An Open Letter from 1,470 Economistson Immigration
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Exchange Rate Policies
Exchange Rate Policies Charles Engel Department of Economics, University of Wisconsin Research Associate, National Bureau of Economic Research Senior Fellow, Globalization and Monetary Policy Institute, Federal Reserve Bank of Dallas July 28, 2009 Email: [email protected]. Address: Department of Economics, 1180 Observatory Drive, University of Wisconsin, Madison, WI 53706-1393, USA. This note was prepared as background for the wrap-up conferences of the BIS Asian research programme, The International Financial Crisis and Policy Challenges in Asia and the Pacific, in Shanghai, 6-8 August 2009. I acknowledge support for my research from the Duisenberg Fellowship at the European Central Bank, and from the National Science Foundation under grant #MSN121092. A debate has continued over many years on the desirable degree of foreign exchange rate flexibility. One side of the debate has sometimes made the case that the exchange rate should be freely determined by market forces, independently of any foreign exchange intervention or targeting by central bank monetary policy. This argument takes the stance that the market can best determine the appropriate level of the exchange rate. From the standpoint of modern macroeconomics, particularly from the view of New Keynesian economics, that stance is potentially self-contradictory. Markets are able to achieve efficient, welfare-maximizing outcomes when they operate without distortions – that is, when markets are competitive and prices adjust instantly to reflect underlying costs. But in such a world, the nominal exchange rate regime is of no consequence in determining the real allocation of resources. The real exchange rate (the consumer price level in one country compared to the level in another country, expressed in a common currency) and the terms of trade (the price of a country’s imports relative to its exports) could adjust freely to efficient levels under a floating nominal exchange rate regime, a managed float or even a fixed exchange rate regime if goods markets were perfectly efficient. -
A Monetary History of the United States, 1867-1960’
JOURNALOF Monetary ECONOMICS ELSEVIER Journal of Monetary Economics 34 (I 994) 5- 16 Review of Milton Friedman and Anna J. Schwartz’s ‘A monetary history of the United States, 1867-1960’ Robert E. Lucas, Jr. Department qf Economics, University of Chicago, Chicago, IL 60637, USA (Received October 1993; final version received December 1993) Key words: Monetary history; Monetary policy JEL classijcation: E5; B22 A contribution to monetary economics reviewed again after 30 years - quite an occasion! Keynes’s General Theory has certainly had reappraisals on many anniversaries, and perhaps Patinkin’s Money, Interest and Prices. I cannot think of any others. Milton Friedman and Anna Schwartz’s A Monetary History qf the United States has become a classic. People are even beginning to quote from it out of context in support of views entirely different from any advanced in the book, echoing the compliment - if that is what it is - so often paid to Keynes. Why do people still read and cite A Monetary History? One reason, certainly, is its beautiful time series on the money supply and its components, extended back to 1867, painstakingly documented and conveniently presented. Such a gift to the profession merits a long life, perhaps even immortality. But I think it is clear that A Monetary History is much more than a collection of useful time series. The book played an important - perhaps even decisive - role in the 1960s’ debates over stabilization policy between Keynesians and monetarists. It organ- ized nearly a century of U.S. macroeconomic evidence in a way that has had great influence on subsequent statistical and theoretical research. -
Laura Tyson the Highest Ranked Woman in the Clinton White
