The Fisher Effect would say that steady and low nominal interests would bring down inflation as the real interest rises to its natural level at full employment. OK… nominal interest rates are steady and low and inflation is low. So is it really the Fisher Effect that is bringing down inflation? Just yesterday I posted […]
Link to graph The graph shows that inflation expectations are still trending lower. This trend is consistent with the Neo-fisherian view that over time, as the Fed rate stays stuck at a low rate, the expected inflation will trend lower as the real rate seeks to rise to its natural level. We have seen in […]
Good Jobs First has just issued a new report analyzing state investment incentive programs open to small and large businesses alike. With the financial support of the Surdna Foundation and the Ewing Marion Kauffman Foundation, Shortchanging Small Business: How Big Businesses Dominate State Economic Development Incentives finds that 70% of the awards and 90% of […]
Brad DeLong talks about how other economists view Fed interest rate policies as “price controls”. Then he makes a comparison to the present situation with on an example of a “price floor” in agricultural products. But are low interest rates a price floor or a price ceiling? If you think that interest rates need to […]
An economic slump or recession is considered a bad thing by economists. They point to Sweden and blame Sweden for raising its interest and causing a recession. “Bad Sweden, Bad Sweden”. But those economists are being short-sighted. They do not mention that Sweden is now doing much better than the rest of Europe. They have […]
The European Commission decided two of its major tax subsidy cases on Wednesday, October 21, and the rulings could not have been worse for Starbucks and Fiat (h/t Chillin’ Competition). These cases can be seen as a barometer of what is to come in the legally similar but much larger case of Apple, where potentially […]
Within an economy, there are different industries. and each industry would require a different central bank interest rate to function best. But there cannot be a different interest rate from a central bank for each and every industry. What happened when Sweden raised its interest rate? We hear that Sweden raised its interest rate a […]
With the earlier discussion of investments I thought a chart would be of interest. As you can see, investments grew until the Republicans started cutting taxes, supposedly to increase investments. (Cutting taxes to grow investments)
Way to rally the base Turtle Neck! NY Times: No Social Security Raises Even if Medicare Soars WASHINGTON — The 60 million people on Social Security will not receive any cost-of-living increase in their benefits in 2016, the government said Thursday, but because of a quirk in federal law, nearly one-third of Medicare beneficiaries could […]
Adair Turner was interviewed by INET about his new book which I have to buy and read. The book came out this week. It is called, Between Debt and the Devil. Here is the interview. (link) He lays out an exquisite analysis of economics on many layers. How the crisis was not expected due to […]