Sunday , March 24 2019
Home / Tag Archives: New Posts

Tag Archives: New Posts

The loss of a great economist and a great man

Like everyone else who knew him, I’m in shock and despair over news of the death of the economist Alan Krueger. Alan was the best kind of colleague: always inquisitive, incredibly rigorous about what constituted facts and evidence in economics, and willing and able to talk about his work in ways that made sense to anyone who would listen. I admired everything about Alan, but a few things stand out. He taught us a lot about creativity. Like the rest of us, he crunched numbers that were...

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Jobs report, Feb 2019 [truncated]: Outliers happen, and faster real wage growth!

Got a late start this AM, so just highlights for now, with more analysis to come. Outliers happen! Payrolls rose a mere 20K last month, a huge downside outlier given the recent trends as shown below in our monthly smoother. The average over the past 3-months of 186K is a much more reliable take on the current underlying pace of job growth. Consider, for example, that payroll jobs were up 311K last month, a value well above trend. So, at least for now, consider this downside miss payback for...

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There’s a new financial transaction tax proposal in town. Here’s why that’s good news.

The 2017 Trump tax cut committed at least two fiscal sins. By delivering most of its cuts to those at the top of the wealth scale, it worsened our already high-levels of pretax inequalities. And in so doing, it robs the Treasury of much needed revenues; based on our aging population, we’re going to need more, not less, revenues for the next few years. Now, along comes an idea that pushes back against both of these problems (and one other one!): a small tax on financial transactions (FTT)....

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What does it mean when both stock and bond prices are falling?

Just a quick comment on this recent NYT piece that scratches its head about an ongoing, simultaneous rally in both stock and bond prices. “Stock and bond prices are not supposed to rise and fall in tandem,” claims the writer. Consider the grid below. I don’t have the relative frequencies for each box but I’ve seen them, and while the boxes on the diagonal get fewer hits than the others, my recollection is that periods with price movements in those boxes isn’t that unusual (bond yields move...

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Real wage gains and energy prices

Readers know I’m a huge booster of the impact of low unemployment rates on wage gains, especially for middle and low-wage workers. This dynamic is alive and well in current data and those of us on team Full Employment should elevate and tout it! But, when it comes to real wage gains in “high frequency data,” which have been notable of late–as in, beating productivity growth–it’s important to also parse out the role of low energy prices. The most recent CPI report showed a low topline...

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Foreign holdings of US debt have been coming down a bit. Is that a problem?

I remember when foreign ownership of U.S. government debt amounted to very little, as shown on the left end of the figure below (the share of total publicly held debt owned by foreigners). Source: US Treasury I next remember that this share was growing rapidly, closing in on half about a decade ago. What I didn’t know was that the share has been falling back a bit. In fact, it’s about 10 percentage points off of its peak. I discovered this because I went to look at the data as part of the...

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January Jobs: Another upside surprise shows the benefits of closing in on full employment.

The US labor market just keeps on rolling along, turning in one good jobs report after another. Payroll gains continue to outpace expectations, wages are handily beating inflation while not pushing it up much, participation continues to suggest more room-to-run than most economists expected, and even the slight uptick in the unemployment rate last month, to 4 percent, was likely a temporary blip caused by the government shutdown (more detail on that below). The underemployment rate, which...

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No correlation between top tax rates and growth rates

In a piece in WaPo today, I note in passing that there’s no persistent correlation between top tax rates and growth rates across the US time series, nor in oft-cited international data from Saez et al. This is widely understood among empirical public finance folks, but just in case, here are a few figures. As Krugman did the other day, I’m using top marginal income tax rates and 10-year, annualized growth rates of real GDP per capita. First, as Paul’s figure suggests, here’s a scatterplot...

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There’s heightened nervousness about the next recession and there are signs pointing in both directions.

I can’t turn around without seeing or hearing people worrying more about the next recession. Google Trends: Web search for “next recession” Source: Google Trends My peeps at the Indicator have a nice podcast on the topic. The WSJ points out that more than half of economists they surveyed expect a downturn by 2020, which, in case you live under a rock, the article helpfully notes is an election year. The reasons for the heightened anxiety are:–Slower global growth, particularly in China (also...

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Blanchard on public debt and interest rates; also: thanks, MMTers!

There’s a deservedly nice bit of buzz about a new paper by tony economist Olivier Blanchard. My WaPo piece today takes you through the argument, along with a heavy dose of my own interpretation, one familiar to OTE readers. “The key points are disarmingly simple, and they’re ones I have written about before in this column. Part one is this: When a country’s growth rate is higher than the interest rate on its debt, the fiscal costs of sustaining its debt levels are somewhere between zero and...

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