Economy / Finance

FOMC Says VIX Index Is Too Low

Feb 22 6:34pm Credit Trends from Moody's Analytics
The moving 13-week three-month average of Moody’s industrial metals price index recently soared higher by 37.6\% year-over-year, while the latest month-long average of the 10-year Treasury yield was up by 60 bp annually.
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Primitive Minds

Feb 22 6:24pm Cafe Hayek
TweetHere’s a letter to a new and intrepid correspondent: Mr. Nolan McKinney Mr. McKinney: You point to Harley-Davidson’s resurgence, after Ronald Reagan drastically raised tariffs on imported large motorcycles, as “evidence of protectionism strengthening our economy.” Harley’s resurgence is evidence of no such thing.  The argument against protectionism is not that it doesn’t help the […] The post Primitive Minds appeared first on Cafe Hayek.
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Economic Roundup: How Soon Is Soon?

Feb 22 5:34pm Credit Trends from Moody's Analytics
FOMC minutes note a rate hike could occur fairly soon, but don't believe that means March.
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Innovation and economic growth in the early 20th century and lessons for today

Feb 22 4:48pm Neighborhood Effects
Economic growth is vital for improving our lives and the primary long-run determinant of economic growth is innovation. More innovation means better products, more choices for consumers and a higher standard of living. Worldwide, hundreds of millions of people have been lifted out of poverty due to the economic growth that has occurred in many […]...
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The Dangers of Economists Teaching ECON 101 Poorly

Feb 22 11:56am Cafe Hayek
TweetMy dear friend Dwight Lee – who is one of the greatest masters of the economic way of thinking – offered the following in the comments section (at the James Martin Center site) to my essay defending ECON 101 against the misunderstandings of law professor James Kwak: Boudreaux is correct about the ability of simple […] The post The Dangers of Economists Teaching ECON 101 Poorly appeared first on Cafe Hayek.
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Americans eat out less as higher menu prices take a bite from restaurant visits

Feb 22 10:20am Economy
Meal kit sellers and upstart grocers are underscoring an eat-at-home culture.
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US existing home sales hit 10-year high in January

Feb 22 10:00am Economy
The National Association of Realtors said existing home sales jumped 3.3 percent to a seasonally adjusted annual rate of 5.69 million units last month.
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Why the Fed's March meeting could be the most important of the year

Feb 22 8:45am Economy
Fed officials want investors to believe that every meeting is live where the central bank will hike.
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The exploitation of adjunct faculty

Feb 22 8:00am The Incidental Economist
Kevin Birmingham is the winner of the Truman Capote Award for his book,The Most Dangerous Book: The Battle for James Joyce’s Ulysses. The book also won the 2015 PEN New England Award for Nonfiction. You would think that an author of a first book that won multiple prizes would be a rising academic star. But […]...
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Wearable Fitness Devices Dont Seem to Make You More Fit

Feb 22 7:30am The Incidental Economist
The following originally appeared on The Upshot (copyright 2017, The New York Times Company). I once received a lot of blowback for an Upshot article in which I showed (with evidence) that exercise is not the key to weight loss. Diet is. Many, many readers cannot wrap their head around the notion that adding physical activity, and […]...
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In Defense of ECON 101

Feb 22 7:27am Cafe Hayek
TweetIn this essay I defend supply-and-demand-based ECON 101 courses against law-professor James Kwak’s poorly informed criticisms of such courses.  (I thank George Leef for his skillful assistance in turning my first draft of this essay into a readable final product.)  A slice: When taught well and wisely, supply-and-demand analysis is the central part of the […] The post In Defense of ECON 101 appeared first on Cafe Hayek.
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Clean energys dirty secret

Feb 22 7:14am Economics
Could the rise of renewables be putting the traditional electricity market into a crisis? Also: Economist Diane Elson takes governments to task about the gender biases in their economic policies. And how the Brazilian government is tackling one of its biggest financial problems: pensions.
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The only thing anti-poverty programs are missing is the long arm of the law?

