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Scott Sumner: February 2017

An Author Archive by Month (17 entries)
Here's Bloomberg: President Donald Trump will select three members of the Federal Reserve board during his term in office, including a replacement chair for Janet Yellen when her appointment expires early next year. He should seize the chance to refresh... MORE

Monetary offset in the UK?

Macroeconomics
Scott Sumner
James Alexander has a new post discussing recent trends in NGDP growth in the UK: UK RGDP saved by accelerating NGDP Unfortunately, the headline is a bit misleading. NGDP (left scale) grew at a 5.0% rate in the first half... MORE

What has Syria ever done for us?

Labor Mobility, Immigration, Outsourcing
Scott Sumner
The Detroit area is a magnet for Muslim immigrants, who are helping to revitalize the city. Here is The Economist: For [Detroit] Mayor Duggan, even a slowdown in his city's depopulation is good news; and he owes it entirely to... MORE

A few predictions (Nothing will change)

International Trade
Scott Sumner
A year from today everything will be much clearer. I'm not sure what will happen, and I'm not much of a forecaster, but I'll take a shot. I think the safest prediction one can make is that nothing will happen,... MORE

Whither the Ex-Im Bank?

International Trade
Scott Sumner
The Ex-Im Bank is often considered a near perfect example of crony capitalism. But the politics of Ex-Im are very messy, perhaps the most confusing and complicated of any issue: 1. Obama opposed Ex-Im as a candidate, and then supported... MORE

Beckworth interviews Eggertsson

Monetary Policy
Scott Sumner
David Beckworth has done a very interesting set of interviews with leading figures in monetary economics and related fields. One of my favorite occurred a few weeks ago when David interviewed Gauti Eggertsson. Eggertsson is a prominent monetary theorist, who... MORE

The lump of labor fallacy

Labor Market
Scott Sumner
Andy Puzder was one of the few Trump appointees that I sort of liked (I say "sort of", because even he had ethical issues.) He was pro-immigration and anti-minimum wage. But in the end even many conservatives opposed him so... MORE

Here's Business Insider: Janet Yellen's warning about low rates causing a recession doesn't make sense Federal Reserve Chair Janet Yellen told Congress this week that the US central bank could cause a recession if it waited too long to raise... MORE

How to think about taxes

Tax Reform
Scott Sumner
Because tax reform is currently in the news, I thought it would be useful to describe what economists know, and don't know, about taxes. I'll start with what we know: 1. Legal tax incidence doesn't matter. If a tax is... MORE

Protectionism is not inflationary

International Macroeconomics: Exchange Rates, International Debt, etc.
Scott Sumner
Protectionism is clearly a bad policy. But it's not bad for the reasons that many people assume. If you put barriers on the import of a specific good, it tends to raise the relative price of that good. But an... MORE

The title of this post covers a lot of ground, but the answer is identical for all three cases. The questions . . . Would it be a good thing if interest rates rose? Would it be a good thing... MORE

The shocking truth about border tax adjustments

International Macroeconomics: Exchange Rates, International Debt, etc.
Scott Sumner
When a country does a currency reform, say exchanging 100 old pesos for 1 new one, it doesn't have major macroeconomic effects. Debt contracts and wage contracts get automatically adjusted in the same way, leaving both types of contracts the... MORE

It seems like hardly a week goes by without me running into another article suggesting that Japan needs to do fiscal stimulus. Today there's one discussing the recommendations of Nobel Laureate Christopher Sims, using the "Fiscal Theory of the Price... MORE

Has President Obama changed the GOP?

Politics and Economics
Scott Sumner
Here's Ramesh Ponnuru: At no point in Obama's presidency did his political success make Republicans consider assimilating some of his views into their philosophy, as Bill Clinton had done with Reaganism. Republicans are even less likely to make such an... MORE

How to identify shocks

Monetary Policy
Scott Sumner
I'm seeing two common mistakes by commenters trying to analyze the Brexit vote shock: 1. Assuming that monetary offset applies to real shocks 2. Assuming that a cut in the BOE's target interest rate represents an easing of policy. It... MORE

Not all macroeconomic problems are recessions

International Trade
Scott Sumner
I recently argued that uncertainty over Brexit did not lead to the recession that many forecasters expected. Actually 'argued' is the wrong term, "pointed out" is more descriptive. But I continue to believe Brexit was a mistake, and that it... MORE

This will probably be my most important post of the year, but I predict that almost no one will pay any attention. Macroeconomics is a deeply flawed field, because it is extremely hard to do controlled experiments. Ideally, you'd like... MORE

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