101
How much of the the slowdown in the recovery is due to the fact that some sectors, while recovering, still face tight supply constraints and low relative demand, or that, because of uncertainty, overall demand is weak. What to do with macro policy depends crucially on the answer.
102
In one slide: The essence of our argument (with @jzettelmeyer and @AlvaroISLM ) for why the EU should move from fiscal rules to fiscal standards.
The long version: bit.ly/3knhzId. And the full video: economic-policy.org/fiscal-standar…
103
Of utmost relevance for covid dynamics. twitter.com/SonyKapoor/sta…
104
Some quick reactions to the new lockdowns in Europe.
1. The degree of uncertainty is much higher than in the first wave. In the first wave, the (incorrect) belief was that the infection rate would quickly decrease and remain low thereafter.
105
1. Twitter is great in allowing you to get your thoughts out quickly. Sometimes too quickly. You have second thoughts. The world changes. I want to take three covid forecasts that I got wrong:
106
1. PIIE has created a great go-to site on inequality: facts, perceptions, policies. bit.ly/331EXo81.
For example, did you know that, since 1985, among AEs, Sweden had the largest increase in its Gini coefficient, Greece had a decrease, France had practically no change.
107
Janet Yellen: A truly great appointment. The perfect expertise mix. Especially at a time when, because of the secular stagnation environment, fiscal and monetary policy makers must work together in new and complex ways.
108
A fascinating graph, showing the dynamics of the second wave in France.
Things were fine in July, but the 20-29 year olds starting relaxing.
Over time, they contaminated older generations until infection rates were high for all.
How will the reverse movement proceed?
109
Weighing my words carefully: We may be on the verge of a shift in fiscal paradigm. Proof of concept: The large agreement between Summers, Furman, Bernanke, Rogoff, and me, in the PIIE-Brookings zoom. bit.ly/2VnhwRU (Second hour. The first hour is great as well)
110
I keep being asked: You say we may not need to increase taxes to pay for the additional debt. How can this be? Who will pay? The answer: Investors, who are willing to accept a negative rate (or more technically, a rate less than the growth rate).
111
An interesting, sociological, issue. How fast will the emerging academic consensus on fiscal policy filter through to policy makers? twitter.com/pisaniferry/st…
112
Democrats. Delighted by your win. But please don't go for the 2000 dollars checks. Aim the money better, for those who really need it.
113
In the next few months, I intend to write a short book about fiscal policy today. The slides, used for a discussion with
@JohnHCochrane below are a first pass. bit.ly/2LqAXIb More to come as I make progress.
114
I am known as a dove. I believe that the absolute priority is to protect people and firms affected by covid. Still, I agree with Summers. The 1.9 trillion program could overheat the economy so badly as to be counterproductive. Protection can be achieved with less.
115
Let me double down and go through some numbers. I agree that too much is better than too little and we should aim for some overheating. The question is how much. Much too much is both possible and harmful. I think this package is too much.
116
For those who teach intermediate macro: Gerhard Illing, my coauthor for the German edition of Macroeconomics has written (in english) a chapter on the economic effects of covid. bit.ly/3cZ2J9U. It is richer and slightly more advanced than my own (bit.ly/2GZB375)
117
Why I am concerned about the size of the Biden 1.9 trillion package. A closer look at the output gap, the multipliers, and the risk of inflation. bit.ly/2ZpQvzg
118
Who is this guy? He is stealing my show... twitter.com/RobinWigg/stat…
119
What is happening to Greece's former chief statistician #AndreasGeorgiou is unacceptable. An appeals court has now found him liable of slander... Now in 10th year, #Greece should end the injustice and exonerate him.
amstat.org/asa/News/Greek…
#JusticeForGeorgiou #DataIntegrity
120
RIP Bob Mundell. The Mundell- Fleming model still today perhaps the best thought-organizing model we have in our macro tool kit.
121
Not unexpectedly, a great summary of Mundell's contributions and contradictions, by Paul Krugman
voxeu.org/article/mundel…
122
1. A mini revolution in the presentation of the US budget. Two new lines: Real net interest payments (that is, net interest payments corrected for inflation, in dollars and as % of GDP. And striking numbers: They are negative up to 2028, small after that....
123
2. An important message: Yes, debt is high, but debt service, the fiscal cost of debt is very low. And this is what matters. If we have good uses for debt, such as the various forms of public investment in the Biden plans, this is the time to do it and issue long maturity bonds.
124
I am afraid Mr Schäuble misunderstood me. I objected to the Biden stimulus program not because of the increase in debt but because of the size of the demand push it implies and the risk of overheating and inflation. And I do not worry about inflation in the EU.
125
1. A year and a half ago, President Macron asked Jean Tirole and me to form an international commission to study future major challenges facing France and think about policies. We decided to focus on three issues, global warming, inequalities, and aging. The report just came out.
Robert Solow Professor of economics emeritus, MIT
Fred Bergsten Senior Fellow, Peterson Institute for International Economics