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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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A fascinating graph in many ways. The starting point. The steady collapse over 80 years. The sharp, but limited reversal. (from Daniel Wadenstrom, bit.ly/3Fqzicr )
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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)
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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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Macroeconomics 8th edition is out. Compared to the first edition (1997), I am struck by two things. The architecture has not changed. But the degree to which what was exotic then is, at least for the time being, the new normal.
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Of utmost relevance for covid dynamics. twitter.com/SonyKapoor/sta…
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RIP Bob Mundell. The Mundell- Fleming model still today perhaps the best thought-organizing model we have in our macro tool kit.
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1/6 The risk of a false dawn in US inflation.
Headline inflation is likely to decrease sharply over the next few months. The reason is simple: Many of the large increases in commodity prices have started to reverse.
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Who is this guy? He is stealing my show... twitter.com/RobinWigg/stat…
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1. 「21世紀の財政政策」が出版されました。"Fiscal Policy under Low Interest Rates"の邦訳です。財政政策、財政赤字、債務に関心を持つすべての方にとって、本書が貴重な材料となることを願っています。
amazon.co.jp/21%E4%B8%96%E7…
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Exceptional agreement among experts across the spectrum about the effect of inequality on the health of liberal democracy, and about the need for more redistribution:
igmchicago.org/surveys/inequa…
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Italy. A case of contractionary fiscal expansion? bit.ly/2ORyqHu
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Anybody who says that economics is in trouble, that economists do not deal with the relevant issues, just has not done his/her homework. Look at the set of papers presented at the AEA meetings. Amazing. bit.ly/2J2Iiub
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My first tweet... Trying to make sense of the latest stock market slump blogs.piie.com/realtime/?p=53…
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Much of the progress in macro in the last 40 years came from the assumption of ergodicity. It lies behind the use of VARs and other time series tools. It lies behind the solution to dynamic optimization problems. These may have a hard time dealing with the current data...
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Italian debt is sustainable.
But to make sure, the Italian government, euro-members, the ESM, and the ECB all have to do what they need to do. Please do it.
More flesh and arguments in bit.ly/2IWouan (unintended irony: look at the bitly address...)
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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.
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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
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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.
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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.
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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
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1. During World war II, economists working for US military intelligence, and using analytical tools, identified how bombings should be chosen so as to have the maximum impact on production in Germany.
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On macro, the need to simplify, and agent based models, reread the one paragraph novel by Jorge Luis Borges, bit.ly/2t2sbWO
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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).
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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.
Robert Solow Professor of economics emeritus, MIT
Fred Bergsten Senior Fellow, Peterson Institute for International Economics