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Scott Sumner: December 2016

An Author Archive by Month (21 entries)

Gary Cohn on the Chinese currency

International Macroeconomics: Exchange Rates, International Debt, etc.
Scott Sumner
Tyler Cowen recently linked to an interview of Gary Cohn, who will be Trump's top economic advisor: The Chinese have taken multidecade views on what they're doing. They built up their surplus capital account over many, many years. It is... MORE

Growth, or jobs for Americans?

Growth: Causal Factors
Scott Sumner
The New York Times has a good article on the trade-off between growth and jobs (a theme I have repeatedly discussed): Donald J. Trump wants us to dream bigger about the economic future. We shouldn't be content with the roughly... MORE

Never reason from an exchange rate change

International Macroeconomics: Exchange Rates, International Debt, etc.
Scott Sumner
Suppose I had a crystal ball and saw one year into the future. At that time, the Japanese yen and the Brazilian real had both depreciated by 15% in the foreign exchange market. What would that tell me? At one... MORE

The Texas magnet

Energy, Environment, Resources
Scott Sumner
Two years ago, the New Orleans Pelicans NBA team seemed to have a bright future: The Pelicans, the team that had just hired Gentry as head coach, played the Warriors closer than their four-game, first-round sweep that season would suggest.... MORE

Economics is held in low repute

International Macroeconomics: Exchange Rates, International Debt, etc.
Scott Sumner
Matt Yglesias has an excellent post discussing the views of Peter Navarro, who was just named head of Trump's National Trade Council: "When net exports are negative," Ross and Navarro write, "that is, when a country runs a trade deficit... MORE

Did monetary offset cause the Great Recession?

Monetary Policy
Scott Sumner
In the past, I've argued that tight money caused the Great Recession. But what caused the tight money? One answer is too much weight placed on inflation targeting, combined with a backward-looking approach to inflation. Consumer price inflation was quite... MORE

India's money shortage

Money
Scott Sumner
Both old monetarists and market monetarists like to describe recessions in terms of a "shortage of money", caused by either a drop in the money supply or an increase in money demand. In this view, the focus is on money... MORE

What do markets tell us about US Presidents?

Efficient Markets Hypothesis
Scott Sumner
In my comment sections I see a lot of speculation about the rising stock market, and what it's telling us about the policies of the next administration. I'm on record as strongly favoring the use of market indicators to evaluate... MORE

Nick Rowe and I have fairly similar views on what's right and what's wrong with Neo-Fisherism. Recall that Neo-Fisherism is the view that shifting to a policy of higher nominal interest rates will lead to higher inflation, especially if the... MORE

The Fed has a mandate to stabilize prices and provide for high employment. The Fed interprets that mandate as calling for 2% PCE inflation and an unemployment rate close to the natural rate. Tim Duy points out that the unemployment... MORE

I've expressed a lot of frustration with the way that pundits have been ignoring monetary offset. Thus it's worth praising one who does not. Here's Matt Yglesias: Indeed, Fed officials are signaling clearly that more stimulus will mean more rate... MORE

Automation and trade

International Trade
Scott Sumner
I've been arguing that the problems often attributed to trade are more likely due to automation. Indeed in a sense both trends are two sides of the same coin --- creative destruction. It might help to make this point with... MORE

An open letter to America's CEOs

Cost-benefit Analysis
Scott Sumner
Dear CEOs, You may face a decision about whether to locate a new factory in America or Mexico. In the past, either location gave you an option of later moving production to the opposite country. It appears that option is... MORE

The Mercatus Center has a new colloquium on the current low interest rate environment, and the implications of higher rates in the future. My contribution discusses four possible ways that interest rates might rise: 1. Tighter money 2. Easier money... MORE

Noah Smith linked to the following recent paper in the AER, by Justin R Pierce and Peter K. Shott. : Abstract: This paper links the sharp drop in US manufacturing employment after 2000 to a change in US trade policy... MORE

Automation destroyed 20 million manufacturing jobs

International Trade
Scott Sumner
I am becoming increasingly frustrated by all the articles I'm reading about how trade is supposedly decimating jobs in US manufacturing. I went to the FRED data set, and they have manufacturing output (real) going back to the first quarter... MORE

What caused the 1974 recession?

Macroeconomics
Scott Sumner
A commenter named Captain Parker recently left this comment: Ok, so, inflation is a monetary phenomenon and Burns should take the blame. This I believe. Yay Milton Friedman. But if you look at '72 through '76 you would conclude Burns... MORE

Should Arthur Burns be rehabilitated?

Monetary Policy
Scott Sumner
In the history of American central banking, Arthur Burns (1970-78) and G. William Miller (1978-79) are often viewed as villains, largely responsible for the Great Inflation. (Although Martin (1951-70) was the one who got the ball rolling.) A new paper... MORE

The Carrier scandal

Politics and Economics
Scott Sumner
Here's Larry Summers on the recent Carrier fiasco: Market economies can operate anywhere along a continuum between two poles. I have always thought of American capitalism as dominantly rule and law based. Courts enforce contracts and property rights in ways... MORE

Who will save China's rust belt?

Industrial Organization
Scott Sumner
Now that Trump has decided to save America's rust belt, I thought it would be interesting to look at the issues facing China's rust belt. Here is the Financial Times: North-eastern China is facing a demographic crisis as educated millennials... MORE

What kind of inflation hurts the public?

Monetary Policy
Scott Sumner
I recently participated on a panel in London, discussing options for monetary and fiscal policy. At one point I mentioned that if the Japanese didn't want such a large central bank balance sheet, then they ought to set a higher... MORE

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