comparison Program (ICP), which measures price levels and GDPs across 176 countries.  The new results are striking.  It...

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Business Cycle Indicators, 30 May 2020

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 2019M02=0. Source: BLS, Federal Reserve, BEA, via FRED, Macroeconomic Advisers (5/29 release), Bloomberg, and author’s calculations. As of Friday, May 29th, NY Fed, Atlanta Fed and St. Louis Fed nowcasts for Q2 are -35.8%, -51.2%, and -49.75% (SAAR),...

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The Hill: “White House to forgo summer economic forecast amid COVID-19, breaking precedent”

That’s from an article today: The White House will not release an updated round of economic projections this summer, breaking from precedent as the U.S. faces its deepest downturn since the Great Depression, two administration officials familiar with the decision confirmed to The Hill on Thursday. The Council of Economic Advisers (CEA), the internal White House economic team, will not release the typical midsummer review of its initial economic projections in July or August even as top...

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Geographical Distribution of April Growth – Philadelphia Fed Indexes

From the Philadelphia Fed Coincident Index release today: Figure 1: April Month-on-month percent decline in Philadelphia Fed coincident index, not annualized, %. Darker denotes larger declines. Source: Philadelphia Fed, and author’s calculations. The variation relative to the overall nationwide decline is interesting; Southern states are (for now) experiencing a less pronounced decline. Figure 1: April Month-on-month percent decline in Philadelphia Fed coincident index relative to US, not...

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No V Recovery: 538.com & IGM COVID-19 Economic Outlook Survey Series

From IGM: The IGM is administering this new survey on the outlook for the economy in collaboration with fivethirtyeight.com. The FiveThirtyEight/IGM COVID-19 Economic Outlook survey complements the existing IGM expert panels and is being overseen by Professors Allan Timmermann and Jonathan Wright. The list of experts answering the questions is identified in the post along with the responses. The entire survey responses are summarized here. Here is the characterization of the recovery by the...

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The Elasticity of Mortality with Respect to Recession

I hear a lot about deaths rising with recessions. What does the data indicate about the robustness of such a relationship? Below is a plot of the deaths/population ratio, in logs. Figure 1: Log ratio of deaths to population. NBER defined recession dates shaded gray. Source: CDC, Census via FRED, NBER, and author’s calculations. Estimating a log-log regression of deaths on population, 1999-2018, one finds that the semi-elasticity of deaths with respect to recession is -1.5%, although it is...

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How Many People Are Being Killed by the Lockdown?

From the Washington Examiner, and op-ed, via AEI: Although lockdowns are preventing some deaths, they are undoubtedly increasing deaths by other causes. This virus is killing people not only by infecting millions but also by inducing a policy response that kills people. First, …Isolation kills in many ways. We don’t have data that the lockdowns are causing more suicides, but plenty of health experts believe they will. People struggling with drug addiction are finding it harder to get the...

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