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As we discuss in Macroeconomics, Chapter 9, Section 9.4, (Economics, Chapter 19, Section 19.4) in calculating the consumer price index (CPI) each month, the Bureau of Labor Statistics sends hundreds of employees to gather price data from stores and offices. A reporter for the Wall Street Journal followed a price checker as she visited an … Continue reading “A Day in the Life of a Price Checker for the Bureau of Labor Statistics”
From early March to early May 2022, the Japanese yen persistently lost value versus the U.S. dollar. Between March 1 and May 9, the yen declined by 14% against the dollar, which is a substantial loss in value during such a short time period. What explains the decline in the exchange rate between the yen and … Continue reading “Interest Rates, the Yen, the Dollar, and the International Financial System ￼”
On Thursday morning, April 28, the Bureau of Economic Analysis (BEA) released its “advance” estimate for the change in real GDP during the first quarter of 2022. As shown in the first line of the following table, somewhat surprisingly, the estimate showed that real GDP had declined by 1.4 percent during the first quarter. The … Continue reading “Are We at the Start of a Recession?”
That’s what Elon Musk did in April 2022. In early April, Musk purchased about 9% of Twitter’s shares. On April 25, he became the owner of Twitter by buying the roughly 90% remaining shares for $54.20 per share. The total he paid for these remaining shares came to $44 billion. Following his often unorthodox style, Musk announced … Continue reading “You’ve Decided to Buy Twitter, So Who Are You Going to Call? Investment Banks, of Course”
Growth matters. A lot. A slightly higher rate of economic growth, sustained over time, can make the difference between a big increase in living standards and relative stagnation. Whether we can still generate strong and steady growth is a “$64,000 question” for the economy — the question. Nobel Prize–winning economist Robert Lucas famously observed that once economists think … Continue reading “Glenn on Economic Growth and Its Social Consequences”
In several of our blog posts and podcasts, we’ve discussed Lawrence Summers’s forecasts of inflation. Beginning in February 2021, Summers, an economist at Harvard who served as Treasury secretary in the Clinton administration, argued that the United States was likely to experience rates of inflation that would be higher and persist longer than Federal Reserve … Continue reading “￼Hoover Institution Podcast with Lawrence Summers and John Cochrane”
As we discuss in Macroeconomics, Chapter 17, Section 17.4 (Economics, Chapter 27, Section 27.4), the Federal Reserve is unusual among federal government agencies in being able to operate largely independently of Congress and the president. Congress passed the Federal Reserve Act, which established the Federal Reserve System, in 1913, and has amended it several times in the … Continue reading “Is the Fed Becoming Too Political to Remain Independent?”
New! – 4/07/22 Podcast – Authors Glenn Hubbard & Tony O’Brien revisit the role of inflation in today’s economy & likely Fed responses in trying to manage it.
Authors Glenn Hubbard and Tony O’Brien reconsider the role of inflation in today’s economy. They discuss the Fed’s possible responses by considering responses to similar inflation threats in previous generations – notably the Fed’s response led by Paul Volcker that directly led to the early 1980’s recession. The markets are reflecting stark differences in our … Continue reading “New! – 4/07/22 Podcast – Authors Glenn Hubbard & Tony O’Brien revisit the role of inflation in today’s economy & likely Fed responses in trying to manage it.”
Warning: Long post! It now seems clear that the new monetary policy strategy the Fed announced in August 2020 was a decisive break with the past in one respect: With the new strategy, the Fed abandoned the approach dating to the 1980s of preempting inflation. That is, the Fed would no longer begin raising its … Continue reading “￼Did the Fed Make a Mistake by Not Preempting Inflation?”
On February 24, when Russian President Vladimir Putin launched an assault on Ukraine he apparently expected within a few days to achieve his main objectives, including occupying the Ukrainian capital of Kyiv and replacing the Ukrainian government. After three weeks, the fierce resistance of the Ukrainian armed forces have resulted in his failing to achieve … Continue reading “￼Is Vladimir Putin Acting Rationally?”
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