Feb 21 10:04pm Chris Blattman
In a minute I’m going to get to a great new book on U.S. poverty and policing. But first I have to digress. You’ll see where I am going in a minute. Overly paternalistic poverty programs give me a nails-on-a-chalkboard feeling … Continue reading → The post The only thing anti-poverty programs are missing is the long arm of the law? appeared first on Chris Blattman.
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Democratic development lowers the cost of credit

Feb 21 7:00pm VoxEU.org: Recent Articles
The positive relationship between democratic development and economic outcomes is well established. Using three decades of international data, this column identifies a new channel for this effect – the cost of credit to corporations. It also analyses loan pricing in Turkey to reveal a substantial rise in the average cost of lending after the attempted coup d’etat in July 2016. Together, these results highlight how efficiency in loan pricing results in a comparative advantage for firms in democratic countries over those in less democratic or authoritarian countries.
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European integration and populism: Addressing Dahrendorf's quandary

Feb 21 7:00pm VoxEU.org: Recent Articles
With its current competences lacking the ability to address distribution effects, the EU is seen as an agent of globalisation rather than a response to it.  At the same time, it is charged with undermining national autonomy, identity, and control. This column sets out five guiding principles for policy articulation at the EU level for a new positive EU narrative.
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Macroprudential stress tests: A new analytical tool

Feb 21 7:00pm VoxEU.org: Recent Articles
The Global Crisis and its aftermath led to greater use of stress tests and to the establishment of macroprudential policy as a new policy area. In this column, ECB Vice-President Vítor Constâncio introduces new suite of analytical tools that support the design and calibration of macroprudential policy. The tools go well beyond the requirements of the traditional solvency stress tests applied to banks, and include a broader set of institutions than just banks, an analysis of the financial cycle, as well as an assessment of systemic risk levels associated with the economic and financial shocks considered in adverse scenarios.
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The US-China Bilateral Balance in Trade in Value Added

Feb 21 6:42pm Econbrowser
As the Administration mulls over possible trade actions against China, it is important to concede official trade statistics do provide in some sense a misleading picture of US-China bilateral trade — but not misleading in a way that bosters the Administration’s arguments. Currently, the full value of a widget partly made in Malaysia, Singapore, and […]...
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Corporate Distress Lingers Despite Substantial Spread Narrowing

Feb 21 5:34pm Credit Trends from Moody's Analytics
A far greater cluster of high yield borrowers have elevated default risk compared to 2014 when the overall high yield spread was last as narrow as it is today.
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Economic Roundup: Risks Point Toward Stronger Q1 GDP Growth in the Euro Zone

Feb 21 5:34pm Credit Trends from Moody's Analytics
Confidence is improving in the euro zone as it softens in U.S.
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Defense of Free Thought in the Face of Illiberalism The Pillars of Free Thought

Feb 21 4:00pm A Marketplace for Ideas
We live in interesting times.  They are times of uncertainty and danger. They are times that threaten our core principles of freedom and the fabric of our society.  It is time to make a defense of free thought. Illiberalism and a Defense of Free Thought A growing tide of illiberalism surrounds us from both sides of … Continue reading Defense of Free Thought in the Face of Illiberalism – The Pillars of Free Thought The post Defense of Free Thought in the Face of Illiberalism – The Pillars of Free Thought appeared first on A Marketplace for Ideas.
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You have got to be kidding me

Feb 21 3:54pm Greg Mankiw
If I did not know the source, I might have thought that this report was from The Onion:The Trump administration is considering changing how U.S. trade deficits are calculated, a move that would make the deficit look larger on paper, the Wall Street Journal reported.  People involved in the discussions told the Journal that the leading idea is to count “re-exports” — goods that are imported to the U.S., and then exported to a third country unchanged — as imports, but not exports.The change would inflate the trade deficit number, an important figure in trade negotiations and policy.
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Unemployment versus Underemployment: Assessing Labor Market Slack

Feb 21 3:33pm macroblog
The U-3 unemployment rate has returned to prerecession levels and is close to estimates of its longer-run sustainable level. Yet other indicators of slack, such as the U-6 statistic, which includes people working part-time but wanting to work full-time (often...
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Mapping Working Family Tax Credits and Their Anti-Poverty Impact

Feb 21 3:24pm Brookings Topics - Economic Development
Now that tax filing season is well under way, millions of Americans are about to begin receiving refunds. For many low-income taxpayers, two key tax code provisions—the Earned Income Tax Credit (EITC) and the Additional Child Tax Credit (ACTC)—will keep them and their families from falling into poverty. What makes the EITC and ACTC special […]        ...
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The Libertarian Angle

