Economy / Finance

Many working-age males arent working: What should be done?

Apr 24 9:58am Neighborhood Effects
The steady disappearance of prime-age males (age 25-54) from the labor force has been occurring for decades and has recently become popular in policy circles. The prime-age male labor force participation rate began falling in the 1950s, and since January 1980 the percent of prime-age males not in the labor force has increased from 5.5\% […]...
Read More

Trump suddenly finds himself needing the Fed he once loathed

Apr 24 8:26am Economy
President Donald Trump's relationship with the Fed is, to put it mildly, evolving.
Read More

Survey of economists finds optimism about growth prospects

Apr 24 8:13am Economy
Business economists are generally optimistic about the U.S. economy with most expecting stronger growth than last year's poor performance.
Read More

How Did Small Businesses Do in 2016?

Apr 24 5:30am On the Economy blog
A recent survey found that 29 percent of employer firms increased revenues and employees, with plans to maintain or further increase their headcounts.
Read More

Imagine the Outcry if Walmart Demanded Payment Years In Advance of Its Delivery of Goods to Consumers

Apr 23 9:33pm Cafe Hayek
TweetHere’s a letter to the Wall Street Journal: AFL-CIO official Ed Wytkind pleads for an increase in government funding of Amtrak so that it “serves the country, not just the East Coast” (Letters, April 24). Never mind the dubiousness of forcing 21st-century taxpayers to fund the expansion of a 19th-century industry.  Mr. Wytkind’s letter unwittingly […] The post Imagine the Outcry if Walmart Demanded Payment Years In Advance of Its Delivery of Goods to Consumers appeared first on Cafe Hayek.
Read More

An asset management company for the Eurozone

Apr 23 8:00pm Recent Articles
Nine years after the onset of the Global Crisis, the problem of non-performing assets is still acute in the Eurozone. This column takes stock of the different proposals to deal with the issue. It argues that a Eurozone-level asset management company can resolve bank fragility and spur economic recovery, but warns that lack of political will and legal barriers can impede the creation of such an agency. ...
Read More

The persistent headache of sluggish investment

Apr 23 8:00pm Recent Articles
Investment growth in emerging market and developing economies has slowed sharply since 2010. This column argues that this slowdown reflects a range of factors, including negative terms-of-trade shocks, slowing FDI inflows, weak activity, and rising private debt burdens and political risk. Policymakers can boost investment directly through public investment, and indirectly by taking measures to improve overall growth prospects and the business climate.
Read More

The Presidents First 100 Days FDRs, That Is

Apr 23 3:38pm Cafe Hayek
TweetHere’s a letter to NPR: Regarding today’s report on the first 100 days of the terms of various U.S. presidents, I dare say that your happy description of Franklin Roosevelt’s is potted (“The ‘First 100 Days’ Presidential Benchmark Goes Back To FDR And Napoleon“).  Writing in 1939 in the Yale Review, John T. Flynn had […] The post The President’s First 100 Days – FDR’s, That Is appeared first on Cafe Hayek.
Read More

Child height and living standards: Indian migrants in England

Apr 22 8:00pm Recent Articles
Data typically show that people become progressively taller as living standards improve. But despite impressive recent rates of economic growth, India remains one of the worst-performing countries in terms of height. Using data from Indian and English health surveys, this column reveals that, conditional on parents’ height, children of Indian ethnicity are on average taller when born and raised in England rather than in India. The results provide evidence against the importance of genetic factors in explaining the disappointing growth performance of Indian children.
Read More

The operation and demise of the Bretton Woods system

Apr 22 8:00pm Recent Articles
Beginning in 1944, the Bretton Woods system played a major role in shaping the global economy in the post-war period. This column describes how although it was successful in bringing about exemplary and stable economic performance in the 1950s and 1960s, familiar confidence and liquidity problems, as well as inflationary pressure and central bankers’ responses to it, ensured that Bretton Woods was short-lived. Nonetheless, legacies of the system, like the dollar standard, remain with us and will likely be with us for some time to come.
Read More