Laura Tyson 1 The highest ranked woman in the Clinton White House, Laura Tyson was the president's national economic advisor from 1993-1995. She is currently dean of the London Business School in England. Tyson discusses her experiences in the Clinton administration, views on international trade, and the impact of technology on the global economy. The Clinton Campaign INTERVIEWER: How did you become head of the Council of Economic Advisors? LAURA TYSON: I had been active in the 1980s with various groups that worked on the issue of changing global competitiveness, U.S. competitiveness, and changes in trade relations. Through that set of commissions, I met a number of people like Bob Rubin and Bob Reich, who ended up being involved in the campaign for President Clinton. They asked me if I wanted to join on because we work on these issues through these commissions. I read what the then- candidate Clinton was espousing, and I was in support of his vision, so I agreed to sign on to the campaign. I didn't do a whole lot during the campaign; I stayed out here in California. But then I got a call to work on the transition team, and from there I was asked by the president to become head of the Council of Economic Advisors. INTERVIEWER: How important were economic and global economic issues in the campaign? LAURA TYSON: Economic issues were obviously central to the campaign, like the famous slogan "It's the economy, stupid," but I would say the issues were primarily domestic in focus. -
Contemporary China: a Book List
PRINCETON UNIVERSITY: Woodrow Wilson School, Politics Department, East Asian Studies Program CONTEMPORARY CHINA: A BOOK LIST by Lubna Malik and Lynn White Winter 2007-2008 Edition This list is available on the web at: http://www.princeton.edu/~lynn/chinabib.pdf which can be viewed and printed with an Adobe Acrobat Reader. Variation of font sizes may cause pagination to differ slightly in the web and paper editions. No list of books can be totally up-to-date. Please surf to find further items. Also consult http://www.princeton.edu/~lynn/chinawebs.doc for clicable URLs. This list of items in English has several purposes: --to help advise students' course essays, junior papers, policy workshops, and senior theses about contemporary China; --to supplement the required reading lists of courses on "Chinese Development" and "Chinese Politics," for which students may find books to review in this list; --to provide graduate students with a list that may suggest books for paper topics and may slightly help their study for exams in Chinese politics; a few of the compiler's favorite books are starred on the list, but not much should be made of this because such books may be old or the subjects may not meet present interests; --to supplement a bibliography of all Asian serials in the Princeton Libraries that was compiled long ago by Frances Chen and Maureen Donovan; many of these are now available on the web,e.g., from “J-Stor”; --to suggest to book selectors in the Princeton libraries items that are suitable for acquisition; to provide a computerized list on which researchers can search for keywords of interests; and to provide a resource that many teachers at various other universities have also used. -
Why Should We Worry About the National Debt: MITCH DANIELS Questions and Answers LEON PANETTA TIM PENNY April 16, 2019
CHAIRMEN Why Should We Worry About the National Debt: MITCH DANIELS Questions and Answers LEON PANETTA TIM PENNY April 16, 2019 “Why Should We Worry About the National Debt?” describes six important ways PRESIDENT MAYA MACGUINEAS that the growing national debt will affect the budget and the economy. Below, we answer specific questions frequently raised about the topic. DIRECTORS Isn’t debt sustainable when the economy grows faster than interest rates? BARRY ANDERSON Despite the fact economic growth rate is higher than government interest rates (r<g), ERSKINE BOWLES CHARLES BOWSHER debt remains on an unsustainable trajectory in the United States. Economist Olivier KENT CONRAD Blanchard and others have pointed out that governments can shrink their debt-to- DAN CRIPPEN GDP ratio while still borrowing to finance their interest payments when r<g. VIC FAZIO However, this only leads to a sustainable outcome if a government is running a WILLIS GRADISON primary balance (revenue equals non-interest spending) or a sufficiently modest JANE HARMAN WILLIAM HOAGLAND primary deficit. The United States today is running a large and growing primary JIM JONES deficit. As a result, both debt and interest payments will continue to rise faster than LOU KERR the economy despite low interest rates. There is also no guarantee that the economic JIM KOLBE growth rate will remain higher than interest rates, particularly as rising debt puts CYNTHIA LUMMIS MARJORIE MARGOLIES downward pressure on growth and upward pressure on rates. DAVE MCCURDY JAMES MCINTYRE, JR. Do low interest rates mean deficits don’t “crowd out” investment? DAVID MINGE Evidence suggests that today’s low interest rates are in spite of, not because of, high JUNE O’NEILL deficits and debt – and that deficits continue to “crowd out” investment. -