Feb 21 11:06am Cafe Hayek
TweetI’m honored to be the guest of Bumper Hornberger and Richard Ebeling on today’s “Libertarian Angle” (from the Future of Freedom Foundation). The post The Libertarian Angle appeared first on Cafe Hayek.
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US labor market has 'more room to run,' Fed's Kashkari says

Feb 21 10:25am Economy
Neel Kashkari is president and CEO of the Federal Reserve Bank of Minneapolis and a voting member of the Fed's policy-setting committee.
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Current job creation has nothing to do with Trumps policies

Feb 21 9:42am Brookings Topics - U.S. Economic Performance
What do we know so far about President Trump’s economic strategy? He has said he wants to get the economy “back on track” and create jobs that will put more money in people’s pockets. But instead of pursuing policies that mainstream economists have endorsed or following up on his commitment to rebuild America’s infrastructure or […]        ...
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Trading off harms and benefits distinctions matter for beta-blockers in the elderly

Feb 21 8:46am The Incidental Economist
Such an important study in JAMA Internal Medicine. “Association of β-Blockers With Functional Outcomes, Death, and Rehospitalization in Older Nursing Home Residents After Acute Myocardial Infarction”: Importance  Although β-blockers are a mainstay of treatment after acute myocardial infarction (AMI), these medications are commonly not prescribed for older nursing home residents after AMI, in part owing […]...
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Healthcare Triage: Trump, Congress, and the Plan for Block Grants and Medicaid

Feb 21 8:17am The Incidental Economist
How Would Republican Plans for Medicaid Block Grants Actually Work? That’s the topic of this week’s Healthcare Triage. This episode was adapted from an Upshot column I wrote. Links to sources and further reading can be found there. @aaronecarroll...
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More On Team Trumps Proposed Scheme to Use Fraudulent Trade Accounting

Feb 21 6:50am Cafe Hayek
TweetHere’s a letter to the Wall Street Journal: You describe Trump’s proposed scheme to artificially inflate U.S. trade-deficit figures as an attempt to “deceive” (“A Trump Statistical Trade Trick,” Feb. 21).  Exactly.  Counting goods shipped to other countries through the U.S. as U.S. imports but not as U.S. exports is simply fraudulent. If the Trump […] The post More On Team Trump’s Proposed Scheme to Use Fraudulent Trade Accounting appeared first on Cafe Hayek.
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American CEOs send letter to House: Kill the 'made in America' tax

Feb 21 6:00am Economy
In a letter to House and Senate leadership, top manufacturing CEOs argued that the current tax system penalizes American factory workers.
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The Impact of Diversity on the Homeownership Rate

Feb 21 5:30am On the Economy blog
Minority households have lower rates of homeownership, which may affect the national rate as the country becomes more diverse.
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In search of a European solution for non-performing loans

Feb 20 7:00pm VoxEU.org: Recent Articles
European banks have not recovered from the Global Crisis, in part due to heavy provisions for non-performing loans. This column argues that a comprehensive approach to the issue in Europe could address market inefficiencies and reduce bad loans to bearable levels. The establishment of a European scheme to securitise non-performing loans should form one of the next steps towards recovery.
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The Trade Deficit Is Nearly 15% (Alternatively Defined)!

Feb 20 6:39pm Econbrowser
If we count only the import side and not the export side of re-exports, as some in the Administration have suggested, we might as well go “whole hog” and redefine the trade balance completely: Let’s count imports, but not exports. Figure 1: The trade balance defined as net exports/GDP (blue), and the trade balance excluding […]...
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No Illicit Relationship Between President Trump and the Russian Government Heres the Analysis

Feb 20 5:00pm A Marketplace for Ideas
There is enough information in the public domain to conclude, with a high degree of confidence, that there is no illicit relationship between President Trump and the Russian government.  Similarly, there is very likely no relationship of any consequence between associates of the President and the Russian government.  We now believe that political motivations and … Continue reading No Illicit Relationship Between President Trump and the Russian Government – Here’s the Analysis The post No Illicit Relationship Between President Trump and the Russian Government – Here’s the Analysis appeared first on A Marketplace for Ideas.
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Nerdcon: Nerdfighteria

Feb 20 4:06pm The Incidental Economist
So you’ll either know what Nerdfighteria is or not. The Venn diagram of those who know what it is will likely overlap largely with fans of Healthcare Triage. There’s a convention this weekend to celebrate it! NerdCon: Nerdfighteria is the first-ever official Nerdfighter convention and celebration of 10 years of nerdfighting. It is a giant […]...
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What Accounts for Trumps Trade Tales?