$10 > $5 (although sometimes some people believe that $10 = $5)

Apr 22 6:52pm Cafe Hayek
TweetEarlier today I reconnected in Dallas with my old friend Charlie Steen.  Charlie was a year ahead of me in law school at UVA.  He also has a PhD in economics from UVA.  His undergraduate degree, in economics, is from George Mason University.  Charlie has practiced law in Dallas for the past twenty or so […] The post $10 > $5 (although sometimes some people believe that $10 = $5) appeared first on Cafe Hayek.
Read More

How Best to Tax Business

Apr 22 11:25am Greg Mankiw
Click here to read my column in Sunday's NY Times.
Read More

Is the Dollar Too Weak or Too Strong?

Apr 22 12:51am Barron's Economic Beat
It all depends on what period—and what conditions—are used in the comparison...
Read More

State Employment Trends: Some Selected States and ALEC Rankings

Apr 21 10:21pm Econbrowser
Since 2011 — when Scott Walker and Sam Brownback came into power — California has powered far ahead of Wisconsin and Kansas. The newly released Rich States, Poor States, 2017 allows us to look at how four states, both low and high ranked by Arthur Laffer et al., fared, employmentwise. Figure 1: Log nonfarm payroll […]...
Read More

Healthcare Triage News: Exercise, Weight Loss, and Big Soda

Apr 21 10:21pm The Incidental Economist
Exercise isn’t the key to weight loss. Still. But food companies want to convince you otherwise. This is Healthcare Triage News. Go read more about this here. @aaronecarroll...
Read More

Education and inequality in the mid-20th century United States

Apr 21 8:00pm Recent Articles
The exact causes of (and lessons from) the Great Compression – the decline in US income inequality in the mid-20th century – remain unclear. This column uses census data and changes in law to examine the effect of education across the complete distribution of income. Policies that increased attendance for young children in the late 19th and early 20th centuries appear to have had long-term implications for earnings and inequality, with returns to schooling highest among those at the lower end of the income distribution.
Read More

The impact of ad blockers on the Internet

Apr 21 8:00pm Recent Articles
The vast majority of online content is financed through ad revenue. This column looks at how the growing use of ad blockers is affecting incentives for online content creation. Using data on site traffic and the proportion of users with ad blockers engaged, it argues that ad blocking intially increases traffic, but as ad revenues decline and sites are less inclined to invest in content, the pattern reverses and visitor numbers decline.
Read More

Outlook for Capacity Utilization Favors Only a 2% Midpoint for the Growth of 2017s Real Capital Spending

Apr 21 6:34pm Credit Trends from Moody's Analytics
In terms of moving yearlong averages from tIhe 25-years-ended 2016, the annual percent change of real business investment spending showed a strong correlation of 0.81 with the percent of US industrial capacity in use.
Read More

Economic Roundup: Jump in U.S. Existing-Home Sales Could Be Short-Lived

Apr 21 5:34pm Credit Trends from Moody's Analytics
Inventories remain a problem.
Read More

Macro Musings Podcast: James Bullard

Apr 21 4:52pm Macro and Other Market Musings
 My latest Macro Musings podcast is with James Bullard. James is the President of the St. Louis Federal Reserve Bank and an accomplished economic scholar. He joined me for a great conversation on macroeconomics that covered everything from the determinants of inflation to the Fed's balance to the future path of monetary policy. We also discussed Jame's work on imperfect credit markets and how it provides a another justification for NGDP level targeting. This was a fascinating conversation throughout and the transcripts for the show are here. You can listen to the podcast on Soundcloud, iTunes, or your favorite podcast app. You can also listen via the embedded player above. And remember to subscribe since more episodes are coming.Related LinksJames Bullard's page at the St. Louis Federal Reserve...
Read More

