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Scott Sumner: June 2017

An Author Archive by Month (15 entries)

My views on monetary economics

Monetary Policy
Scott Sumner
In this post, I'll use "(e)" to denote a (market) expected value. 1. NGDP(e) is the single most important variable in macro; it should be the centerpiece of modern macro. Unfortunately, it often doesn't even appear in models. 2. NGDP(e)... MORE

How should we measure productivity?

Productivity, Baumol's cost disease
Scott Sumner
The Financial Times has an article claiming that Japanese construction workers are far more productive than American workers. But the data they provide seems to suggest the exact opposite: Reality is the other way around. Despite radically different demographics and... MORE

Nominal exchange rates, real exchange rates and protectionism

International Macroeconomics: Exchange Rates, International Debt, etc.
Scott Sumner
The three concepts mentioned in the title of the post are completely unrelated to each other. So unrelated that the subjects ought not even be taught in the same course. The nominal exchange rate is a monetary concept. Real exchange... MORE

What's causing the low inflation?

Macroeconomics
Scott Sumner
This article caught my eye: When online retail giant Amazon.com Inc. announced last Friday that it would purchase Whole Foods Market Inc., a plunge in retail and grocery stocks reinforced the disinflationary tone set by three straight months of... MORE

Immigration and growth

Labor Mobility, Immigration, Outsourcing
Scott Sumner
There are some indications that the immigration crackdown may slow economic growth: AUSTIN, Texas (AP) -- Though construction is in high demand in Texas' booming capital city, Oscar Martinez's drywall company is suddenly struggling. One-third of the approximately 20 employees... MORE

How much did poverty rise under Reagan?

Income Distribution
Scott Sumner
This is from a Jeff Madrick article on poverty in America, in the New York Review of Books: The poverty rate has been as low as 11.1 percent, in the 1970s; it rose under Ronald Reagan to approximately 15 percent... MORE

Larry Summers, market monetarist?

Monetary Policy
Scott Sumner
Not quite there yet, but getting very close. Let's take a look at his new Financial Times piece: Many of my friends have recently issued a statement asserting that the Fed should change its inflation target. I suspect, for reasons... MORE

In previous comment sections, I've seen a lot of confusion over the concept of "monopsony power", which means the buyer can influence the price of what they buy. It is the buyer side equivalent of sellers having "monopoly power". Many... MORE

The Fed needs a new "theory"

Monetary Policy
Scott Sumner
Caroline Baum directed me to a WSJ article on the Fed. It begins as follows: The Federal Reserve's interest-rate increases aren't having the desired effect of cooling off Wall Street's hot streak. That's already got me worried, as "Wall Street"... MORE

Does tribalism breed extremism?

Politics and Economics
Scott Sumner
Imagine that 80% of voters prefer normal sensible candidates, and 20% prefer wild extremists. Who would come out ahead under a democratic system of government? It might seem like the sensible candidates had the advantage. And that was certainly the... MORE

The WSJ on the German trade surplus

International Macroeconomics: Exchange Rates, International Debt, etc.
Scott Sumner
Ramesh Ponnuru directed me to a couple of Wall Street Journal pieces on the German trade surplus. The first, by Greg Ip, argues that President Trump was partly correct in pointing to this as a problem: President Donald Trump took... MORE

David Beckworth has a new post discussing the implications of declining interstate mobility for whether or not America is an optimal currency area. Adam Ozimek has a post suggesting that lower labor mobility might imply a need for additional monetary... MORE

Real and nominal shocks

Macroeconomics
Scott Sumner
Last July, Arnold Kling made the following observations: Tyler Cowen on Brexit, Steven Pinker, and Joseph McCarthy Posted on July 22, 2016 by Arnold Kling And also other topics. The link goes to a Twitter post with a video. Judge... MORE

Two new picks for the Fed?

Finance
Scott Sumner
The NYT reports that President Trump is about to nominate two people for the Board of Governors: The Trump administration has selected candidates for at least two of the three open positions on the Federal Reserve's Board of Governors, according... MORE

Imagine a banking system where the public would lend money to the Treasury at X% interest, and the Treasury would then lend the same funds to commercial banks at the same X% interest rate. All bank deposits were held by... MORE

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