Macro Issues

image_pdfimage_print

All productivity analyses miss the "wood for the trees"

All economists agree that productivity is very important. It is a remarkable failure of economics that economists understand so little about what causes it to grow, or atrophy. In yet another exhaustive examination Bank of England Chief Economist and MPC Member Andy Haldane again shows how even the most intelligent people continue to miss the wood for

This content is for Free Trial, Individual Subscriber and Corporate Subscriber members only.
Log In Register

The nominal GDP forecast has held north of 4.1% since our last update, though it has not risen with stock prices. This is because stocks are only one input into the system, and other inputs: yield spreads, TIPS spreads, commodities, have held steady or even retreated somewhat. Bond spreads that compare a short maturity to

This content is for Free Trial, Individual Subscriber and Corporate Subscriber members only.
Log In Register

Cashhoardus Americanus

The old style, Milton Friedman monetary analysis proved a reliable and straightforward way of understanding macroeconomic movements. The basic idea was you looked at changes in the M2 money supply (basically everything you think of when you ask someone “how much readily available money do you have?) and used that to forecast near-term inflation and

This content is for Free Trial, Individual Subscriber and Corporate Subscriber members only.
Log In Register

Irish lessons in GDP accounting and GDP per capita

Many times, it has been argued that you cannot assess the nominal growth of the economy by looking at one sector or one region within a monetary bloc. And this is correct. Money gets everywhere inside the monetary bloc, accounting for half of all transactions – by definition. The same goes for inflation, which cannot

This content is for Free Trial, Individual Subscriber and Corporate Subscriber members only.
Log In Register

Inflation has become a mystery!

From the WSJ: No number is more important for investors right now than inflation. The belief that it will continue to rise underpins the recent rally in financial stocks and the slump in government bonds. It is key to commodities, currencies and more. Yet investors are in a quandary: Theories used to forecast it just

This content is for Free Trial, Individual Subscriber and Corporate Subscriber members only.
Log In Register

93 months and climbing, already bronze medalist

This is already the third longest expansion on record, surpassing the 92-month expansion of the 1980s and only  lagging behind the 106-month expansion of the 1960s and the 120-month expansion of the 1990s. Why, then, all the unhappiness? The major reason, I think, is that this expansion was not preceded by a recovery.  The “natural

This content is for Free Trial, Individual Subscriber and Corporate Subscriber members only.
Log In Register

How to make the economy look good so monetary policymakers can “get a license to kill”

The concept of economic potential is key to the making of monetary policy. When there is a large positive gap – the difference between potential and actual output – the economy is in a recession. Such a situation requires monetary stimulus to trigger a recovery, i.e., the closing of the gap. The chart illustrates The

This content is for Free Trial, Individual Subscriber and Corporate Subscriber members only.
Log In Register

EZ Q4 NGDP growth flat, though Germany "dangerously" accelerates in Q4 QoQ

As usual, we have a long wait for the EuroZone NGDP data to be released. We do get some large countries reporting and can use them to estimate for the whole of the monetary bloc. We also get Germany’s data and that is very important due to its 30% economic weight and nearly 50% moral

This content is for Free Trial, Individual Subscriber and Corporate Subscriber members only.
Log In Register

Equity rally led by investors piling into banks: likely wrong move

Investors adding new money to the market and to the bank sector in particular, drive the current rally in US equities. Two reasons: deregulation and higher interest rates. We have discussed the deregulation issue already, creating a longer-term risk to the economy, as investment banks can now play chicken with the Fed all over again, and

This content is for Free Trial, Individual Subscriber and Corporate Subscriber members only.
Log In Register

Bank of Canada Triples down on inflation targeting

In “Getting to the Core of Inflation” we read: Over the past 26 years, we have reduced consumer price index (CPI) inflation and maintained it at a level close to our 2 per cent target, with no persistent episodes of inflation outside our inflation-control range of 1 to 3 per cent. Because inflation has been low,

This content is for Free Trial, Individual Subscriber and Corporate Subscriber members only.
Log In Register