Thursday , October 21 2021
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Our economics correspondents consider the fluctuations in the world economy and the policies intended to produce more booms than busts

Free Exchange Economist

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Is there a wage growth puzzle in America?

TODAY’S labour market report showed that the American economy created 156,000 net new jobs in August. That was a bit less than expected, but payrolls are still growing comfortably faster than the working-age population. Despite having created over 2m jobs in the last year, pushing unemployment below 4.5% for the last five months, wage growth remains muted, at around 2.5%, compared to more like 3.5% the last time unemployment was comparably low. In a recent article for the print edition, I...

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The hubris of ten-year budgets

IN February of 2001, Alan Greenspan, then still the chairman of the Federal Reserve, and still called the “Maestro”, testified to the Senate Budget Committee. The committee wanted to get started on the tax cuts George W. Bush had promised during his campaign. Mr Greenspan gave them his qualified blessing, with an argument that now sounds incredible: he was worried that America would pay down its debt too soon. That week the Clinton administration’s Office of Management and Budget had released...

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How to interpret a market plunge

FOR much of the past two years, market watchers have had little to write about, apart from the passing of one stock-index milestone after another. The events of the past week, however, have shaken the financial world awake. A recent, upward zag in bond yields seemed to signal the arrival of a new theme in market movements. Stock prices confirmed it, and then some. Over the past week, American stocks have dropped about 7%, punctuated by a breathtaking, record-setting plunge on Monday. The Dow...

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A new paper rekindles a tiresome debate on immigration and wages

WHAT effect do immigrants have on native wages? It’s perhaps one of the most important questions of labour economics. It's also one that is largely unanswerable. The problem is that it's almost impossible to separate cause and effect. If a country with high rates of immigration also sees strong wage growth, we can’t assume that immigrants are boosting wages—it may well be the case that the migrants are choosing to move to places with stronger economies.One approach to getting around this...

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Has BRICS lived up to expectations?

DOES anyone still care about the BRICS? Brazil, Russia, India, China and South Africa concluded their tenth official summit in Johannesburg on July 26th. The widespread perception is that the group has failed to live up to the hype the acronym helped to generate. But that is only half true.The combined GDP of the original quartet (which did not include South Africa) is actually far bigger in dollar terms than Goldman Sachs envisaged when they first projected BRIC growth in 2003 (after Jim...

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Why the Fed is likely to raise rates, despite low inflation

CREDIBILITY is a thing you have to worry about with toddlers. You cannot reason with them. The best you can hope to do is respond consistently to undesirable behaviour. Get this wrong and your work becomes harder. If your correspondent doesn’t actually go and hide the box of Legos every time he has to count to three, for example, his child will not find his threats to be credible, and will fail to respond to them. Get our daily newsletterUpgrade your inbox and get our Daily Dispatch and...

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