Josh Barro, Betsey Stevenson, and Yours Truly

 A conversation in The New York Times.

Our Dollar, Your Problem

I just finished Our Dollar, Your Problem by my Harvard colleague Ken Rogoff. It is a great read for econonerds like me, especially for those who lean toward macro rather than micro. Ken wonderfully blends personal anecdotes with wise observations about the evolution of global finance.

Economics Teaching Conference

I will be speaking at a teaching conference to be held in New Orleans on November 5-7, 2025. If you might be interested in attending, click here.

Keep Politics Out of Data

Cecilia Rouse and I opine in the Washington Post.

Paul Krugman and I

...talk with Bianna Golodryga on CNN.

Wimbledon Wisdom

I recently ran across a graduation speech by the tennis great Roger Federer. I especially appreciated this passage:

In the 1,526 singles matches I played in my career, I won almost 80% of those matches... Now, I have a question for all of you... what percentage of the POINTS do you think I won in those matches?

Only 54%.

In other words, even top-ranked tennis players win barely more than half of the points they play.

When you lose every second point, on average, you learn not to dwell on every shot.

You teach yourself to think: OK, I double-faulted. It’s only a point.

OK, I came to the net and I got passed again. It’s only a point.

Even a great shot, an overhead backhand smash that ends up on ESPN’s Top Ten Plays: that, too, is just a point.

Here’s why I am telling you this.

When you’re playing a point, it is the most important thing in the world.

But when it’s behind you, it’s behind you... This mindset is really crucial, because it frees you to fully commit to the next point… and the next one after that… with intensity, clarity and focus.

The truth is, whatever game you play in life... sometimes you’re going to lose. A point, a match, a season, a job... it’s a roller coaster, with many ups and downs.

And it’s natural, when you’re down, to doubt yourself. To feel sorry for yourself.

And by the way, your opponents have self-doubt, too. Don’t ever forget that.

But negative energy is wasted energy.

You want to become a master at overcoming hard moments. That to me is the sign of a champion.

The best in the world are not the best because they win every point... It’s because they know they’ll lose... again and again… and have learned how to deal with it.

The Fiscal Future

At 4:45 pm today, I will be giving the 2025 Martin Feldstein Lecture at the NBER Summer Institute on "The Fiscal Future." I believe you can watch the lecture live at NBER YouTube channel. In any event, I will post the video when it is available.

Or you can read the lecture by clicking here.

Update: The video is here.

Update 2: George Will offers a nice summary.

Amicus Brief in V.O.S. Selections, Inc. v. Trump

 I was happy to join this group of sensible economists.

Today I Learned

"Beginning in the last decade of the 18th century, firewood output increased from about 18% of GDP to just under 30% of GDP in the 1830s."

Source.

My talk at the recent Princeton reunions (Alan Blinder moderates)

Stanley Fischer

The world lost a great man today. Here is Stan's obituary in the New York Times.

Harvard Derangement Syndrome

Fantastic article by Steven Pinker on the situation at Harvard. A tidbit:

And if you’re still skeptical that universities are worth supporting, consider these questions: Do you think that the number of children who die every year from cancer is just about right? Are you content with your current chance of developing Alzheimer’s disease? Do you feel our current understanding of which government policies are effective and which ones are wasteful is perfect? Are you happy with the way the climate is going, given our current energy technology?

I talk with Gerry Baker

 At the Free Expression Podcast.

Harvard faculty put their money where their mouths are

Here.

Do you oppose the Trump tariffs?

 If so, sign here.

I talk with Bianna Golodryga

 On CNN.

A Virtual Teaching Conference

I will be talking at a virtual economics teaching conference on April 11. If you are interested in participating, click here.

Why the dollar is depreciating today

In a previous post, I noted that, other things being equal, trade restrictions strengthen the dollar. A reader asks, why then is the dollar depreciating in the wake of the newly announced Trump tariffs?

The answer, I believe, is that other things are not equal. In particular, the policy has reduced investor confidence in the U.S. economy. That's also why the U.S. stock market is declining relative to stock markets abroad.

The WSJ explains the dollar depreciation as follows:

The dollar’s sharp falls after President Trump’s tariff announcement raises concerns about the risk of a broader confidence crisis, Deutsche Bank’s George Saravelos says in a note. “Developments since the start of the year make us worried about a broader undermining of confidence in the U.S. economic outlook and the medium-term desirability of dollar allocations.” This risks an unwinding of overweight positions in U.S. assets from countries that have exported capital to the U.S. over the past decade.

Are you feeling liberated yet?

I called it

Almost nine years ago, I wrote that I would not support Mr. Trump's candidacy:

Mr. Trump has not laid out a coherent economic worldview, but one recurrent theme is hostility to a free and open system of international trade. From my perspective as an economics policy wonk, that by itself is disqualifying.

And then there are issues of temperament. I am not a psychologist, so I cannot figure out what Mr. Trump's personal demons are. But he does not show the admirable disposition that I saw in previous presidents and presidential candidates I have had the honor to work for.

Sadly, today's announcement about tariffs makes clear that I was right. Welcome to the kakistocracy.

Two of the best international finance economists opine on Trump policy

• Maury Obstfeld
• Jeff Frankel

Might President Trump stumble onto a good policy?

I don't have much faith in the Trump administration's economic policy, but I see one small glimmer of hope. The president plans to announce his new tariff policy on April 2. So far, he has said two things about it. First, the goal is reciprocity. Second, he wants to treat a value-added tax, which most other nations have, as a tariff.

I don't buy either of these arguments. On reciprocity: Why should I shoot myself in the foot just because you shoot yourself in the foot? On the value-added tax, he is just wrong. A value-added tax is a consumption tax, not a trade restriction. (See here.)

But what if these two misguided arguments together lead Trump to propose a value-added tax? 

That would be great. The new tax could finance cuts in other, more distortionary taxes, reduce the budget deficit, or some combination of the two. I have written about the virtues of a value-added tax here and here. 

I know, I am probably engaged in wishful thinking.

America First?

 
From my Harvard colleague Oleg Itskhoki. (Click on image to enlarge.)

A new review of my favorite textbook

 Here or here.

Four good readings about Trump policy

• Andrés Rodríguez-Clare and Arnaud Costinot
• Clifford Winston
• Cliff Asness
• Larry Summers