26
Global supply chains and trade wars. You are China and unhappy about the new tariffs. You identify a few Chinese plants crucial to the supply chains of a couple of US firms. You send a hygiene inspector, who finds a rat, and closes the plant for a month. You are done.
27
Enormously impressed by the webinar by Raj Chetty today
bcf.princeton.edu/event-director…
An amazing combination of how to put big data together, test hypotheses, and draw highly relevant policy conclusions. This is 21st century economic research. I feel old, but excited. Watch it.
28
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。
30
A textbook example of how not to design and not to sell a fiscal expansion. While we were worried about Italy, the UK sneaked in. We are lucky that the UK is not in the euro… Otherwise, we would be facing another euro crisis. ☹
31
Why I am pessimistic about inflation, and why I believe the Fed will have to increase rates more than markets think. bit.ly/3q4nua8
32
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.
33
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....
34
Ben Bernanke is the living economist who has made the biggest contribution to world GDP. Without his actions when the financial crisis came, GDP would have collapsed much more than it did. So, on purely financial grounds, he deserves the prize (and on other grounds as well).
35
RIP Alberto Alesina, my student, my friend. Passion for life. Passion for work (we often disagreed, but we both learned from each other), creativity, and very hard work. Big loss.
36
Don't blame the oil companies for their high profits. It is not price gouging, just how markets work. But there is nothing wrong with taxing those exceptional profits.
37
1. I thought it useful to gather my thoughts and predictions for the US economy for the rest of the year. The usual caveat applies: there is a lot of uncertainty around them, but these are my best guesses. 1/9
38
For the last year, I have been working on a book on fiscal policy under low interest rates. It will be published by MIT Press in 2022. Meanwhile, MIT Press has made the draft available to all on an open source site, …y-under-low-interest-rates.pubpub.org
39
A Trump administration potential silver lining: It may provide macroeconomists with true randomized (not quite controlled) experiments.
40
Let's be clear. The German "non paper" proposal for the reform of EU fiscal rules, requiring in particular a decline of 0.5% in the debt to GDP (1% for high debt countries) ratio each year would be catastrophic. It would lead to the worst form of pro-cyclical fiscal policy.
41
Much of the debate about fiscal policy appears to be based on the notion that governments will ALWAYS misbehave, so one should NEVER tell them that there is more policy space, even when there is. This is counterproductive, and leads governments to ignore academic advice.
42
Should we be worried about an Italian economic crisis? Yes. bit.ly/2LqXqAd
43
1. The war in Ukraine will to an increase in gas and oil prices. How much will depend on whether either Russia is willing to limit exports or the EU is willing to limit imports. For the moment, the effects are limited. They could get worse.
44
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.
45
Not joking: Very relevant, as we learned in 2008-9.
Maybe the toughest challenge to macro as we do it. twitter.com/JustinWolfers/…
46
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
47
My Princeton webinar on fiscal policy. What it should do, what are the challenges, whether there will be too much debt, both in rich and poor economies, the need for coordination, and the role of international institutions. All this in 45 minutes. 😀 youtu.be/9jSyhtYq_ME
48
1/6 The lag conundrum of monetary policy
Monetary policy affects activity with a lag. This enormously complicates the task of policy makers, and the design of disinflationary policy.
49
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.
50
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:
Robert Solow Professor of economics emeritus, MIT
Fred Bergsten Senior Fellow, Peterson Institute for International Economics