Dont Buy It

Apr 21 4:39pm Cafe Hayek
TweetHere’s a letter to the Wall Street Journal: Pres. Trump’s push to have Uncle Sam “buy American” is a slap in the face of the many people who voted for him because of his alleged business acumen (“In ‘Buy American’ Push, Trump Is Starting in a Hole,” April 21). Good business executives ensure that their […] The post Don’t Buy It appeared first on Cafe Hayek.
Read More

The So-called War on Drugs is Deeply Unethical

Apr 21 4:07pm Cafe Hayek
Tweet (I thank my dear friend Fred Dent for the pointer.) The post The So-called ‘War on Drugs’ is Deeply Unethical appeared first on Cafe Hayek.
Read More

Doug Irwin on The False Promise of Protectionism

Apr 21 3:01pm Econbrowser
Why Trump’s Trade Policy Could Backfire That’s a new Foreign Affairs essay out today by Doug Irwin, Professor of Economics at Dartmouth College: Although Trump’s professed goal is to “get a better deal” on trade, his brand of economic nationalism is just one step away from old-fashioned protectionism. The president claimed that “protection will lead […]...
Read More

Public Choice Outreach Seminar 2017

Apr 21 10:30am Cafe Hayek
TweetHere’s a reminder that the deadline for students to apply to attend the 2017 Public Choice Outreach seminar is April 28th – one week from today.  I encourage all advanced undergrads and grad students to apply. Here’s more information on the seminar from Center for Study of Public Choice director Alex Tabarrok: The annual Public […] The post Public Choice Outreach Seminar 2017 appeared first on Cafe Hayek.
Read More

They did not prove that diet soda causes Alzheimers Disease. THEY DID NOT!

Apr 21 10:27am The Incidental Economist
I know what the headlines say. Congratulations, media! You succeeded. You even managed to panic my wife. Here’s the abstract (highlighting mine): Background and Purpose—Sugar- and artificially-sweetened beverage intake have been linked to cardiometabolic risk factors, which increase the risk of cerebrovascular disease and dementia. We examined whether sugar- or artificially sweetened beverage consumption was […]...
Read More

FTAlphaville and optimal currency areas.

Apr 21 9:55am longandvariable
There are a lot of talking points in this fun post on FTAlphaville by Matthew Klein. The piece is a spirited defence of the idea of returning to the gold standard, based on logic that Martin Sandbu uses as a … Continue reading →...
Read More

Brexit, globalisation, and de-industrialisation

Apr 20 8:00pm Recent Articles
Many commentators have portrayed Britain’s referendum decision to leave the EU as being motivated by a popular rejection of globalisation. This column argues that in seeking to understand the economic basis of the Brexit vote, we should concentrate not on globalisation but on the long-term impact of de-industrialisation, which has left a legacy of a much more polarised service sector labour market, with large numbers of people condemned to poorly paid and insecure jobs.
Read More

Eligibility easing and the lender of last resort

Apr 20 8:00pm Recent Articles
Central banks helped contain the Global Crisis using a policy of 'eligibility easing'. The policy expanded the collateral that could be used to access liquidity facilities and the range of counterparties that could request liquidity. This column argues that although eligibility easing successfully reduced the need for central banks to act as lender of last resort or to provide emergency liquidity assistance, the time has come to determine its future role as a macro-prudential tool.
Read More

The Basel process: Good intentions and unintended consequences

Apr 20 8:00pm Recent Articles
The first Basel Accord initiated what has become a three decade-long process of regulatory convergence of the international banking system. This column argues that by trying to regulate minimal capital standards, the Basel process itself contributed to an ever-increasing shortfall in aggregate bank capital. Consequently, European banks have become increasingly exposed to systemic risk, suggesting that expansive monetary policy could adversely affect the resiliency of banks. ...
Read More

