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People have been told to hanker down for a few weeks, until the infection is under control. After this, they are led to believe, we shall emerge from isolation, and things will slowly return to normal. I am not so sure; this report, bit.ly/2Uf7hhr reinforces my worries.
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A fact that struck me: Russia's GDP (1.4 trillion in dollars) is equal to the sum of Netherlands and Belgium GDP (0.9 and 0.5 trillion respectively)...
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A lot of similarities between crypto and QAnon. Same anti-state sentiment, same irrationality, same herd behavior. Good reasons to worry.
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China has indicated it is tired of lending to the US. It has asked the US to take measures to cut its trade deficit vis a vis China by 200 billion by the end of 2020. (Just kidding obviously. But doesn't it remind you of another set of ridiculous demand?)
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A third pass at DSGEs :(. Theory is elegant. Reality is messy. One class of models cannot do everything. bit.ly/2jcmX4O
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The failure of covid zero. Likely to have major implications for China and the rest of the world.
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Monetisation: Do not panic. ( A Vox EU piece with Jean Pisani Ferry) bit.ly/2xno5vg
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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...
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2/
If markets work half decently, they imply that most economic movements should be largely unpredictable.
The best example is the stock market.
Anybody who says that they can forecast major movements in the stock market is a crook, not an economist
110
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
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A new and creative definition of currency manipulation by the US administration: Not intervening to prevent market movements. Orwell...
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Struck by the importance of the collapse of networks in understanding major macro fluctuations. Three examples:
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Macro Policy makers: Please listen to the experts 😀 (I know: Such listening is not in fashion. ☹️ But we actually know something about the economy works)
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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)
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Everything you wanted to know about the evolution of income, wealth, social, health, inequality in the US and in Europe in the 10 minutes video of Lucas Chancel presentation at the PIIE conference on combating inequality bit.ly/31P0n4g
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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.
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Taking again the risk of discussing an MMT proposition, and fully expecting to be told that I have not understood….
One of the propositions of MMT is that, in contrast to standard mainstream arguments, government spending is automatically financed by money creation.
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The cliff notes video of my AEA address (7 minutes) on public debt. bit.ly/2SDABiW
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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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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.
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some room to go to get to gender balance... twitter.com/Lagarde/status…
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Should we get rid of the natural rate hypothesis? What evidence is there for hysteresis? Can we exploit the Phillips curve trade off? For all the answers, see bit.ly/2jwnUGH
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Not unexpectedly, a great summary of Mundell's contributions and contradictions, by Paul Krugman
voxeu.org/article/mundel…
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With the threatened tariffs, the Chinese may be succeeding where the Democrats have so far failed: Decreasing support in the Trump base. Russians may have determined the last election. The Chinese may determine this one. :)
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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.
Robert Solow Professor of economics emeritus, MIT
Fred Bergsten Senior Fellow, Peterson Institute for International Economics