An article came out today by Ricardo Caballero, Emmanuel Farhi and Pierre-Olivier Gourinchas, called On the global ZLB economy, where they talk about how a liquidity trap scenario can spread globally.They see a high demand for safe assets over their supply. “The growing global shortage of safe assets imparted a strong downward secular trend to […]
We hear that aggregate demand must be increased. Just today in a great article giving 3 mismatches that should be fixed in the global economy we read… “First, aggregate demand is deficient relative to aggregate supply.” – (Restarting the global economy: Three mismatches that need concerted public action, Michael Spence, Danny Leipziger, James Manyika, Ravi […]
Brad DeLong is great as an educator and a thinker. I bet that even he struggles to understand economics fully. We all have to develop theories to progress the field of economics. Brad DeLong has a post where he cites a long text from Keynes about rates of interest and effective demand. Now, I am […]
The greatest goal of economics is to maximize net social benefits. Just imagine how great the United States is. We have great resources in terms of human and capital. Then look at how poorly the economy is performing for society. Obviously, something is wrong, terribly wrong with the economy. What can the Fed do? Can […]
“Always click the link” — Kevin Drum In his latest Op-ed Paul Krugman wrote ” Americans overwhelmingly believe that the wealthy pay less than their fair share of taxes, and even Republicans are closely divided on the issue.” I would have guessed that a majority of rank and file Republicans agree with all Republican presidential […]
– by New Deal democrat Part 1 The decline in prime age labor force participation: the smoking gun (part 2 of 2); comparing June Cleaver and Roseanne Conner I recently wrote about the compelling evidence that the biggest reason for the decline in the prime working age labor participation rate was the “child care cost […]
A fat cat is not in good shape. And feeding it more, will not give it energy to be more athletic. Greenspan said… “in assessing real rates [of interest], the central issue is their relationship to an equilibrium interest rate, specifically the real rate level that, if maintained, would keep the economy at its production […]
I just notice that in the second quarter of 2015 US real gross private domestic investment surpassed US real government consumption expenditures & gross investment for the first time since the data have been collected (1947). The long era of US socialism as lead by Eisenhower, Nixon, Reagan and the Bushs has ended under raging […]
by Barkley Rosser (Econospeak) VSPs Get Their Way With Budget Deal: Social Security Benefits Are Cut All the Very Serious People are jumping up and down and cheering. We have a budget deal in the House and the debt ceiling is being raised and there will be no more artificial budget crises until […]
Yesterday a paper came out by John Williams and Thomas Laubach called, Measuring the Natural Rate of Interest Redux. They presented their model to determine the natural real rate of interest. In short, their model gives a steadily low natural real rate that would justify keeping nominal interest rates low. Paul Krugman jumped on board […]