Weekend's read on the economy. After last week's trouble in European sovereign bond markets and the Friday's lousy payrolls from US, talk on another round of quantitative easing is bound to become a hot topic during the next weeks. Inflation figures and Fed-speak will thus be followed very carefully. GENERAL
BizDaily: Economics - the imperial science? – BBC (mp3)
(17min) Justin Rowlatt is in the university city of Cambridge to report on the annual conference of the Royal Economics Society. He discusses modern economics with leading economists, asking can it really be considered a science? And if so, does it have answers that economists can agree on? Joining the discussion are Kenneth Rogoff, Professor of Economics at Harvard University along with John Van Reenen and Francesco Caselli, both Professors of Economics at the London School of Economics.
FISCAL
Is There a Fiscal Crisis in the United States? – EconoMix / NYT
Two competing narratives: 1) already or soon a debt crisis 2) actually a jobs crisis and more spending is needed. Simon Johnson argues both views are dangerous.
Two competing narratives: 1) already or soon a debt crisis 2) actually a jobs crisis and more spending is needed. Simon Johnson argues both views are dangerous.
Why I don’t stress about deficits – Wonkblog / WP
The budget deficit is unique: If Congress is unable to agree on a remedy, the problem goes away on its own. Would that all of our challenges were so cooperative.
Government accounting: Book-cooking guide – The Economist
One of the best things about being a government is that nobody audits your accounts. Politicians have huge leeway in drawing up and presenting their budgets.
Market perception of fiscal sustainability – Bank of Portugal (pdf)
An application to the largest euro area economies 29-Mar, Bank of Portugal Working papers by Maximiano Pinheiro
Fiscal policy and the great recession in the Euro area – ECB (pdf)
European Central Bank Working papers by Günter Coenen, Roland Straub, Mathias Trabandt 27-Mar
FEDERAL RESERVE
Far Too Low for Far Too Long – Rorty Bomb
So, what caused the economic and financial crisis of 2007-whenever?...let’s talk about one possible story, or really family of stories: that the root cause of the crisis is that interest rates were too low for too long.
Fed Policy and Inflation Risk – Project Syndicate
Martin Feldstein: The large volume of reserves, together with the liquidity created by quantitative easing and Operation Twist, makes that risk greater. It will take skill – as well as political courage – for the Fed to avoid the rise in inflation that the existing liquidity has created.
Why QE is being mis-sold – alphaville / FT
At the macro level, deleveraging must be a managed process: for the private sector to deleverage without causing a depression, the public sector has to move in the opposite direction and re-lever by effectively viewing the balance sheets of the monetary and fiscal authorities as a consolidated whole.
At the macro level, deleveraging must be a managed process: for the private sector to deleverage without causing a depression, the public sector has to move in the opposite direction and re-lever by effectively viewing the balance sheets of the monetary and fiscal authorities as a consolidated whole.
Treasuries Update: A Look at Recent Volatility – dshort
Treasury Yields in Perspective - dshort
Very nice collection of yield charts (first short-term, second long-term)
JOBS, CONSUMER, GROWTH
Behind the "Trend is the Cycle" – Tim Duy’s Fed Watch
If you were looking for a jobless recovery two years ago, the "routine" task sectors of construction and manufacturing were cause for concern. But I think the dynamics in those sectors can be explained in the context of a global demand shortfall rather than entirely a structural phenomena.
Net Worthless: People As Corporations – ZH
Bank Of America remains skeptical of this self-sustaining recovery - expecting second half growth to slow significantly as businesses and households react to the risk of a major fiscal shock
Bank Of America remains skeptical of this self-sustaining recovery - expecting second half growth to slow significantly as businesses and households react to the risk of a major fiscal shock
An Elusive Relation between Unemployment and GDP Growth: Okun’s Law – FED
Okun’s law is just an empirical relationship. It may not necessarily reflect a structural link between output growth and the unemployment rate. Moreover, the relationship might change over time as the dynamics of the labor market change.
Okun’s law is just an empirical relationship. It may not necessarily reflect a structural link between output growth and the unemployment rate. Moreover, the relationship might change over time as the dynamics of the labor market change.