Tag Archives: US/Global Economics

Has the Phillips curve vanished ? There is widespread discussion of the possibility that the Phillips curve has become horizontal. I am old enough to remember when all serious economists agreed that, in the long run, it is vertical. The reason for the thought that it might be horizontal is that large important countries have unemployment lower than estimated non accelerating inflation rates, and yet still have low inflation (including low wage...

The more people think about the Republican proposal to cut corporate taxes the worse it looks. Most people dismiss the argument that the benefits will trickle down to workers. Supporters’ argument is that reduced taxes on profits will cause increased investment which causes higher production and wages. There are strong arguments that the tax cut won’t cause firms to invest more. But aside from that, increased investment wouln’t cause (all) of the...

Two Powerful Women Losing Power That would be respective Angela Merkel and Janet Yellen, both reported to have lost a lot of power in today’s Washington Post.  During at least the last year, if not the last four, they have been probably the two most powerful women on the planet. In the case of Merkel, what has happened is that she has failed to form a coalition government after last month’s election, which put her and her party in the lead, but not...

Another article from Jared Bernstein Washington Post: There’s an interesting sort of argument going on between Stansbury/Summers (SS) and Mishel/Bivens (MB). My name has been invoked as well, so I’ll weigh in. It’s a “sort-of” argument because there’s less disagreement than first appears. It all revolves around this chart, which plots to the real compensation of mid-wage workers against the growth in productivity. For years they grew together, then they...

Via Washington Post, Jared Bernstein writes: The Republican tax cut plan has been justly criticized for worsening both income inequality and the national debt, but the plan has another big problem: It’s likely to lead to more outsourcing of U.S. jobs and a larger trade deficit. That’s obviously a negative for factory jobs and net exports, but it’s also precisely the opposite of what Trump continues to promise to many of his working-class supporters....

by Joseph Joyce Venezuela and the Next Debt Crisis The markets for the bonds of emerging markets have been rattled by developments in Venezuela. On November 13,Standard & Poor’s declared Venezuela to be in default after that country missed interest payments of $200 million on two government bonds. Venezuelan President Nicolás Maduro had pledged to restructure and refinance his country’s $60 billion debt, but there were no concrete proposals offered at...

by Hale Stewart (originally published at Bonddad blog) John Hinderaker Renews His “Tax Cuts Pay For Themselves With Growth” Nonsense It’s been awhile since John “Everything I wrote about economics for an entire year was wrong” Hinderaker has written about economics.  The respite has been glorious.  But now that Republicans in the House have passed a tax bill, ol’ John has to tell us that they will lead to glorious growth. I have one word for him:...

No, We Won’t See a Torrent of Investment From the Tax Bill One of the arguments that Republicans are using to support their tax bill is that it will unleash investment.  The data says otherwise.  Currently, most US economic sectors are operating far below maximum capacity utilization. Let’s start with manufacturing: Figure 1 The top chart shows the CU rate for manufacturing while the bottom two charts break the data down into durable and non-durable...

ARAMCO CEO Is Delusional Financial Times reported yesterday that Amin Nasser, the CEO of the Arabian American Oil Company (ARAMCO, currently 100% owned by the Saudi government, although originally founded by four former US oil company majors), has declared that investors should feel pleased that Crown Prince Muhammed bin Salman has arrested and purged over 200 Saudi princes, government officials, and private businessmen.  This is because this was...

The post below is silly. It is based on bending over backwards to take silly arguments for the GOP tax plan seriously. This older post is the one with some relevance to the real world. The silly argument is that lower taxes on profits imply a lower cost of capital for firms. Investors will demand the same return net of taxes and so demand less from firms if the IRS takes less. The story continues that this lower cost of investing will cause firms to...