Most economists do not put stock in the stock market. That is to say that they do not include the stock markets in their analyses. Yet, economists should have a sense of what the markets will do if they are actually good economists. Economists seem to think that the stock markets are ruled by psychology […]
Larry Summers has been writing about Secular Stagnation for Two Years. This is the post which triggered the trialogue It is an excellent and important post, but I will just take the non technical definition of Secular Stagnation The core idea behind secular stagnation was that the neutral real rate had for a variety of […]
by Marco Fioramanti and Robert Waldmann This is the second to last post on the European Commissions DG -Ec-Fin estimates of cyclical unemployment for the purposes of calculating output gaps. This estimate is called unemployment minus the NAWRU (non accelerating wage inflation rate of unemployment). We will call unemployment – NAWRU “cyclical unemployment” even though […]
Even if his inspiration for doing so comes from (of all places) the HuffPo, This is spot-on: Unless something big and constructive in the way of global economic policy is done soon, we will have to change Stiglitz’s first name to ‘Cassandra’ — the Trojan prophet-princess who was always wise and always correct, yet cursed […]
Too wide a scope for a blog post? You betcha. But this was going to be the core of my PhD Dissertation back when I was in such a program and had delusions of adequacy. So those who wonder “WTF does any of this have to do with labor hours?” Well bear with me. Or […]
In time, we will see a debate start raging as to whether the Fed rate should have started rising earlier instead of at the end of 2015. Some like me say that the Fed rate should have started rising earlier because the market had momentum and the capacity to accept the rate rises. Others say […]
I saw this tweet today… Just fyi, the US stock market has never NOT crashed post back to back quarters of corp profit declines — Keith McCullough (@KeithMcCullough) January 6, 2016 Profits peak when the economy reaches its effective demand limit. A recession eventually follows. How much can the psychology embedded in the tweet move […]
Tim Duy gave his projections for 2016. I will go through his 10 points with my reflections from the effective demand point of view. 1. He says that there will be no recession and the economy will stabilize by the end of the year. Yet, I see a higher probability of recession than he does. […]
usa = Greece ? A challenge. Paul Krugman asks how a country like the USA could have a Greek style crisis. In his Mundell-Fleming Lecture Krugman defined Greek style crisis twice ” a Greek-style crisis of soaring interest rates” and ” a Greek-style scenario of higher rates and a slump in the real economy” . […]
by Joseph Joyce Can Systemic Financial Risk Be Contained? Risk aversion is a basic human characteristic, and in response to it we seek to safeguard the world live in. We mandate airbags and safety belts for automobile driving, set standards for the handling and shipment of food, build levees and dams to control floods, and […]