Sunday, July 24, 2016

Why did Lehman fail?

Larry Ball has an important new monograph arguing, contra Bernanke, that during the recent financial crisis, the Fed could have saved Lehman Brothers but, unadvisedly, chose not to.  Here, James Stewart of the NY Times covers the Ball piece, and it includes this tidbit:
an internal Fed team assigned to value Lehman’s collateral reached a preliminary finding that the firm was narrowly solvent and the Fed could have justified a loan. But everyone was too busy to listen, and the report was never delivered to Mr. Geithner, Mr. Bernanke or Mr. Paulson. This is consistent with Professor Ball’s findings.

Tuesday, July 19, 2016

Pigou Club News

Tuesday, July 12, 2016

A Quick Note on a Universal Basic Income

Consider an economy in which average income is $50,000 but with much income inequality. To provide a social safety net, two possible policies are proposed.

A.  A universal transfer of $10,000 to every person, financed by a 20-percent flat tax on income.

B.  A means-tested transfer of $10,000.  The full amount goes to someone without any income.  The transfer is then phased out: You lose 20 cents of it for every dollar of income you earn.  These transfers are financed by a tax of 20 percent on income above $50,000.
 Which would you prefer?

I have seen smart people argue as follows: Policy A is crazy. Why should Bill Gates get a government transfer? He doesn’t need it, and we would need to raise taxes more to pay for it.  Policy B is more progressive. It targets the transfer to those who really need it, and the transfer is financed by a smaller tax increase levied only on those with above-average incomes.
But here is the rub: The two policies are equivalent.  If you look at the net payment (taxes less transfer), everyone is exactly the same under the two plans. The difference is only a matter of framing.

Sunday, July 03, 2016

Summer Reads

Saturday, July 02, 2016

Some Questions for Mr Trump

I see you recently opened up a golf course in Scotland. I presume that part of your business plan is for some Americans to take vacations to play there. But this raises some thorny questions.

You complain constantly about American firms moving jobs overseas. But couldn't you have opened up your golf course here in the United States?  Wouldn't that have created jobs for American caddies and groundskeepers?  Should we be concerned when Americans import golfing services from your foreign course? Would you as President slap a tariff on American tourists traveling to your course, as you have proposed for goods coming from China?  Do you think such a tax would Make American Golfing Great Again?

Friday, July 01, 2016

Brexit in a Snapshot 2


Wednesday, June 29, 2016

Feldstein on Brexit

Monday, June 27, 2016

Brexit in a Snapshot

A friend sends along this summary:

Tuesday, June 21, 2016

Yellen at Radcliffe

Monday, June 20, 2016

On the Alesina Hypothesis

In my  recent NY Times article, I explored several hypotheses to explain slow growth. One was based on work by Alberto Alesina and Silvia Ardagna suggesting that the standard Keynesian view of tax and spending multipliers is inconsistent with the international evidence. 

Paul Krugman says the Alesina-Ardagna work has been "refuted."  Nothing could be further from the truth.  See this recent paper by Alesina, Favero, and Giovazzi on fiscal consolidations, which reports evidence consistent with the earlier work and is forthcoming in the peer-reviewed Journal of International Economics.  (By the way, this work is also consistent with the Romers' finding of large tax multipliers, much larger than the literature finds for spending multipliers.)

To be sure, these issues continue to be debated. Remember: My piece was presenting hypotheses about what has been happening in the economy, not taking a stand about which one is right. From my perspective, the Alesina work suggests a still plausible hypothesis.

Friday, June 17, 2016

What's wrong with the economy?

Click here to read my column in Sunday's NY Times.

Sunday, June 12, 2016

Bad ideas never die

In the Silicon Valley suburbs, activists are pushing for laws that limit rents, even though, as the article says, "economists have an almost universally dim view of rent control."

Monday, June 06, 2016

Summers on Trump

Wednesday, June 01, 2016

Elinor Ostrom in the news (sort of)

A friend emails me:

This article in the today's NY Times discusses how musicians who play near the site where John Lennon died have had trouble managing the common resource of a strategically placed park bench. Currently, however, they have worked out an informal arrangement that appears to work well. The article reminded me of the work of Elinor Ostrom, who was awarded  the Nobel Prize in part for her work on self-governance of the commons.

Saturday, May 28, 2016

Dani Rodrik

Friday, May 27, 2016

What I am doing today

Thursday, May 26, 2016

Sachs on Sanders

Sunday, May 22, 2016

File this under "Quixotic"

Saturday, May 21, 2016

McCloskey on Growth

Tuesday, May 17, 2016

The PhD Job Market