Thursday, October 22

Economics

Economics

A Reminder: The Advance Estimate of Q2 GDP Growth Is…an Estimate
Economics

A Reminder: The Advance Estimate of Q2 GDP Growth Is…an Estimate

For instance, Goldman Sachs presents two forecasts for Q2 growth (SAAR): one for advance, and one for final. As of 7/19, the forecast of the advance release was -29.0%, and final was -33.0% (Seasonally Adjusted at Annual Rates, SAAR). Something to remember when contemplating the near future. Figure 1: Real GDP (bn Ch.2012$, SAAR) (black line),  potential GDP CBO estimate from July 2020 (gray line), from January 2020 (chartreuse line), HP filter (pink line), and CBO July 2020 projection (red line). Source: BEA, GDP 2020Q1 3rd release, and CBO, An Update of the Economic Outlook (July 2020), [data], Budget and Economic Outlook (January 2020), and author’s calculations. In other words, not only is potential GDP an estimate; so too, to varying degrees, are all the GDP figures assoc...
Hummel on Posner and Garrison on Keynes
Economics

Hummel on Posner and Garrison on Keynes

I followed a recent email discussion about Judge Richard Posner’s 2009 article in the New Republic in which he tried to revive John Maynard Keynes‘s contributions to macroeconomic understanding. Jeff Hummel, as per usual, had some cogent comments: I read this and found it somewhat interesting. Posner does a fairly good job explicating Keynes’s General Theory (although I think I did a more persuasive job of making Keynes’s theories plausible when I taught intermediate and graduate macro). But except for Posner’s complaints about mathematics and his emphasizing the distinction between risk and uncertainly, I think he was quite unfair to mainstream economists. Posner is obviously grossly unfamiliar with the actual views of mainstream macroeconomists . F...
Flintstones Without the Nice Tune
Economics

Flintstones Without the Nice Tune

I just finished watching an excellent 45-minute discussion led by my Hoover colleague Scott Atlas. The two participants he questioned were Hoover colleagues Russ Roberts and Ayaan Hirsi Ali. The topic was Hoover’s Human Prosperity Project and both had a lot of great insights and great lines. Among the lines that stood out was one from Ali. If I remember correctly, she said it in the context of her story about growing up in Somalia and seeing her mother lining up for food for hours after Somalia went the socialist route under Siad Barre. She explained that whereas socialism is utopian and aims at nice goals like equality and prosperity for everyone, it ends up as “The Flintstones without the nice tune.”
The European Union, Italy writ large
Economics

The European Union, Italy writ large

  It has been called Europe’s “Hamiltonian moment.” It’s true that for the first time the EU has seen a common issuance of debt. As the Wall Street Journal summarizes: On Tuesday European Union leaders agreed to a recovery plan funded by the bloc’s first major issuance of common debt, and some are calling it a historic moment for the Continent’s political and fiscal integration. This is a significant development, but don’t hold your breath for a United States of Europe. The EU announced €1.8 trillion in spending to address the pandemic-induced economic contraction, with more than €1 trillion going to the bloc’s seven-year budget. The European Commission also will borrow on capital markets for a €750 billion recovery package. Some €390 billion of t...
Footloose, Fancy-Free, and Failing
Economics

Footloose, Fancy-Free, and Failing

Systemic racism. Cancel culture. Police brutality. Tumbling statues. We hear about these everywhere and all the time today. Should this make us optimistic or pessimistic about America’s future? In this episode, EconTalk host Russ Roberts welcomes economist and author Glenn Loury to discuss race and inequality in America today. This lively conversation covers these issues and more. We are eager to continue the conversation with you, our loyal listeners. Please use the prompts below to join our discussion here at EconTalk, or use them to start a conversation of your own offline. These matters could not be more significant today.     1- The conversation begins with Roberts asking Loury if the “persisting subordinate position of blacks” in America is...
Covid Mortality Rates by Country
Economics

Covid Mortality Rates by Country

Source: Johns Hopkins University   For the twenty countries currently most affected by COVID-19 worldwide, the bars in the chart above show the number of deaths per 100,000 population (this represents a country’s general population, with both confirmed cases and healthy people). Countries at the top of this figure have the most deaths proportionally to their COVID-19 cases or population, not necessarily the most deaths overall. You can also see a full table of  Johns Hopkins’ Cases and mortality by country here.      
10 Wednesday AM Reads
Economics

10 Wednesday AM Reads

My mid-week morning train WFH reads: • The S&P 500 Grows Ever More Concentrated: Does this bode well for small-value stocks? (Morningstar)• Residential real estate is a solid a portfolio diversifier: Look what happened to home prices when the coronavirus sent stocks into a bear market (Marketwatch)• Should Universities Spend More From Their Endowments? During the virus-driven recession, universities are wrestling with whether they should dip deeper into their endowments. The short answer seems to be no. (Chief Investment Officer)• Frackers Are in Crisis, Endangering America’s Energy Renaissance: Even before the pandemic, West Texas was reeling and Wall Street was running out of patience with the industry. (Businessweek)• In Electric Car Market, It’s Tesla and a Jumbled Field of Also...
MMTed Q&A – Episode 8
Economics

MMTed Q&A – Episode 8

Here is Episode 7 in our weekly MMTed Q&A series. In this episode, my special guest was Warren Mosler. We talked about the difference between issuing bonds and overt monetary financing, and issues related to those concepts and practices. And when your done with that you can enjoy some great Latin Jazz from the Monterey Peninsular – from 1959 (a good vintage). MMTed Q&A – Episode 8 This is Episode 8 in the MMTed Q&A series. This week, my special guest was Warren Mosler, one of the founders of MMT. We talked about the difference between issuing bonds and overt monetary financing, and issues related to those concepts and practices. The video goes for 6.55 minutes. Note the discussion is mostly via Zoom, which means at time the audio and video quality is less than firs...
MMTed Q&A – Episode 8
Economics

MMTed Q&A – Episode 8

Here is Episode 7 in our weekly MMTed Q&A series. In this episode, my special guest was Warren Mosler. We talked about the difference between issuing bonds and overt monetary financing, and issues related to those concepts and practices. And when your done with that you can enjoy some great Latin Jazz from the Monterey Peninsular – from 1959 (a good vintage). MMTed Q&A – Episode 8 This is Episode 8 in the MMTed Q&A series. This week, my special guest was Warren Mosler, one of the founders of MMT. We talked about the difference between issuing bonds and overt monetary financing, and issues related to those concepts and practices. The video goes for 6.55 minutes. Note the discussion is mostly via Zoom, which means at time the audio and video quality is less than firs...
Trump Didn’t Have To
Economics

Trump Didn’t Have To

Another way many of us think unclearly is by going through life with a list of made-up obligations. We wake up in the morning with a long list of “must do” items. After a while, our feet start dragging and we feel a heavy burden on our shoulders. But we “must” press on. Such phony obligations get in the way of clear thinking. There is very little in the world that we actually must do. Let’s face it, unless we are in jail or otherwise detained, we have complete freedom about how to spend our day. The reason we don’t just pack up and go sit on the beach every day is that our actions lead to outcomes—and many of our “have to’s” give us the outcomes we want. Going to work, for example, provides camaraderie and a feeling of importance, as well as the money to buy ...