The Defense Program and the Economy Hearings
THE DEFENSE PROGRAM AND THE ECONOMY HEARINGS BEFORE THE SUBCOMMITTEE ON ECONOMIC GOALS AND INTERGOVERNMENTAL POLICY OF THE JOINT ECONOMIC COMMITTEE CONGRESS OF THE UNITED STATES NINETY-SEVENTH CONGRESS FIRST AND SECOND SESSIONS PART 1 OCTOBER 7, 13, 22, AND 29, 1981, AND DECEMBER 15, 1982 Printed for the use of the Joint Economic Committee U.S. GOVERNMENT PRINTING OFFICE 9-760 WASHINGTON:.1983 JOINT ECONOMIC COMMITTEE (Created pursuant to see. 5(a) of Public law 304, 79th Cong.) HOUSE OF REPRESENTATIVES SENATE HENRY S. REUSS, Wisconsin, Chairman ROGER W. JEPSEN, Iowa, Vice Chairman RICHARD BOLLING, Missouri WILLIAM V. ROTH, Ja., Delaware LEE H. HAMILTON, Indiana JAMES ABDNOR, South Dakota. GILLIS W. LONG, Louisiana STEVEN D. SYMMS, Idaho PARREN J. MITCHELL, Maryland PAULA HAWKINS, Florida FREDERICK W. RICHMOND, New York' MACK MATTINGLY, Georgia CLARENCE J. BROWN, Ohio LLOYD BENTSEN, Texas MARGARET M. HECKLER, Massachusetts WILLIAM PROXMIRE, Wisconsin JOHN H. ROUSSELOT, California EDWARD M. KENNEDY, Massachusetts CHALMERS P. WYLIE, Ohio PAUL S. SARBANES, Maryland JAMES K. GALBRAITH, Executive Director BRucE R. BARTLETT, Deputy Director SUBCOMMITTEE ON ECONOMIC GOALS AND INTERGOVEBNMENTAL PoLIor HOUSE OF REPRESENTATIVES SENATE LEE H. HAMILTON, Indiana, Chairman LLOYD BENTSEN, Texas, Vice Chairman RICHARD BOLLING, Missouri PAULA HAWKINS, Florida STEVEN D. SYMMS, Idaho MACK MATTINGLY, Georgia 1 Representative Richmond resigned from the U.S. House of Representatives on Aug. 25, 1982, and Representative Augustus F. Hawkins, of California, was subsequently appointed to the committee on Sept. 23, 1982. CONTENTS WITNESSES AND STATEMENTS WEDNESDAY, OCTOBEB 7, 1981 Reuss, Hon. Henry S., chairman of the Joint Economic Committee: Open- Page ing statement ------------------------------------------------- 1 Weidenbaum, Hon. -
The Real Exchange Rate, Real Interest Rates, and the Risk Premium
IHS Economics Series Working Paper 265 April 2011 The Real Exchange Rate, Real Interest Rates, and the Risk Premium Charles Engel Impressum Author(s): Charles Engel Title: The Real Exchange Rate, Real Interest Rates, and the Risk Premium ISSN: Unspecified 2011 Institut für Höhere Studien - Institute for Advanced Studies (IHS) Josefstädter Straße 39, A-1080 Wien E-Mail: offi [email protected] Web: ww w .ihs.ac. a t All IHS Working Papers are available online: http://irihs. ihs. ac.at/view/ihs_series/ This paper is available for download without charge at: https://irihs.ihs.ac.at/id/eprint/2050/ 265 Reihe Ökonomie Economics Series The Real Exchange Rate, Real Interest Rates, and the Risk Premium Charles Engel 265 Reihe Ökonomie Economics Series The Real Exchange Rate, Real Interest Rates, and the Risk Premium Charles Engel April 2011 Institut für Höhere Studien (IHS), Wien Institute for Advanced Studies, Vienna Contact: Charles Engel Department of Economics University of Wisconsin 1180 Observatory Drive Madison, WI 53706-1393 email: [email protected] Founded in 1963 by two prominent Austrians living in exile – the sociologist Paul F. Lazarsfeld and the economist Oskar Morgenstern – with the financial support from the Ford Foundation, the Austrian Federal Ministry of Education and the City of Vienna, the Institute for Advanced Studies (IHS) is the first institution for postgraduate education and research in economics and the social sciences in Austria. The Economics Series presents research done at the Department of Economics and Finance and aims to share “work in progress” in a timely way before formal publication. -
On Sticky Prices: Academic Theories Meet the Real World
