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Jeffrey Frankel’s Blog

Biden Avoids Mistake of Insufficient Fiscal Stimulus

TweetMarch 27, 2021 — It has been a year since the US and the world went into recession.  Because of its origins in the sudden pandemic, it was possible to reliably discern the advent of the recession before it was reflected in any of the standard economic statistics, which is rare.  (I hope it shocks no one to learn that economists can’t normally predict recessions.) By the end of the second quarter of 2020, US GDP had fallen 11 %. This record plunge took the US economy from a level that...

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Remembering George Schultz at a 1983 Reagan cabinet meeting

TweetFebruary 8, 2021 — In early November 1983, President Ronald Reagan was meeting with his entire cabinet, as Secretary of State George Schulz walked him through each step of an upcoming visit to Japan and Korea.  I was there as the “plus one” staff aide to Martin Feldstein, Reagan’s top economic adviser. On the occasion of Schultz’s passing, February 6, at age 100, I offer two remembered anecdotes from this meeting. Reagan and Whales Reagan said very little during the lengthy briefing...

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Will the GameStop game stop?

TweetFebruary 6, 2021 — Whether one thinks that the overall equity market is currently valued properly or not, something very unusual happened in the last week of January to GameStop stock.  Its price rose 323 percent for the week, and 1,700 per cent for the month (that is, an 18-fold increase). This was a speculative bubble. That is, the price departed from fundamentals. Some investors who got in early and got out early made a lot of money. Just as many people, who got in too late or...

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Republicans fight deficits only when a Democrat is President

TweetJanuary 28, 2021  —  High among the many priorities of newly-inaugurated US President Joe Biden are the challenges of an economy that appeared to be slowing down as the new year started, with the latest employment numbers looking bleak.  A fourth-quarter slowdown in the US recovery from the horrendous second quarter could be attributed to the expiration of some of the bipartisan stimulus programs that were passed by Congress in March of 2020, or to the third wave of Covid-19, or to...

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The Year 2020 in Three Phrases

TweetDecember 31, 2020 —  Consider the past year through the lenses of three phrases: “witch hunt,” “black swan,” and “exponential.”  Each of these terms is widely applied, but not necessarily in the most useful way. Witch hunt Donald Trump has used the words “witch hunt” approximately once every three days on average during his presidency, just counting tweets alone.  It wasn’t just his impeachment trial, which ended with the Senate voting to acquit on February 5 of 2020. He continued...

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Remembering Richard Cooper

TweetDecember 24, 2020 —     Richard N. Cooper (Dick), who passed away Wednesday evening at the age of 86, was always young for his age.  Jim Tobin once told me a story from when Dick was a senior staff economist at the President’s Council of Economic Advisers (1961-63).  He used to bring his bicycle into his office at the Old Executive Office Building.  As I remember the story, President Kennedy remarked that apparently a high school student worked at the CEA! As recently as a year ago,...

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You don’t miss international cooperation until it’s gone

TweetNovember 30, 2020 — As Joni Mitchell sang, “you don’t know what you’ve got ‘til it’s gone.”   Classroom education was often deemed boring by students and obsolete by tech visionaries.  Then the coronavirus made it difficult or impossible to meet in person.  The result:  We yearn for the irreplaceable in-class experience. Perhaps the same is true of international economic cooperation. It was never especially popular. The theory, first formulated in a 1969 paper by Richard Cooper, said...

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Biden is Better on Economics

TweetOctober 29, 2020 — In a few days, Americans will choose a president.  Polling suggests that voters favor former Vice-President Joseph Biden when it comes to social policy, foreign policy, the environment, and managing the pandemic, not to mention the question of personal character. But on economics, polls have reported that voters favored President Donald Trump, at least until recently. A general impression that the US economy does better under Republicans is long-standing.  The...

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Will the Coronavirus Spur Action on Climate Change?

TweetOctober 3, 2020 — From early on in this pandemic, a common reaction has been “at least, maybe now we will get serious about addressing climate change.”  One can see the logic.  The terrible toll taken by Covid-19 should remind us of the importance of three things: the need for science, the role for public policy, and the usefulness of international cooperation.  With these three revelations firmly in mind, we can see that we also need them to respond to the problem of climate...

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What’s wrong with US Treasury claim of Vietnamese undervaluation

TweetAugust 27, 2020 — The US Treasury’s tendentious interpretation of the IMF’s External Balance Approach this week found a 4.7 % undervaluation of Vietnam’s currency.  It may pave the way for the US Commerce Department to impose countervailing duties (in a case involving the tire market), for the first time in a currency case. See Mark Sobel’s useful update of August 27. The Treasury claimed to find undervaluation despite small Vietnamese current account surpluses and fx reserves equal...

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