With lower than potential growth, US unemployment could move to 10.1%

San Fransisco Fed research continues to show concerns for US economy. In previous paper they said it looks like there will be a jobless recovery. The reason was high productivity which is expected to remain.

Now in another research note, David Lang and Kevin J. Lansing forecast US growth and unemployment. They use the business cycle indicators produced by the Chicago and Philadelphia Federal Reserve Banks to predict growth for 2011 and H1 2012. And then use Okun law relationship to predict unemployment.

Words of wisdom from Bank of Japan

There are some excellent speeches from BoJ Governor Masaki Shirakawa recently.

1. “Uniqueness or Similarity? — Japan’s Post-Bubble Experience in Monetary Policy Studies –”
   Keynote Address at Second IJCB Fall Conference hosted by the Institute for Monetary and Economic Studies 
2. “Roles for a Central Bank — Based on Japan’s Experience of the Bubble, the Financial Crisis, and Deflation –”
   Speech at the 2010 Fall Meeting of the Japan Society of Monetary Economics

Why do sovereigns repay their debt?

IMF Sep-10  Research Bulletin has interesting discussions as always.  

The one on sovereign debt and default is very interesting. It is written by Emine Boz of IMF.

Do Large-Scale Asset Purchases impact inflation expectations?

Yes they do. The impact is not much but still it has some powers to raise inflation expectations.

Economics = Economic science + economic engineering + economic management

One thing which I really miss in this crisis is the speeches by Bernanke (especially be Bernanke) where he explained key economic concepts and policies. Earlier such speeches were pretty common. Now they are rare (very rare) with most speeches on economic outlook and crisis.

Ok so this is one such rare speech. He speaks at Princeton University (his homeground) and talks like a professor (and not Chairman Bernanke). He says:

And how Europe policymakers saved EMU from a collapse?

After pointing an article on how India avoided the crisis, let us look at another article. This one looks at how European policymakers  averted what could be a full blown global crisis.

How India’s policymakers saved India from this global crisis

P. Vaidyanathan Iyer of Indian Express has this very interesting story on the topic. He explains how Indian policymakers got together to save India. It looked very bad in the beginning around October-2008 and then condition improved slowly.

Do foreign interest rates matter in home central bank decisions?

Though John Taylor’s some ideas may not be acceptable to a few (including me), his blog is just wonderful. He comes with really interesting posts and articles.

In his recent post he looks at whether the impact of  foreign interest rates matter in central bank decisions. The focus is on this crisis but it could be applied generally as well. He points to examples of Norway and Sweden where foreign interest rates  matter greatly:

A note on US productivity

Daniel Wilson of FRBSF has a nice note on the topic:

Political economy of infrastructure spending in India

Stuti Khemani of World Bank has this very interesting paper on the topic.

Professor Bernanke vs Central Banker Bernanke

This evolution of Bernanke from a Professor to a Central Banker is very interesting. It is as interesting as tracking developments in ongoing debates on monetary policy and all other economic topics.

Time has come for general road tolls on all roads across all of Europe

Hans-Werner Sinn, Professor of Economics and Public Finance at the University of Munich writes on the topic.

Did France cause the Great Depression?

There is an intriguing paper by Douglas Irvin on the topic. Voxeu has a nice summary (one of the best things to have happened on web for economics students- voxeu. Most economists use it to summarise key papers/thoughts/ideas etc)).

He says:

Mohd Yunus vs Vikram Akula — Should microfinance mean profiting from the poor?

Smit Gade a student at IGIDR sends me this interesting debate between Mohd Yunus and Vikram Akula (via Megha Bahree‘s Blog).

Here is the entire discussion:

Inflation measurement issues in India

G V Nadhanael and Sitikantha Pattanaik of RBI have written an insightful paper on the issue. It is an excellent primer on inflation. If there is someone who wants to understand inflation issues in India and has to read one paper, this one is just right. Though this study came a while ago, I am just pointing in case some people have not read it.

How has the crisis changed the teaching of economics?

There is an excellent discussion on Economist on this topic.

Number of economists chip in - Hal Varian, Tyler Cowen, Alberto Alesina, Michael Bordo etc. Two broad ideas emerge which need to be included in economics – One economic history and two basic concepts of finance.

Assorted links

There are a couple of interesting links :

• Tyler Cowen suggests Fed should adopt a inflation target of 3% which will then help in faster recovery of US economy. Once Fed says it will keep expanding money supply till inflation reaches 3%, then people might just begin spending rather than just hoard.
• Krugman says US should not bother if China keepinstops buying US Treasuries
• Shiller says knowing economic history and behavioral economics is important to understand crises
• Jeff Frankel looks at main questions asked from NBER as it said recession ended in June 2009.
• Economists debate whether the recession has ended? Superb stuff this with most saying we are still stuck in recessionary conditions

 

Taylor revisits Japan’s intervention in forex markets

Japan is intervening in currency market to prevent appreciation of Yen. This is done by buying US Dollars and selling Japanese Yen. There is an interesting development thatUS need not worry that Chinese will stop buying US Treasuries. Now with Japan buying USD there are high chances that the USD would also be deployed in US Treasuries.

Interestingly, Japan did that in 2002 as well. John Taylor  was U.S. Treasury Under Secretary for International Affairs. He recounts the experiences then.

How US economic policy changed post 1950s?

Though this is an old paper and must have been read by most, still those who have not should read it.

Christina Romer writes on the changes in thoughts in US economic policymaking from 1950 onwards.

The Budgetary Impact of Fannie Mae and Freddie Mac

Here is an interesting CBO short note on the topic. It also explains the various mehthodologies used by CBO to estimate the impact.

Other useful speeches:

• Fiscal Policy Choices in Uncertain Times an interesting speech by CBO Director Doug Elmendorf
• Monetary policy after the financial crisis, speech by Lars Svensson
• Bundesbank Lecture 2010: The Economic Consequences of the Reforms” by Mark Carney, Governor of the Bank of Canada
• “Restoring Faith in the International Monetary System” by Mark Carney, Governor of the Bank of Canada
• The Development of Asia: Risk and Returns for Australia by Philip Lowe, Assistant Governor (Economic), Reserve Bank of Australia