Short essays on the economic issues of the day written for a generally informed readership.
2012, No. 34
The Fiscal Cliff in Context
Federal revenue is currently well below its postwar, pre-crisis average, while expenditure is well above, with both factors contributing to a large and persistent deficit. Under current law, the deficit situation would be quickly, if painfully, resolved, with the lion’s share resulting from increased tax revenue.
2012, No. 31
How Can QE3 Affect the Housing Market?
The Fed’s concern for housing is a relatively new phenomenon. Historically, house price bubbles have been localized and affected only areas with rapid growth. The latest housing bust, however, was a nationwide problem with important ramifications for employment and economic activity.
2012, No. 23
The Efficacy of the FOMC’s Zero Interest Rate Policy
If investment spending is sufficiently insensitive to interest rate changes
and the effect of Fed actions on interest rates is sufficiently weak, the net effect of the persistent zero interest rate policy could be negative.
2012, No. 17
Reducing the U.S. Deficit by Recycling Capital Inflows
The United States can simply recycle the financial capital inflows from China and re-export them back to China in the form of FDI. In so doing, the United States gains a substantially larger rate of return from FDI than China does from owning U.S. government bonds.
2012, No. 9
The FOMC: Transparency Achieved?
Greater transparency is a means to better synchronize the public with policymakers and minimize the risks of undesirable economic outcomes.
2012, No. 8
Speculation in the Oil Market
Disentangling the true drivers of oil prices is a critical first step for allocating resources and designing good policy.
2012, No. 6
The Mysterious Greek Yield Curve
The hump in the Greek yield curve exists because the calculated yields assume that the bonds will pay off at their full value but market prices incorporate expectations that the payoff will be much lower.