Japan has had its discount rate in the zero lower bound range for many years. If the Fisher effect had any truth to it, we should have seen the real interest rate return back to its natural level of 1% or so. What do we see? (link to updated graph) The graph shows Japan’s central […]
The Fisher effect is defined by Paul Krugman & Robin Wells in their textbook… Economics, 3rd Editon 2013, page 721. “The expected real interest rate is unaffected by changes in expected future inflation. According to the Fisher effect, an increase in expected future inflation drives up the nominal interest rate, where each additional percentage point […]
Piketty wouldn’t raise taxes on income, which thriving professionals have a lot of; he would tax investment capital, which they don’t have enough of. — David Brooks, The Piketty Phenomenon, New York Times, today Alexandra Petri has a trademark-funny piece today in the Washington Post that she promises tells you “[e]verything you need to know […]
Noah Smith brought up the issue of the long run Fisher effect. Yet, he wants to see micro-foundation models. “Specifically, what I’d be interested to see is for someone to find some micro-foundations for the Neo-Fisherite result that don’t depend on fiscal policy reaction functions.” He found a paper written by Stephanie Schmitt-Grohé and Martín […]
Last week there was an 1.5 hr discussion with the following participants: Joseph Stiglitz (Columbia University), Paul Krugman (Princeton University), and Steven Durlauf (University of Wisconsin–Madison) participated in a panel moderated by LIS Senior Scholar Branko Milanovic. The Center just posted it yesterday on their youtube channel.
UPDATE: Elena Kagan served as an Associate White House Council in the Clinton administration in 1995-96, when AEDPA was being drafted and negotiated. —- “Freedom” does not include actual physical non-imprisonment; to the contrary, “freedom” means states’–or actually, state courts’–and prosecutors’ freedom to violate criminal defendants’ constitutional rights, to their heart’s content. — Me, Angry […]
World Trade weakens in Early 2014, Wall Street Journal: Weakening world trade is something to watch according to Michael Pettis. “… redistributing income downwards is easier said than done in a globalized world, especially one in which countries are competing to drive down wages. The first major economy to attempt to redistribute income will certainly […]
How low can you go? No… this is not a post about Limbo. It is a post about low interest rates, low inflation, and economic growth. The question is… Can low inflation stay low as the economy heats up around full employment? Let’s look at Europe. Low interest rates and falling inflation are not stopping […]
Monday, April 21, was 2014 Tax Freedom Day®, according to the Tax Foundation. The Tax Foundation is not exactly known for unbiased research, and its promotion of Tax Freedom Day® is no exception. The Foundation claims that Tax Freedom Day® is “a vivid, calendar-based illustration of the cost of government.” In other words, instead of […]