Feb 20 3:28pm Cafe Hayek
TweetTrump and his protectionist trade triumvirate are not only ignorant of the basic tenets of economics, they are ignorant also of the basic tenets of accounting.  Commerce-secretary designate Wilbur Ross, for example, routinely insists that “it’s ECON 101” that trade deficits reduce GDP.  But he’s deeply mistaken. First, a U.S. trade deficit means that investments […] The post What Accounts for Trump’s Trade Tales? appeared first on Cafe Hayek.
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Deirdre McCloskey on Free Trade

Feb 20 1:54pm Cafe Hayek
TweetIn this short video, Deirdre McCloskey accurately identifies the purpose of trade and applauds its achievements. Here’s a choice quotation from the video: The purpose of the economy is not to make jobs. Jobs are infinite. We can make construction workers use teaspoons instead of shovels and that will make for more jobs. A pretty […] The post Deirdre McCloskey on Free Trade appeared first on Cafe Hayek.
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Did the Dodd-Frank Act Make the Financial System Safer?

Feb 20 5:30am On the Economy blog
Two aims of the Dodd-Frank Act were to improve large banks’ resiliency and reduce the impact of their failures or material weaknesses.
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Globalisation and economic nationalism

Feb 19 7:00pm VoxEU.org: Recent Articles
The revival of nationalism in western Europe, which began in the 1990s, has been associated with increasing support for radical right parties. This column uses trade and election data to show that the radical right gets its biggest electoral boost in regions most exposed to Chinese exports. Within these regions communities vote homogenously, whether individuals work in affected industries or not. ...
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Views on industrial strategy from economists

Feb 19 7:00pm VoxEU.org: Recent Articles
A majority of UK-based macroeconomists welcome the government’s new industrial strategy, but doubt that the government can deliver. This column, which presents the results of the latest Centre for Macroeconomics and CEPR survey, shows a large majority of economist think that the UK needs a new regional strategy to tackle inequality across different parts of the country.
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Protect Us from Those Who Would Bargain Hard for Us

Feb 19 4:34pm Cafe Hayek
TweetOver the past several months I’ve been told many times, in many different ways and places, that I and other free traders are “unrealistic,” and that Trump – who’s an alleged master of the art of the deal – will make Americans richer through his hard and skillful bargaining.  Such claims are nonsense.  Here’s a […] The post Protect Us from Those Who Would ‘Bargain Hard’ for Us appeared first on Cafe Hayek.
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Repealing Dodd-Frank and Basel III

Feb 19 10:34am Econbrowser
One of the responses to the financial turmoil of 2008 was new legislation and regulation intended to prevent such a disaster from recurring. These measures include the Dodd-Frank Act of 2010 and the third international accord from the Basel Committee on Banking Supervision of 2010-11. But today there are powerful voices seeking to amend or […]...
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Salams Criticism of Puzder Misses the Point

Feb 19 8:03am Cafe Hayek
TweetAt EconLog, Scott Sumner rightly calls out Reihan Salam for getting the economics wrong in objecting former Labor-secretary nominee Andy Puzder.  The specific target of Scott’s criticism is this passage from Salam: Puzder has also been an influential critic of minimum-wage hikes and overtime regulations, warning that such measures would force employers to replace low-wage […] The post Salam’s Criticism of Puzder Misses the Point appeared first on Cafe Hayek.
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How antitrust enforcement can spur innovation

Feb 18 7:00pm VoxEU.org: Recent Articles
There is growing concern that dominant companies use patents strategically to keep competitors from entering their market. This column uses the landmark 1956 Consent Decree against Bell Labs to explore whether antitrust enforcement is an effective remedy to the problem. Results show that patents can indeed be used as an entry barrier for start-up firms, and that the compulsory licensing of patents can foster market entry and innovation. However, compulsory licensing is found to be ineffective in markets where dominant firms have other means of market foreclosure.
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Healthcare Triage News: Good News! We Can Have Successes in Population Health!

