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Scott Sumner: March 2017

An Author Archive by Month (17 entries)

Two Michigan cities

Entrepreneurialism
Scott Sumner
Tyler Cowen recently quoted from a paper by Ed Glaeser and Wentao Xiong: "In 1961, Benjamin Chinitz argued that New York City was more resilient than Pittsburgh during the 1950s, because New York City had a culture of entrepreneurship that... MORE

The Great Recession, productivity and productivity growth

Growth: Causal Factors
Scott Sumner
The sharp reduction in productivity growth since 2004 is one of the most notable recent trends in macroeconomics. Not surprisingly, some pundits have suggested that this slowdown is linked to the Great Recession. In the most simple business cycle models,... MORE

Stocks did not crash this morning

Finance: stocks, options, etc.
Scott Sumner
The day after Trump won an unexpected election victory, stocks on Wall Street rose modestly. This surprised many people, as previously stocks had done poorly on indications that Trump was doing well in the polls. Some attributed this to "second... MORE

Macroeconomists are often lousy political philosophers. In previous posts I've discussed how macroeconomic views that are considered "liberal" or "conservative" actually have no obvious relationship to those political stances. For instance there's no obvious reason why "using monetary policy" (as... MORE

Robert Frost and liberalism

moral reasoning
Scott Sumner
Robert Frost once said: A liberal is a man too broadminded to take his own side in a quarrel. This seems very clever to me---I wonder what other people think. 1. He may not be using the term "liberal" to... MORE

Interest on reserves and stock prices in 2008

Finance: stocks, options, etc.
Scott Sumner
I did a recent post criticizing Bernanke's defense of paying interest on reserves. This policy was introduced in October 2008, and even the Fed viewed the policy as contractionary in intent. Indeed Susan Woodward and Robert Hall called the Fed's... MORE

Is a falling population contractionary?

Macroeconomics
Scott Sumner
One often comes across articles that suggest Japan faces "headwinds" of a falling population. This is supposed to contribute to falling aggregate demand and deflation. That may be true, but if so it's almost certainly not for the reason that... MORE

Ricardo Reis on price level targeting

Monetary Policy
Scott Sumner
I've devoted much of my life to promoting market-based approaches to monetary policy. To better understand the idea, let's start by assuming the goal is simply a stable price level. Since the value of base money is the inverse of... MORE

A recent Vox post asked 17 experts for their views on the risks posed by artificial intelligence. Bryan Caplan was grouped with those who views might be described as more complacent, or perhaps less complacent, depending on whether you define... MORE

In July 1933, Roosevelt issued an executive order that effectively forced firms to raise nominal hourly wages by 20% in just two months. In the previous 4 months, industrial production had risen by 57%, three times faster than in any... MORE

A dangerous myth about trade deficits

International Macroeconomics: Exchange Rates, International Debt, etc.
Scott Sumner
In the long run trade must balance, in the sense that imports must ultimately be paid for with exports---plus interest. Thus if we buy a billion dollars in laptops from China, we might pay for those goods by exporting $1.5... MORE

Why I favor taxing subsidized goods

Regulation and Subsidies
Scott Sumner
A number of people have asked me why I opposed the repeal of the medical devices tax. Taxes generally create deadweight losses, as they reduce output to a position below the socially optimal level (which is usually the free market... MORE

Initial thoughts on Obamacare 2.0

Economics of Health Care
Scott Sumner
Tyler Cowen directed me to several commentaries on the new GOP health care proposal. My initial impression is mostly negative, as the GOP seems to have avoided tackling the biggest problem in health care, excessive costs due to subsidy and... MORE

Why not both?

Monetary Policy
Scott Sumner
Alexander Schibuola directed me to a recent speech by Fed Vice Chair Stanley Fischer: Committees and rules may appear to be in opposition as approaches to policymaking. One might even argue that if a central bank ever converged on a... MORE

Do checks and balances reduce efficiency?

Political Economy
Scott Sumner
Commenter msgkings recently made the following observation about the factors behind China's rapid growth: China has only one party so they are all working together to get growth (and of course stay in power doing exactly that). In the US... MORE

Two popular views that can't both be right

Macroeconomics
Scott Sumner
There seems to be a consensus that Japan has been stuck in a "liquidity trap" since the 1990s. Here's a typical story, from the Wall Street Journal: Japan remains definitively stuck, despite a long and aggressive experiment with ultralow rates.... MORE

The (developed) world's 4th longest expansion

Macroeconomics
Scott Sumner
As I write this post, Australia just announced 1.1% RGDP in the fourth quarter, and 2.4% over the past 12 months, both higher than expected. Thus once again the "Lucky Country" dodged a recession (GDP had fallen 0.5% in the... MORE

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