This PDF is a selection from an out-of-print volume from the National Bureau of Economic Research Volume Title: Monetary Policy Volume Author/Editor: N. Gregory Mankiw, ed. Volume Publisher: The University of Chicago Press Volume ISBN: 0-226-50308-9 Volume URL: http://www.nber.org/books/greg94-1 Conference Date: January 21-24, 1993 Publication Date: January 1994 Chapter Title: On Sticky Prices: Academic Theories Meet the Real World Chapter Author: Alan S. Blinder Chapter URL: http://www.nber.org/chapters/c8331 Chapter pages in book: (p. 117 - 154) 4 On Sticky Prices: Academic Theories Meet the Real World Alan S. Blinder Any theory of how nominal money affects the real economy must face up to the following conundrum: Demand or supply functions derived-whether precisely or heuristically-from basic micro principles have money, M,as an argument only in ratio to the general price level. Hence, if monetary policy is to have real effects, there must be some reason why changes in M are not followed promptly by equiproportionate changes in I.! This is the sense in which some kind of “price stickiness” is essential to virtually any story of how monetary policy works.’ Keynes (1936) offered one of the first intellectually coherent (or was it?) explanations for price stickiness by positing that money wages are sticky, and perhaps even rigid-at least in the downward direction. In that case, what Keynes called “the money supply in wage units,” M/W, moves in the same direction as nominal money, thereby stimulating the economy. In the basic Keynesian model,2 prices are not sticky relative to wages. -
NBER Reporter Online, Volume 1984
A Service of Leibniz-Informationszentrum econstor Wirtschaft Leibniz Information Centre Make Your Publications Visible. zbw for Economics National Bureau of Economic Research (NBER) (Ed.) Periodical Part NBER Reporter Online, Volume 1984 NBER Reporter Online Provided in Cooperation with: National Bureau of Economic Research (NBER), Cambridge, Mass. Suggested Citation: National Bureau of Economic Research (NBER) (Ed.) (1984) : NBER Reporter Online, Volume 1984, NBER Reporter Online, National Bureau of Economic Research (NBER), Cambridge, MA This Version is available at: http://hdl.handle.net/10419/62096 Standard-Nutzungsbedingungen: Terms of use: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Documents in EconStor may be saved and copied for your Zwecken und zum Privatgebrauch gespeichert und kopiert werden. personal and scholarly purposes. Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle You are not to copy documents for public or commercial Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich purposes, to exhibit the documents publicly, to make them machen, vertreiben oder anderweitig nutzen. publicly available on the internet, or to distribute or otherwise use the documents in public. Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, If the documents have been made available under an Open gelten abweichend von diesen Nutzungsbedingungen die in der dort Content Licence (especially Creative Commons Licences), you genannten Lizenz gewährten Nutzungsrechte. may exercise further usage rights as specified in the indicated licence. www.econstor.eu NATIONAL BUREAU OF ECONOMIC RESEARCH, INC. SPRING 1984 Program Report Economic Fluctuations Robert E. Hall NBER's Program of Research in Economic Fluctua tions primarily studies movements in employment, in flation, and output within the U.S. -
Investment, Overhang, and Tax Policy
2581-04_Desai.qxd 1/18/05 13:28 Page 285 MIHIR A. DESAI Harvard University AUSTAN D. GOOLSBEE University of Chicago Investment, Overhang, and Tax Policy THE PAST DECADE HAS seen an unusual pattern of investment. The boom of the 1990s generated unusually high investment rates, particularly in equipment, and the bust of the 2000s witnessed an unusually large decline in investment. A drop in equipment investment normally accounts for about 10 to 20 percent of the decline in GDP during a recession; in the 2001 recession, however, it accounted for 120 percent.1 In the public mind, the recent boom and bust in investment are directly linked due to “capital overhang.” Although the term is not very precisely defined, this view generally holds that excess investment in the 1990s, fueled by an asset price bubble, left corporations with excess capital stocks, and therefore no demand for investment, during the 2000s. The popular view also holds that these conditions will continue until normal economic growth eliminates the overhang and, consequently, that there is little policymakers can do to remedy the situation, by subsidizing invest- ment with tax policy, for example. Variants on this view have been espoused by private sector analysts and economists,2 and the notion of a We thank Mark Veblen and James Zeitler for their invaluable research assistance, as well as Alan Auerbach, Kevin Hassett, John Leahy, Joel Slemrod, and participants at the Brookings Panel conference for their comments. Dale Jorgenson was kind enough to pro- vide estimates of the tax term by asset. Mihir Desai thanks the Division of Research at Har- vard Business School for financial support. -