Business Activity Is Only As Good As Its Players

Apr 20 6:34pm Credit Trends from Moody's Analytics
... as a business cycle upturn matures, the quality of the available supply of labor subsides.
Read More

Minnesota Employment Growth Accelerates Relative to Wisconsin (Again)

Apr 20 5:59pm Econbrowser
Wisconsin and Minnesota released March employment figures today. Here, without comment (as none are needed) are year-on-year growth rates relative to the US average for Minnesota (blue) and Wisconsin (red). Figure 1: 12 month log-differences of nonfarm payroll employment for Minnesota (blue) and Wisconsin (red), relative to US. Green shading denotes sample not updated to […]...
Read More

Technically Correct, but Betraying a Certain Mindset

Apr 20 5:34pm Econbrowser
From the Washington Examiner: I really am amazed that a judge sitting on an island in the Pacific can issue an order that stops the president of the United States from what appears to be clearly his statutory and constitutional power” That “island in the Pacific” is the state of Hawaii, a state since 1959. […]...
Read More

Economic Roundup: Jobless Claims Suggest March Was a Fluke

Apr 20 5:34pm Credit Trends from Moody's Analytics
The labor market appears to have improved in April after disappointing in March.
Read More

On the Concert of Interests and Unlearning the Lessons of the 1930s

Apr 20 4:27pm Multiplier Effect
Jan Kregel opened this year’s Minsky Conference (which just wrapped up yesterday) with a reminder that the broader public challenges we face today are still in many ways an echo of those that faced the nation in 1930s. What follows is an abridged version of those remarks: This year’s conference takes place in an increasingly charged and divisive […]...
Read More

Tackling crime and illicit economies isnt just a technical exerciseits an intensely political one

Apr 20 3:24pm Brookings Topics - Economic Development
Since the terrorist attacks of 9/11, it has become obvious that belligerent groups, such as the Taliban in Afghanistan and Pakistan and the Islamic State in Iraq and Syria, derive multiple benefits, including extensive financial profits, from participating in illicit economies such as the drug trade. Thus, the international community has come to focus on…        ...
Read More

For Malpractice Reform, Focus on Medicine First (Not Law)

Apr 20 11:53am The Incidental Economist
The following originally appeared on The Upshot (copyright 2017, The New York Times Company). Congressional Republicans have recently revived efforts to overhaul malpractice laws, including capping certain kinds of suits at $250,000. A perennial argument of supporters of such measures is that many claims are frivolous, clogging the court system and driving up health care costs for […]...
Read More

IMF's Lagarde: Far-right win in France would cause 'major disorder'

Apr 20 11:16am Economy
The IMFchief also says U.S. tax reform can benefit both the domestic and global economy if it is tailored correctly.
Read More

The reality of main street

Apr 20 10:50am Brookings Topics - Economic Development
Louis Hyman’s recent piece in The New York Times Sunday Review, The Myth of Main Street, presents a bleak choice for rural and rust-belt America: persist in hopeless efforts to rebuild your downtown or graciously accept a future of telecommuting for a distant corporation. The former he decries as nostalgia; the latter as the only economically viable […]        ...
Read More

How and when to use private money in infrastructure projects

Apr 20 10:49am Economics
WHEN the Indiana Toll Road was opened in 1956, there were eight pairs of travel plazas, or rest stops, along the 156-mile (250km) stretch linking Chicago to Ohio and points eastward. As cars became faster and less thirsty, travellers had less reason to stop regularly for petrol or snacks. Three of the travel plazas closed in the 1970s. Restaurants shuttered, even if offered free rent. The remaining plazas, dwindling in number, fell into disrepair. The abiding memory some road users had of Indiana was of grubby toilets along the toll road.Those rest-stops are at last getting a makeover. IFM, an Australian infrastructure fund, is investing $34m in the toll-road’s plazas, part of a $200m-plus upgrade. Half of the road’s length, with 57 bridges, is being resurfaced, using a treatment known as “crack-and-feed”, which lasts longer than simply patching the top. IFM, which acquired a 66-year lease on the road in a $5.8bn deal in 2015, says a private-sector operator has the right incentives to invest for the long term. Fewer tyre blowouts mean less gridlock, more road users and more revenue.Politicians across the spectrum agree on the need to upgrade America’s...Continue reading...
Read More

