Economics & Global Affairs

1078 Items

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Blog Post - views-on-the-economy-and-the-world

Helping Ukraine is a National Security No-brainer

| Jan. 28, 2024

Much is difficult to understand about what has happened to one of our two political parties.   Among other things, I don’t understand why some Republican congresspeople oppose an extension of US support for the government of Ukraine in its fight against the Russian invasion, and why others who may be in favor of continuing support give it so low priority as to allow their colleagues to block it, by holding it hostage to unrelated Mexican border concerns.

Weighing costs and benefits, backing Ukraine is one of the most sensible US foreign affairs policy priorities in a long time. As Ukrainian President Volodomyr Zelensky said earlier this month, “Giving us money or giving us weapons, you support yourself.”

Analysis & Opinions - Project Syndicate

Why Supporting Ukraine Enhances US National Security

| Jan. 25, 2024

While the United States has valid reasons to avoid a direct confrontation with Russia, supporting Ukraine’s war effort should be a top foreign-policy priority. Aiding Ukraine costs a fraction of what the Iraq War cost, does not entail the potential loss of US soldiers, and advances America's interest in deterring wars of aggression.

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Blog Post - views-on-the-economy-and-the-world

Fix Air Traffic Control!

| Dec. 17, 2023

Air travel is soaring, as a long-term trend, especially in the growing economy.  It is also soaring seasonally: The few days after Christmas are expected to be especially intense.  Many passengers will experience maddening flight delays this holiday season, especially in the US. A few might be exposed to scary airport near-misses.  It is reasonable to hope that the excellent US safety record — no fatal crashes since 2009 — will be extended.  But close calls have increased during the post-pandemic return to commercial air travel, reaching about 300 in the most recent year, 27 of them serious.

Analysis & Opinions - Project Syndicate

How to Fix America’s Broken Air-Traffic Control System

| Dec. 14, 2023

Understaffed and underfunded, the United States’ air-traffic control system is close to its breaking point. The main obstacle to reform is the wealth and influence of private-jet owners, a group that has its own successful lobbying operation focused on retaining access to airport slots and ensuring that fees remain low.

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Blog Post - views-on-the-economy-and-the-world

Does the Fed Deserve Credit for the Disinflation?

| Nov. 19, 2023

The Bureau of Labor Statistics on November 14, remarkably, announced that the US CPI had been unchanged in October (whether seasonally adjusted or not).  That is, the level of the CPI was unchanged, not the inflation rate, which was zero.  Of course, single-month numbers are too volatile to draw much of a conclusion.  Not every month will see the price of gasoline plunge by 5.0 %, as it did from September to October.

More informatively, the headline CPI inflation rate over the last 12 months was 3.2 %, far down from 6.5 % in 2022.  At the risk of tempting fate, one might say that the inflation battle is being won.

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Blog Post - views-on-the-economy-and-the-world

China’s Great Leap Backward

| Oct. 23, 2023

Ten years ago this November, the 18th Central Committee of China’s Communist Party held its quinquennial Third Plenum.  The meeting decided on a set of reforms that were well-chosen to sustain the national growth rate.  But the reforms have not been implemented, contributing to a big slowdown in the economy.

  1. The decline in Chinese growth

As of ten years ago, 2013, a naive extrapolation of the differential in growth rates between China and the US suggested that the number two economy would overtake the number one economy by 2021 (when GDPs are compared using nominal exchange rates). Some even said the cross-over year would be 2019. This did not happen; the US economy remains far ahead.  Goldman Sachs and others now project that China’s GDP will not catch up with US GDP until 2035if ever.  Even if the crossover occurs, it may be only temporary.  The Chinese economy is forecast to peak sometime in the middle of the century, after which the ongoing decline in the labor force will outweigh productivity growth.  This drastic revision of crossover forecasts is one indication of how sharply trend growth in the Middle Kingdom has been revised downward since 2013.

Chinese President Xi Jinping arrives to deliver a speech during the Belt and Road Forum at the Great Hall of the People in Beijing, Wednesday, Oct. 18, 2023. (AP Photo/Louise Delmotte)

AP Photo/Louise Delmotte

Analysis & Opinions - Project Syndicate

China’s Great Leap Backward

| Oct. 20, 2023

China’s ongoing economic slowdown is partly the result of its failure to implement crucial structural reforms that would have enabled it to escape the middle-income trap. While previous Chinese leaders saw economic prosperity as the key to maintaining popular support, Xi Jinping has prioritized political control over growth.

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Blog Post - views-on-the-economy-and-the-world

The End of Zero Interest Rates?

| Aug. 14, 2023

What a difference a year makes!  In 2021, interest rates were close to zero in the US and the UK,  and slightly negative in the eurozone and Japan.  They were expected to remain low indefinitely.  Remarkably, as recently as January 2022, investors thought that the probability the interest rate would rise above 4.0 % within 5 years was only 12% in the US, 4 % for the euro-zone, and 7 % for the UK [p.45].  Those were short-term nominal interest rates.  Correcting for expected inflation, real interest rates were substantially negative and expected to remain so.