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On immigration in Europe. The only realistic option, economically and politically: Let countries set their own targets, but fully mutualise the costs across EU members. (As an added bonus: a good and sellable reason to have a common EU budget.) bit.ly/2MJFbFF
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Is the 7% RMB depreciation re $ since April sufficient to cancel the effects of US tariffs on Chinese imports? My sense is: Enough to offset the tariffs on 50b (25%* 50=12.5b, vs 7%*500=35b), prob enough to offset the threatened tariffs on 200b (25%*50+10%* 200=32.5b, vs35b).
28
Un tweet en francais, sur ``l'affaire Benalla.'' Sentiment fort de tempete dans un verre d'eau, de quasi hysterie journalistique. Habitant aux US, et souffrant de ses exces, j'esperai mieux des journaux de mon pays.
29
In response to popular demand. An AEA discussion board, to be populated with information about job market, discussions about anything economic. True facts, no rumors, and civility. Whether it works depends on all of us.
aeaweb.org/economics-disc…
30
My discussion of Bernanke's paper on the crisis. 3 points
1. A typology of crisis. From multipliers to multiple equilibria
2. Multipliers vs multiple equilibria. Why it matters
3. When do multiple equilibria emerge? Dark corners or hidden mines?
bit.ly/2QFxLGq
31
For a fascinating discussion of whether low rates have led to excessive risk taking, go to the new AEA discussion forum, bit.ly/2Or6tVU. Remarks by Summers, Stein, Borio, Caballero, Llaeven, and many others. Register and add your own thoughts.
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Italy. A case of contractionary fiscal expansion? bit.ly/2ORyqHu
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A great new site from PIIE on globalization and its consequences. Facts, history, graphs. Tackling the hard questions. Worth a long visit. @PIIE piie.com/globalization
34
For those who follow Italy closely. An in-depth analysis of the likely effects of the fiscal expansion, and an assessment of debt sustainability: piie.com/publications/p… .
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In response. I do not think I am known as a pro-austerity messiah... But this does not imply that I have to say amen to every fiscal expansion, from Trump to Italy. Important to look at each situation on its own, and avoid sweeping ideological positions.
36
Some thoughts on the French ``yellow jackets'' and the (current) failure of representative democracy. bit.ly/2FUAuKR
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Inspired by France's events. Could it be that, given the political constraints on redistribution and the constraints from capital mobility, we may just not be able to alleviate inequality and insecurity enough to prevent populism and revolutions. What comes after capitalism?
38
A question. Central banks have large research departments. Ministries of finance typically do not even have a research department. (with the result that research on monetary policy is much more developed than research on fiscal (macro) policy). Why?
39
Message from my AEA address: Low interest rates imply that, not only public debt may have small fiscal costs, it may also have low welfare costs. You can use it, if you use it wisely. The beginning of a conversation? bit.ly/2C38cso text: bit.ly/2C2ahEW
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The cliff notes video of my AEA address (7 minutes) on public debt. bit.ly/2SDABiW
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I wanted to start a conversation on public debt and fiscal policy. The conversation has started. This is a first pass at listing and discussing objections to my AEA paper, and also an attempt to translate general principles into practical policy advice. bit.ly/2tlwiL9
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People have mentioned that I am big on r<g, but Piketty became famous by arguing that r>>g. How do we reconcile? My r is the safe rate. Piketty's r is the rate of return on capital, which is indeed much higher than g.
43
Serious? yes. Modest? yes. Pedestrian? Maybe. Essential? Absolutely. The low-key, honest, approach to macro modeling for policy by Ray Fair. Capturing the facts, using theory, accepting the limits of our knowledge. cowles.yale.edu/sites/default/…
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On r-g, some striking statistics from the IMF fiscal monitor. Forecasts of r-g over 2018-2023: Negative for 29 of 34 advanced countries, negative for 33 of 39 emerging market and middle income countries...
45
On MMT. I shall write a longer piece. But: Yes, fiscal policy can be used to maintain output at potential. No, the deficit, unless very small, cannot be fully financed through non-interest bearing money creation, without leading to high or hyperinflation.
46
Le Grand debat: Une augmentation des depenses de 1% du PIB pour addresser les problemes les plus criants d'inegalite, d'investissement public, financee par la dette, ferait augmenter la dette de 0.5% du PIB, et les paiements d'interet de 0.005% du PIB. A serieusement considerer.
47
r<g and ZLB together require major rethinking of the role of fiscal policy. Some thoughts as a book on Rethinking macro which I edited with Larry Summers is coming out at MIT Press. bit.ly/30g8De1 (the book: bit.ly/2LG8Nbp) @PIIE @LHSummers
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Japan has a virulent case of ``secular stagnation’’, i.e. weak private domestic demand. To maintain full employment, it has needed and still needs aggressive monetary and fiscal policies. Monetary policy is doing everything it can. The burden thus falls on fiscal policy.
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主なモチベーションは需要の確保ですが、プライマリーバランス赤字は供給サイド、成長のために用いられるべきです。橋やトンネルの必要性について懐疑的なことはもっともなことです。それでも、財政を用いるべき良いプロジェクトが数多くあります。例えば、出生率を向上させること、地球温暖化への対処
50
プライマリーバランス赤字の拡大や債務残高対GDP比の上昇は長期的なコストを伴うものでしょうか？その通りです。国債は資本をクラウドアウトするでしょう。しかし、超低金利を反映してリスク調整後の資本の収益率は低く、資本蓄積の阻害に伴う長期的な厚生コストは大きなものではないでしょう。
Robert Solow Professor of economics emeritus, MIT
Fred Bergsten Senior Fellow, Peterson Institute for International Economics