Tag Archives: budget

America, the Balanced

When the United States’ current account fell into deficit in 1982, the US Council of Economic Advisers accurately predicted record deficits for years to come, owing to budget deficits, a low national saving rate, and an overvalued dollar. If the US did … Continue reading

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Is the US Economy Really About to Go Boom?

Politico asked 8 of us for a prognosis on US growth in the new year. This was my response – Something important will get better in 2014: Fiscal policy will stop hurting the economy. The results should show up as expansion … Continue reading

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Will Financial Markets Crash Before October 17, or After?

October 4 is the first Friday of the month, the day when the Bureau of Labor Statistics routinely reports the jobs numbers for the preceding month.   Is the havoc created by our current political deadlock over fiscal policy showing up as … Continue reading

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Japan’s Consumption Tax: Take it Slow and Steady

Japan’s consumption tax rate is scheduled to increase substantially in April (from 5% to 8%).  The motive is to address the long-term problem of very high debt.  (Takatoshi Ito has stated the case in favor of the tax increase.)  Prime Minister … Continue reading

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Recent Jobs & Growth Numbers: Good or Bad?

This morning’s US employment report shows that July was the 34th consecutive month of job increases.   Earlier in the week, the Commerce Department report showed that the 2nd quarter was the 16th consecutive quarter of positive GDP growth.   Of course, the growth … Continue reading

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Does Debt Matter?

“Does Debt Matter?” is the question posed by The International Economy to 20 commentators: “The recent scrutiny of the popularized version of the Rogoff-Reinhart thesis (that growth plummets when debt exceeds 90 percent of GDP) makes clear there are no … Continue reading

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On Whose Research is the Case for Austerity Mistakenly Based?

Several of my colleagues on the Harvard faculty have recently been casualties in the cross-fire between fiscal austerians and stimulators.   Economists Carmen Reinhart and Ken Rogoff have received an unbelievable amount of press attention, ever since they were discovered by … Continue reading

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McKinnon’s Claim that RMB-$ Appreciation Would Not Reduce Trade Imbalances

The International Economy magazine (Winter 2013) asks 16 authorities, “Can Changes in Exchange Rate Valuations Affect Trade Imbalances?“   It is referring to the claim in a recent book by Stanford economist Ron McKinnon that pressure on China to let the renminbi … Continue reading

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Can the Euro’s Fiscal Compact Cut Deficit Bias?

Europe’s fiscal compact went into effect January 1, as a result of its ratification December 21 by the 12th country, Finland, a year after German Chancellor Angela Merkel prodded eurozone leaders into agreement.   The compact (technically called the Treaty on Stability, … Continue reading

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Monetary Alchemy, Fiscal Science

The year 2013 marks the 100th anniversaries of two separate major institutional innovations in American economic policy:  the Constitutional Amendment enacting the federal income tax, ratified on February 3, 1913, and the law establishing the Federal Reserve, passed in December 1913. … Continue reading

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