With appropriate, real-world tweeks, standard flexprice neo-classical models can generate above-unity multipliers, solidly consistent with empirical estimates…
A Realistic Neoclassical Multiplier, FRB Minneapolis, 11 Sep 2013
Measuring policy uncertainty and testing its relation with output, investment, and employment…
Countries faced with uncomfortably high debt ratios have several options available to them. Monetisation, prolonged austerity and debt default clearly have lots of problems attached. Selling the family silver through privatisations is popular but its inherent unsustainability hardly commends it as a way of life. Cheating, by reclassifications of what is private rather than public debt, is also popular but you usually get found out – destroying any credibility benefits. Fiddling the books is more likely to raise risk premia than reduce them. Pleading for debt relief might work but Greece’s targeted, asset-windfall approach has to win plaudits for irony…
Greece Wants Germany to Pay War Reparations, Wall St Journal, 24 Apr 2013
Note to self: always check those spreadsheets carefully, and always question whether statistical associations shed any light on causation… Continue reading Austerity & Growth Revisited
The IMF has just published a useful summary of key macro policy issues going forward…Rethinking Macro Policy II: Getting Granular, Blanchard et al, IMF Working Paper, 15 Apr 2013
The IMF link to its April 2013 conference on Rethinking Macro Policy is also worth following up.
Mrs Thatcher’s economic legacy proved much weaker than her supporters claimed… Continue reading Mixed Bag Lady
Adding an ironic twist to the debate about Germany’s support for the debt-challenged PIGS…
Europe’s Poorest? Look North, Wall Street Journal, 10 Apr 2013
The Eurosystem Household Finance and Consumption Survey, ECB Statistics Paper, Apr 2013
Is the Untalented Mr Osborne giving one more puff to Britain’s housing bubble?
Fannie and Freddie no model for UK housing, Financial Times, 25 Mar 2013
Ploughing ahead, The Economist, 23 Mar 2013
Bubblicious: Osborne perpetuates the high house price cycle, IPPR, 20 Mar 2013
The OBR chief was right to correct the Prime Minister on his misleading interpretation of UK macro forecasts. That said, the impression has been left that “external” factors such as the global financial meltdown, high energy prices and the Eurozone crisis “explain” the bulk of the UK’s under-performance relative to forecast (which did recognise that, at the margin, fiscal austerity contributes to weaker short-term economic activity).
The problem is that we still need to address the more fundamental question as to why the UK should be so vulnerable to “external” shocks. Perhaps because the fiscal regime (in its broader sense that includes not just standard demand management but also structural reform, infrastructure, etc programmes) is failing to shoulder its counter-cyclical and supply-side responsibilities… Continue reading Responsible Fiscal Policy