76
One thought about inflation fighting
1. When inflation comes from overheating, convincing workers that the economy needs to slow down, and that unemployment has to increase to control inflation, is hard but at least the logic can be explained.
77
Dani Rodrik's and my conclusions form the conference on inequality we organized in October. Governments have the tools to combat inequality if they want to. bit.ly/2D4fcpZ
78
Re: Draghi new measures. Wouldn't the euro area be better off today if there was a different fiscal/money mix. If, for example, fiscal deficits were, say, 1% of GDP higher, and the ECB could avoid negative rates, additional asset purchases, etc? Happy to hear disagreements...
79
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.
80
On the swoosh recovery. My guess is that, conditional on covid not getting worse (big if), there will be an initial fast recovery as many businesses simply reopen. But this will be another "mission accomplished" moment. Don't be fooled. The rest of the climb will be a slog.
81
Must read. Many great contributions. If you do not have the time to read the 200 pages, read the great intro by Beatrice Weber di Mauro and Richard Baldwin. twitter.com/BaldwinRE/stat…
82
It is hard to understate the importance of the decision of the European Court of Justice to allow the EU to withhold funds to countries that do not respect the rule of law. It is a truly major decision, decisive for the future of the European Union.
83
The motto for fiscal policy these days is “Whatever it takes”, This is indeed the right motto. But what does it mean? And can we really afford it? Or will we wake up in a few months with a hangover, asking “What on earth did we do?” My views: bit.ly/39tlvRD.
84
In this courageous compromise, democrats get all the spending they want, republicans get all the spending they want, and nobody pays more taxes. :( With such sacrifices, no wonder this compromise was so hard to achieve.
85
In the name of covid, a naked attack by the administration on foreign students and universities. (and, with lower educational exports, a likely major hit to the trade balance, dear to the President. ) Maybe I take too personally, but it stinks and hurts. bit.ly/2Z3OJEu
86
25 years ago, Michael Kremer and I wrote a paper on ``Disorganization'', arguing that the collapse in output in Central and Eastern Europe was largely due to disruptions of supply chains. This seems fairly relevant today. bit.ly/3cofhFq
87
/1
Asked by Bloomberg today: What are economists (or economic forecasts) getting wrong today?
So once again:
Economics is not primarily about economic forecasting.
Economists analyze how the economy works, examine policies, explore counterfactuals.
But they know that:
88
Quick reactions to the French economic plan released today.
The three legs, climate, competitivite (helping firms), cohesion (helping people) make good sense. The amount committed, 100 b euros on top of what has already been spent is substantial. But (there is always a but...)
89
Some thoughts about the need to rethink EU fiscal rules and the EU fiscal architecture in a low interest rate environment. bit.ly/2X0wzUa
90
Some thoughts on the French ``yellow jackets'' and the (current) failure of representative democracy. bit.ly/2FUAuKR
91
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.
92
Two reasons to expect Russia to drastically cut gas supplies.
1. Russia is a gas monopolist facing a very inelastic European demand curve. The only reason not to set a nearly infinite price (and sell epsilon) is to preserve future demand.
93
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).
94
The Italian government is behaving extremely responsibly—more so than many. It is putting health considerations and the control of the epidemic ahead of short term economic considerations---exactly as it should.
95
1. Looking for a research assistant, part time or full time, to help Jean Pisani Ferry (@pisaniferry) and me on research projects.
Location: Paris or DC.
Timing: Starting in the fall
Duration: At least a year.
Required skills:
96
Best analysis of costs of sanctions for Russia versus EU I have read so far, and clear policy conclusions. twitter.com/lugaricano/sta…
97
A potentially important paper rb.gy/h4uxie
(at a great Brookings conference yesterday rb.gy/qzwlhd
Basic message: Even starting from the very worrisome position the US is today, the use of masks and moderate testing might keep us out of the woods.
98
Three remarks about the coronavirus and China. Conventional monetary or fiscal policy will not do much for China. Those policies affect demand but the problem is supply. If workers do not go to work, and firms run out of parts, higher demand will not help.
99
A nice example of salience: relation between inflation rate and google searches for ``inflation'' for the US, from 2004 to today. From Oleg Korenok, David Munro et Jiayi Chen (2022) ideas.repec.org/p/zbw/glodps/1…. Suggests things are ok up to close to 4%.
100
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
Robert Solow Professor of economics emeritus, MIT
Fred Bergsten Senior Fellow, Peterson Institute for International Economics