Thursday , February 21 2019
Home / Jared Bernstein: On the economy (page 10)

Jared Bernstein: On the economy

Links from JB, LLC

Obviously, you want catch up on the latest from JB, LLC (in which I’m a passive investor…bring on that tax cut!…JK!!), so here are some links: –From WaPo, why Mnuchin’s comment on the weak dollar making US exports more competitive was, of course, correct; and why Treasury secretaries should be neutral on currencies, not go around pretending they always prefer a strong dollar. Because they don’t. EG, we hit a recession and the dollar falls as part of a natural corrective. Trust me, they’re...

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Populism, Globalization, Trump at Davos, Tariffs, the Dollar…

As my title betrays, I’m trying to organize my thoughts around all of the above. There’s a unifying theme to all this, and maybe if I noodle on about it here for a bit, I’ll trip over it. But let me stipulate from the outset that I’m pretty sure the underlying theme of the moment will link up to the extremely important and deeply insightful recent work of the economist Dani Rodrik. –Trump and a bunch of his staff are at the World Economic Forum in Davos, Switzerland. This feels like one of...

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Hamlet on fiscal space in recessions

Over at WaPo, wherein I argue that a) when we hit the next recession, many policy makers will point to our higher-than-average debt/GDP ratio as evidence that we have too little fiscal space to engage in offset fiscal stimulus, and b) those policy makers will be wrong. I cite an important new paper by Romer/Romer on these points, showing that when you show up to put out a fire, you’d better bring some water. IE, countries with more fiscal and monetary space do more to offset negative shocks...

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What should states do about the new tax law?

While everybody’s been trying to figure out what the Republican tax plan means for families, paychecks, and the federal budget, there’s another important group of stakeholders that hasn’t gotten enough attention: states. Yes, the capping of the state and local tax deduction (SALT)—one of the bill’s more substantial payfors (it’s expected to raise over $600 billion over the next decade)—got elevated during the debate. But now that the new code is in place, what does it mean for state finances,...

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An “anchored expectations” model for wage stagnation?

I found this Bloomberg View piece by Conor Sen to stimulate the old noodle re why wage growth has generally been lagging. That is, given the persistent tautness in the job market, I’d expect a bit more wage acceleration than we’ve seen. Before I get to Sen’s points, however, a few facts to consider. One, based on still-recovering employment rates for prime-age workers, the job market is still not as tight as the unemployment rate suggests. Two, some series do show faster wage growth. The...

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Links, and some warm music for these chilly times

–Ask not for whom the shutdown tolls. It tolls for thee. IE, it does if you’re someone who recognizes the need for functional gov’t. Over at WaPo. To be clear, this is not a critique of the D senators that are blocking the deal. As a friend puts it, “They are forcing governance in the face of total bad faith and incompetence from the other side, and shouldn’t be shy in saying that.” Or doing it. Trump and much of the R caucus have put every partisan priority before DACA and CHIP, programs...

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A few thoughts on the political economy of a gov’t shutdown

I’d put the odds of a government shutdown at a little below half at this point, say 45%. To be clear, what we’re really talking about is a partial shutdown; less than half of federal workers are considered non-essential, so most (~60%) stay on the job; those furloughed typically get paid retroactively. You can read about the latest details here, including a curve-ball tweet this AM from the president that seems to mess a bit with the R’s strategy: get D’s on board for a short-term budget...

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Links; more on heating vs. overheating.

Medicaid is a highly efficient program (see figure below), delivering health coverage to 70 million low-income persons while conveying many ancillary benefits on its beneficiaries, as Hannah Katch and I point out in the NYT oped. So, of course, Republicans want to lay waste to it. They were blocked from doing so through their ACA repeal, they did a bit of it in their tax plan, and now they’re going after Medicaid through the waiver process (which skirts Congress), by adding a work...

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Is it getting a little warm around here?

The front page of my WSJ this AM, above the fold, screams: “Treasury Yields Ripple Through Markets.” The 10-year yield was up for five days straight as of yesterday, approach a 52-week high at 2.609%. The 10-year “breakeven rate,” a market-based measure of inflation expectations (it’s the difference between the 10-year rate on inflation-protected bonds (TIPS) and the 10-year Treasury yield; thus, a measure of expected inflation, 10-years out), rose sharply in recent days, and has cracked 2%...

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Questions for the MMTers

As their adherents readily, and fairly, remind me, there’s a lot I don’t understand about modern monetary theory (MMT). So, let me ask about some aspects of the theory and see if I might get me some education. First, I’ve stressed that, as I understand it, there’s no distance between my views and a core principle of MMT: the need for deficit spending when the economy is below full employment. This, of course, as Dean Baker points out, is as much Keynesian as anything else, but as the Chinese...

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