Sunday, May 01, 2016

Condorcet in the News

Thursday, April 28, 2016

Kocherlakota on Trump

Narayana writes a column titled Trump Starts Making Economic Sense.  Seems to be a minority view among economists.

Gabaix to Harvard

I just heard the wonderful news that Xavier Gabaix will be joining the faculty of the Harvard economics department. 

Welcome, Xavier!

Addendum: Here is his most recent paper, "A Behavioral New Keynesian Model."

Friday, April 22, 2016

Truths about Trade

Wednesday, April 20, 2016

A Reading for the Pigou Club

Friday, April 15, 2016

A Nice Assignment for a Macro Course

My friend Phill Swagel gives his students the following assignment:

Imagine that you are a staff member working for a member of Congress who sits on the Joint Economic Committee (JEC).  Fed Chair Janet Yellen is about to testify before the JEC and you are assigned to write a three-page memo to prepare your boss—the member of Congress.  You are to focus on economics. This is not a political question and you should assume for this assignment that the member of Congress you work for is interested in economics and not politics.

The first part of this assignment is for you to provide your boss with a concise briefing on the state of the U.S. economy, focusing on the aspects of the economy that are relevant for the decision facing Chair Yellen.  The second part of the assignment is for you to write a question that your boss will ask Chair Yellen, and then explain to the member of Congress the information that the question is intended to elicit from the Fed chair.  You can split the three pages however you wish between the questions.

Question 1. Your member of Congress wants to understand what policy decision the Fed is likely to take next, when, why, and what will be the impact on the US economy.  Your memo should answer this request for understanding. Focus on the most important macroeconomic indicators – the key data that explain the words in underline just above.  The most important part of this memo is the explanation: you will want to include some key numbers from the data that you have been following all semester (and that we discuss each week), but be sure to explain what those numbers mean and why they matter.  Before starting to write, I urge you to step back and think about the story and message you will convey to the member of Congress.

Question 2. Your member of Congress will have five minutes to ask questions of Chair Yellen. What is the first question your member should ask?  And then explain why you suggest this question: what information do you hope to elicit from Chair Yellen and how will that help your member of Congress to better understand the Fed’s view of the economy and the meaning of that view for the Fed’s policy decision?  This section should first put down the question. Then explain why this is an important question, and what information you hope to learn from it. Presumably there will be something that you and your member of Congress are not sure about in terms of the Fed’s thinking, and asking this question will help you to better understand. Again, this is a question only about economics, and not about politics.

Monday, April 11, 2016

Where I'll Be

I am giving several public lectures this week. Here are the locations and links to relevant information, in case you are in the area and interested in attending:

Sunday, April 10, 2016

A Front Page from the Future?

The Boston Globe has some fun today, including with the paper a fake front page from the beginning of an imagined Trump presidency. You can see it here.

Saturday, April 09, 2016

Happy Square Day!

It is 4-9-16.

Immelt on Sanders

General Electric CEO Jeff Immelt, whom President Obama once tapped to head his economic advisory board, gives his view of presidential candidate Bernie Sanders.

Monday, March 28, 2016

Who are the free traders?

Paul Krugman has an odd column today, suggesting that if you are a free trader, the Democrats are historically a better bet for you.  He writes,
When I say that Republicans have been more protectionist than Democrats, I’m not talking about the distant past, about the high-tariff policies of the Gilded Age; I’m talking about modern Republican presidents, like Ronald Reagan and George W. Bush. Reagan, after all, imposed an import quota on automobiles that ended up costing consumers billions of dollars. And Mr. Bush imposed tariffs on steel that were in clear violation of international agreements, only to back down after the European Union threatened to impose retaliatory sanctions. 
Actually, the latter episode should be an object lesson for anyone talking tough about trade. The Bush administration suffered from a bad case of superpower delusion, a belief that America could dictate events throughout the world. The falseness of that belief was most spectacularly demonstrated by the debacle in Iraq. But the reckoning came even sooner on trade, an area where other players, Europe in particular, have just as much power as we do.
This narrative ignores some inconvenient evidence to the contrary, such as the fact that in 1993 a majority of Democrats in Congress voted against NAFTA, while a majority of Republicans voted in favor.

But what really caught my eye is how wrong Paul is about the Bush steel tariffs. I was there for part of this episode, so I am confident that his interpretation--that President Bush was a protectionist--is completely backwards.

President Bush wanted to get Trade Promotion Authority (aka Fast Track) to negotiate future trade deals. It was, however, a hard sell in Congress. The steel tariffs were imposed as a quid pro quo to get a few of the votes needed to pass TPA. The political calculation was that it was worth suffering a small, temporary trade restriction to get the tools needed for a broader, more permanent opening up of trade.

Yes, after about a year and a half, the tariffs were found to have violated international trade rules, but that was always anticipated. Indeed, one can say that it was part of the plan. When the WTO ruling was announced, President Bush happily removed the tariffs, just as he had always intended.

The trade promotion authority that this political calculation yielded pushed the free trade agenda forward.  It led, for example, to CAFTA.  When this trade agreement came up for a vote in 2005, once again a majority of Democrats in Congress voted against, while a majority of Republicans voted in favor.

Friday, March 25, 2016

Almost everything you hear from POTUS candidates about trade deals is wrong

The new IGM Panel poll of prominent economists asks about this proposition:
An important reason why many workers in Michigan and Ohio have lost jobs in recent years is because US presidential administrations over the past 30 years have not been tough enough in trade negotiations.
Only 5 percent agree, while 64 percent disagree.  (The rest were uncertain or did not answer.)  A previous poll asked about this statement:
Past major trade deals have benefited most Americans.
On this one, 83 percent agreed, and zero percent disagreed.

So the next time you hear some candidate complain about trade deals, remember that he or she is disagreeing with the vast majority of economists.

Wednesday, March 23, 2016

Commentary on Trump's Economics

  1. Alan Blinder
  2. Jon Hartley and Glenn Hubbard
I don't know any mainstream economist--right, left, or center--who has good things to say about the economic policy views of Donald Trump.  But, somehow, I don't think this fact will deter his supporters.

Sunday, March 13, 2016

More Competition

The Stigler Center of the University of Chicago has a new blog.

Friday, March 11, 2016

The Latest from Merle Hazard


FYI: Both Merle and Alison Brown (the banjo player) are former Ec 10 students.

Wednesday, March 09, 2016

From My Inbox

Tuesday, March 08, 2016

Hillary on Outsourcing

It depends on when you ask.

If you are interested in reviewing the 2004 furor over outsourcing, click here (published version).

Saturday, March 05, 2016

Debating the Ten Principles

In the new issue of the Eastern Economic Journal, David Colander critiques the Ten Principles in my favorite textbook and concludes they are insufficiently nuanced. Here is my response.

Wednesday, March 02, 2016

A Reading for the Pigou Club

Monday, February 29, 2016

John Oliver on Donald Trump