Trade Liberalization with Heterogenous Firms
NBER WORKING PAPER SERIES TRADE LIBERALIZATION WITH HETEROGENOUS FIRMS Richard E. Baldwin Rikard Forslid Working Paper 12192 http://www.nber.org/papers/w12192 NATIONAL BUREAU OF ECONOMIC RESEARCH 1050 Massachusetts Avenue Cambridge, MA 02138 April 2006 This paper is a substantially revised version of the Baldwin and Forslid (2004) working paper with an identical title. The present paper, however, also includes elements from Baldwin (2005), which has not and will not be submitted for publication anywhere. We are grateful for comments from Elhanan Helpman and Marc Melitz as well as other participants at ERWIT 2004. Any remaining errors are our own. Forslid thanks The Bank of Sweden Tercentenary Foundation (Reg. no. J2001-0684:1) for financial support. The views expressed herein are those of the author(s) and do not necessarily reflect the views of the National Bureau of Economic Research. ©2006 by Richard E. Baldwin and Rikard Forslid. All rights reserved. Short sections of text, not to exceed two paragraphs, may be quoted without explicit permission provided that full credit, including © notice, is given to the source. Trade Liberalization with Heterogenous Firms Richard E. Baldwin and Rikard Forslid NBER Working Paper No. 12192 April 2006 JEL No. H32, P16 ABSTRACT This paper examines the impact of trade liberalization with heterogeneous firms using the Melitz (2003) model. We find a number of novel results and effects including a Stolper-Samuelson like result and several results related to the volume of trade, which are empirically testable. We also find what might be called an anti-variety effect as the result of trade liberalization. -
Monetary Policy Rules and Macroeconomic Stability: Evidence and Some Theory*
MONETARY POLICY RULES AND MACROECONOMIC STABILITY: EVIDENCE AND SOME THEORY* RICHARD CLARIDA JORDI GALI´ MARK GERTLER We estimate a forward-looking monetary policy reaction function for the postwar United States economy, before and after Volcker’s appointment as Fed Chairman in 1979. Our results point to substantial differences in the estimated rule across periods. In particular, interest rate policy in the Volcker-Greenspan period appears to have been much more sensitive to changes in expected ination than in the pre-Volcker period. We then compare some of the implications of the estimated rules for the equilibrium properties of ination and output, using a simple macroeconomic model, and show that the Volcker-Greenspan rule is stabilizing. I. INTRODUCTION From the late 1960s through the early 1980s, the United States economy experienced high and volatile ination along with several severe recessions. Since the early 1980s, however, ina- tion has remained steadily low, while output growth has been relatively stable. Many economists cite supply shocks—and oil price shocks, in particular—as the main force underlying the instability of the earlier period. It is unlikely, however, that supply shocks alone could account for the observed differences between the two eras. For example, while jumps in the price of oil might help explain transitory periods of sharp increases in the general price level, it is not clear how they alone could explain persistent high ination in the absence of an accommodating monetary policy.1 Furthermore, as De Long {1997} argues, the onset of sustained high ination occurred prior to the oil crisis episodes. * We thank seminar participants at Universitat Pompeu Fabra, New York University, the Board of Governors of the Federal Reserve System, University of Maryland, NBER Summer Institute, Universite´ de Toulouse, Bank of Spain, Harvard University, Bank of Mexico, Universitat de Girona, and the Federal Reserve Banks of Atlanta, New York, Richmond, Dallas, and Philadelphia, as well as two anonymous referees and two editors for useful comments.