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In RealTime posts, PIIE senior staff and colleagues discuss the fast-moving economic news, financial developments, and public policy choices confronting the United States and the world.
Prime Minister Shinzo Abe captured the attention of economists, pundits, and global markets with his bold plans to boost growth and inflation in Japan. Stock prices soared, real bond yields plummeted, and the yen dropped sharply. These trends boded well for Abe’s success. More recently, markets seem disappointed with the details (or lack thereof) on [...]
Last week, Tyler Cowen of the blog Marginal Revolution asked “Have we seen self-defeating austerity in the United States?” Cowen declines to take a clear stand on the question, but his main point is that the well-known fiscal cuts of 2012 and 2013 have, in fact, reduced the US budget deficit. Ergo, goes the implication, [...]
On January 19, the Wall Street Journal published a letter that was a condensed version of my response to an article by Edward Lazear on January 8. My complete response follows. Edward Lazear argues that China’s massive government intervention in the currency markets—more than $3 trillion in the past 10 years—has caused no significant harm [...]
In his recent speech at the Federal Reserve’s annual Jackson Hole conference, Professor Michael Woodford of Columbia University attempted to pour cold water on the idea that the Fed’s purchases of long-term bonds (also known as quantitative easing) could lower bond yields.1 His contention was that the portfolio balance effect of such purchases would be [...]
Let’s break out the booze and have a ball if that’s all there is. – From the song “Is That All There Is?” by Jerry Leiber and Mike Stoller At Jackson Hole last week, Federal Reserve Chairman Ben Bernanke provided more detail on the “costs and risks” he had cited in his June Federal Open [...]
In my policy brief, “Combating Widespread Currency Manipulation,” I list 20 countries that meet stringent criteria for excess accumulation of foreign exchange reserves designed to hold down the values of their currencies. The list includes various statistics expressed as a percent of each country’s GDP. In response to questions, I provide here a ranking of [...]
On June 20, 2012, the Federal Reserve System’s Federal Open Market Committee extinguished the last shred of doubt as to whether it intends to achieve its mandated objectives. Despite a substantial markdown of an already inadequate forecast, the Fed did not take any actions that would make it possible to achieve either of its objectives [...]
Federal Reserve Chairman Ben Bernanke recently said that Chinese currency manipulation “is blocking what might be a more normal recovery process.” In fact, the problem goes beyond China to include many other emerging economies and even a few advanced economies. Altogether, governments in these economies are spending about $1.5 trillion per year on currency manipulation. [...]
In my October 24 RealTime column, "The Last Bullet," I argued that the combination of serious reform of the Home Affordable Refinance Program (HARP) and an aggressive Federal Reserve program to hold down the mortgage rate would spark a refinancing boom that could save borrowers as much as $60 billion to $80 billion per year. [...]
US policymakers are running out of options to solve our massive unemployment problem and get the economy growing again. The Administration’s jobs bill faces resistance in Congress. The best option that can be implemented without a vote of Congress is to work through the market that started this mess in the first place—housing. The Administration [...]