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Today the House Financial Services Subcommittee on Oversight and Investigations held a hearing on whether the Orderly Liquidation Authority (OLA) in Title II of the Dodd Frank Act has reduced the likelihood of bailouts of large financial firms. I was one of the witnesses. Here is a summary of my 5 minute opening statement. More details are in m…
Rumors are flying around that the World Bank will water down or even abandon its ten-year old Doing Business series which measures the extent and quality of pro-growth economic policies in individual countries round the world. A committee has been set up by World Bank president Jim Yong Kim to review the series. People are naturally writing and…
The updated charts below incorporate last Friday’s release of the first quarter GDP data. They continue to tell the story of a weak recovery which, in my view, is largely due to ineffective government policy interventions. There is, of course, an alternative view: that the recovery is weak because the recession and the financial crisis …
I’ve been speaking a lot about monetary policy recently:- Testifying at the Joint Economic Committee (JEC) last week- Delivering a dinner speech at the Atlanta Fed the week before that- Giving remarks at Mervyn King’s farewell conference on a policy panel in London- Testifying at a House hearing on monetary policy last monthIn each venu…
The discovery of errors in the Reinhart-Rogoff paper on the growth-debt nexus is already impacting policy. A participant in last Friday’s G20 meetings told me that the error was a factor in the decision to omit specific deficit or debt-to-GDP targets in the G20 communique. It’s also a new talking point in the battle over the budget—offere…
Paul Krugman commented early this morning on the Wall Street Journal oped by John Cogan and me. Our oped is based on our research paper with Volker Wieland and Maik Wolters which shows that there are beneficial effects on the economy—in the long run and the short run—of a ten-year program to reduce the budget deficit, and eventually ba…
In talks about my book First Principles I argue that shifts toward and away from the principles of economic freedom have had profound effects on economic performance. From the mid-1960s through the 1970s, deviations away from economic freedom were large, economic policy was bad, and economic performance was poor with rising unemployment and inf…
It is good news that we now have both House and Senate budget proposals for FY 2014 to compare and contrast. This is a first step back toward old-fashioned regular budget order which will help get the country off of management by crisis, whether by debt limits, fiscal cliffs, sequesters, or continuing resolutions. Regular order also gives us al…
Scare stories about the automatic reduction in federal spending to start on March 1—commonly called the sequester—fall mainly into two categories. First are the concerns that reducing every discretionary budget account by the same percentage—the “meat-axe” approach—would not allow government agencies to prioritize. Hence the scare s…
When the recovery was getting started I pointed out the remarkably strong inverse relationship between fixed investment as a share of GDP and the unemployment rate, and argued that a policy that focused on getting businesses to invest more would help get the unemployment rate down. The additional data from the past several years gives us a chance to …
The data released last week generated a lot of news stories, first bad ones about the GDP numbers and then good ones about the employment numbers. When you put the numbers in perspective, however, the economic story is little changed from what we have been experiencing for several years now: a continued weak economic recovery.If you average out …
In his inaugural address, President Obama said that “An economic recovery has begun.” It was an applause line. The line is correct of course, but it is really nothing to applaud. As economists define it, the recovery began nearly four years ago when the 2007-2009 recession ended in June 2009. So we have had a recovery for most of the …
The recent debate about the debt limit focuses on the negative economic impact of a decision by the government not to increase the debt limit. That’s why President Obama says he is asking for clean debt limit increase—one not linked to spending reductions, saying that a default would cause economic harm, and that we should not play chicken with t…
The election is over, the fiscal cliff is over, and the problems remain.For the past several years on this blog I have been showing simple charts to monitor progress—or lack of progress—on the persistent deficit and the growing debt, which in my view are impediments to returning to strong economic growth. Unfortunately neither the election nor th…
. . . or are they the shadows of things that May be, only?But if the courses be departed from, the ends will change. So go back to First Principles, 102ff
Five years ago this month the Great Moderation ended. To be precise December 2007 is the month that the NBER business cycle dating committee designated as the peak of the third and final expansion of the Great Moderation and the beginning of the Great Recession.Hundreds of research papers have been written on the nature and causes of the Great Modera…
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