Feb 18 6:06pm The Incidental Economist
It can sometimes feel like there’s nothing we can do to improve population health. That’s just not true. This is Healthcare Triage News. For more information, go here. @aaronecarroll...
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Trumps Rosy Scenario

Feb 18 10:46am Paul Krugman
The math is not his friend.
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Why Small Business Favors Trump---So Far

Feb 18 1:25am Barron's Economic Beat
Cheered by Trumpian promises of lower taxes, fewer regulations, and cheaper health care, company owners get upbeat.
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Profits, Nominal GDP and Home Sales Help to Set Benchmark Yields

Feb 17 7:34pm Credit Trends from Moody's Analytics
The most recent past suggests that the high-yield spread is likely to move toward the value predicted by the VIX index unless high-yield default expectations climb meaningfully higher.
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Economic Roundup: No Longer Need to Squint to See Effect of U.K. Referendum

Feb 17 5:34pm Credit Trends from Moody's Analytics
The labor market and consumer spending show the ill effects of the decision to break from the EU.
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Why Do We Get So Much Regulation?

Feb 17 3:27pm Neighborhood Effects
Over the past 60 or 70 years, levels of regulation in the United States have been on the rise by almost any measure. As evidence, in the year 1950 there were only 9,745 pages in the US Code of Federal Regulations. Today that number is over 178,000 pages. There is less information about regulation at […]...
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Plane Ignorance

Feb 17 3:19pm Cafe Hayek
TweetHere’s a letter to the Wall Street Journal: While touring a Boeing factory today in South Carolina, Trump exclaimed that “[w]hen there is a level playing field, and I’ve been saying this for a long time, American workers will always, always, always win” (“President Donald Trump Praises Boeing, Suggests More Plane Purchases Coming,” Feb. 17). […] The post Plane Ignorance appeared first on Cafe Hayek.
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Utilizing the National Guard to Deport Investigate, Identify, Apprehend, Arrest, and Detain Undocumented Immigrants

Feb 17 2:44pm Econbrowser
[Correction to title: it’s been pointed out that the National Guard will not necessarily be empowered to actually deport individuals; they can only have “authority to investigate, identify, apprehend, arrest, detain and conduct searches”. The actual deportation (transportation to port or border) would presumably be undertaken by other agencies. MDC 2/18 10:51AM Pacific] What are […]...
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Mysterious Sentences

Feb 17 12:48pm Cafe Hayek
TweetJim Ziegler sent to me this long essay by Bruce Schneier.  So far I’ve had time only to skim the essay.  My skimming leaves me less than impressed, although a more-careful reading might change my assessment of the essay as a whole.  But I’m quite certain that even ten careful re-reads will not cause me […] The post Mysterious Sentences appeared first on Cafe Hayek.
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Macro Musings Podcast: Sebastian Mallaby

Feb 17 12:48pm Macro and Other Market Musings
My latest Macro Musings podcast is with Sebastian Mallaby. Sebastian is a senior fellow at the Council on Foreign Relations and a contributing columnist to the Washington Post. Previously, he worked with the Financial Times and the Economist magazine and is the author of several books. He joined me to talk about his latest book “The Man Who Knew: The Life and Times of Alan Greenspan”.This was a fascinating conversation throughout. 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.
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Over the planning hurdle, how regions implement economic development strategy

Feb 17 12:05pm Brookings Topics - Economic Development
There’s a profound shift under way in economic development, from overreliance on attracting jobs and talent from outside a region to greater emphasis on growing from within. Making that shift often involves formulating a new plan. But planning is just one piece of a much larger and more complex process of transforming economic development practices. And […]        ...
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Medicaid expansion and reducing divorce rates

Feb 17 11:44am The Incidental Economist
Emma Sandoe is a PhD student in Health Policy, Political Analysis at Harvard and a former spokeswoman for Medicaid at the Centers for Medicare & Medicaid Services. This week David Slusky and Donna Ginther released an NBER working paper which suggested that Medicaid expansion reduced the prevalence of divorce by 5.6\% among those aged 50-64. The thinking […]...
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US Economic Indicators February 20th - 24th

Feb 17 11:34am Credit Trends from Moody's Analytics
A look at next week's economic indicators which include new and existing home sales.
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