The IMF nudges up its forecast for global growth

Apr 20 10:49am Economics
APRIL is the cruellest month, breeding lilacs out of the dead land, and, in Washington, chirpy forecasts from the IMF that often prove a bit too chirpy. On April 18th the fund released its semi-annual World Economic Outlook (WEO), raising its forecast for global growth in 2017 to 3.5\%.Growth forecasts for the emerging world have not changed. The IMF’s global optimism is based instead on hopes of increased growth in the rich world. The fund takes a rosy view of the American economy, citing both high levels of consumer confidence and Donald Trump’s plans for more government spending. In Britain the IMF now reckons GDP will grow by 2.0\% in 2017, up from earlier estimates of 1.5\% (issued in January) and 1.1\% (last October). The IMF has also raised its forecasts for Japan and the euro area.Snipers point out that IMF forecasts have been far from perfect. Some glitches are excusable. In the spring of 1990, it predicted that Kuwait’s economy would grow by 0.8\% that year. It actually fell by 26\%. The IMF’s model did not allow for an Iraqi invasion. But other errors are less easily explained: between 1990 and 2007, the IMF’s spring forecasts...Continue reading...
Read More

In year of big political decisions, Chinese economy appears stable

Apr 20 10:43am Brookings Topics - Economic Development
China’s first-quarter economic numbers were mostly good news, with GDP growth (year-on-year) accelerating modestly to 6.9 percent, up from 6.8 percent in the previous quarter and 6.7 percent for all of 2016. The GDP growth is based on domestic consumption, rather than investment, as in the past. The China story of the past few years […]        ...
Read More

Ex-Fed Chairman Greenspan: Get rid of Dodd-Frank and watch economy and stocks soar

Apr 20 10:19am Economy
"If you get rid of Dodd-Frank, it's going to have a very significant positive impact," Alan Greenspan tells CNBC.
Read More

Clinton Treasury Secretary Rubin: Long-term economic growth beyond 3% would be a 'stretch'

Apr 20 9:04am Economy
Tax reform would provide "some stimulus" to get growth to about 2½ percent, Bill Clinton's Treasury secretary says.
Read More

Fed's Powell says parts of too-big-to-fail rules 'unnecessarily burdensome' and may not be needed at all

Apr 20 8:35am Economy
Powell said parts of too-big-to-fail regulations were "inappropriately applied to small and medium-sized" banks.
Read More

Weekly jobless claims rise, while continuing claims hit 17-year low

Apr 20 8:31am Economy
First-time claims for state unemployment benefits were expected to total 242,000 in the most recent week, up from the 234,000 claims reported for the previous week.
Read More

The Roots of Rising Treasury Yields

Apr 20 5:30am On the Economy blog
Foreign central banks trimming their holdings, a deal to cut oil output and the U.S. elections helped push Treasury yields higher late last year.
Read More

Shadow borrowing through the UKs defined benefit pension system

Apr 19 8:00pm Recent Articles
While defined benefit pension schemes are typically viewed as users rather than sources of sponsor-firm funds, the considerations taken into account when firms choose to scale contributions are such that they become indistinguishable from other firm financing decisions. This column analyses how pension scheme funding deficits arise and argues that whilst deficits do not exist by design, firms’ decision to fund or underfund a defined benefit scheme might usefully be examined as one of many competing sources of long-term finance.
Read More

The Dark Side of Slower Growth by Corporate Debt

Apr 19 6:34pm Credit Trends from Moody's Analytics
the next contraction by internal funds will be joined by a renewed ballooning of spreads, another plunge by now richly priced share prices, and, perhaps, the demise of the current business cycle upturn.
Read More

Economic Roundup: The U.S. Economy Remains in Good Health

Apr 19 5:34pm Credit Trends from Moody's Analytics
Beige Book shows expansion of activity across the nation.
Read More

Not Leaders. Lackeys

Apr 19 4:12pm Cafe Hayek
TweetHere’s a letter to the Wall Street Journal: Today, the 200th anniversary of the publication of David Ricardo’s On the Principles of Political Economy and Taxation – the book that famously first explained to the world the key principle of comparative advantage – Greg Ip quotes GOP advisor Lanhee Chen’s observation about GOP members of […] The post Not “Leaders.” Lackeys appeared first on Cafe Hayek.
Read More

Fed's Beige Book: Economic Growth Modest, Wage Gains Broaden

Apr 19 2:11pm Economy - Investor's Business Daily
The U.S. economy continues to expand at a modest pace, while wage gains are broadening, according to the Federal Reserve's beige book report.
Read More

Spontaneous Order is Not an Engineered Outcome

Apr 19 2:00pm Cafe Hayek
TweetCommenting on this post, Lanny Ebenstein asks me: If even the smartest professors aren’t able to engineer a society according to their, or to anyone else’s, designs, and if the belief that it is possible to do this is always futile and often fatal, why do you believe that it would be possible massively to […] The post Spontaneous Order is Not an Engineered Outcome appeared first on Cafe Hayek.
Read More

Americans Moral Obligation to Pay Taxes But Its Limited

Apr 19 1:55pm A Marketplace for Ideas
Are Americans proud to pay their taxes?  Vanessa Williamson of the Brookings Institute thinks so, after studying survey data and conducting interviews.  She finds that Americans view paying taxes as a civic and moral responsibility, and the price of citizenship.  She believes that “the idea that ‘Americans hate taxes’ has become a truism without the benefit … Continue reading Americans’ Moral Obligation to Pay Taxes – But It’s Limited The post Americans’ Moral Obligation to Pay Taxes – But It’s Limited appeared first on A Marketplace for Ideas.
Read More

The Feds Inflation Goal: What Does the Public Know?

Apr 19 1:49pm macroblog
The Federal Open Market Committee (FOMC) has had an explicit inflation target of 2 percent since January 25, 2012. In its statement announcing the target, the FOMC said, Communicating this inflation goal clearly to the public helps keep longer-term inflation...
Read More

Hutchins Roundup: US life expectancy, Chinas GDP growth, and more

Apr 19 1:36pm Brookings Topics - U.S. Economic Performance
Studies in this week’s Hutchins Roundup find that growing inequality in life expectancy by socioeconomic status reduces the progressivity of retirement benefits in the US, China’s official statistics appear to understate GDP growth, and more. Want to receive the Hutchins Roundup as an email? Sign up here to get it in your inbox every Thursday. […]        ...
Read More

Fed should shed bonds soon, keep hiking rates: Rosengren

Apr 19 12:43pm Economy
The Fed should begin shedding its bond holdings soon, Rosengren said...
Read More

AcademyHealth: Medicare Advantage risk selection

Apr 19 12:32pm The Incidental Economist
One of the concerns about Medicare Advantage (MA) is that it doesn’t serve sick beneficiaries well, motivating some of them to switch to traditional Medicare (TM). My final blog post for AcademyHealth explores this topic. @afrakt  ...
Read More

The Humans Are Coming!

Apr 19 11:15am Cafe Hayek
TweetHere’s a letter to a new reader of Cafe Hayek: Ms. Valerie Konski Ms. Konski: Thanks for your e-mail. I don’t share your fear of robots, and I’m skeptical of empirical findings that the introduction of robots is lately responsible for permanently ratcheting down the number of jobs in the economy.  At Café Hayek I’ve […] The post The Humans Are Coming! appeared first on Cafe Hayek.
Read More