Fairly Recently: Must- and Should-Reads, and Writings... (December 8, 2018)
Tobias Renkin, Claire Montialoux, and Michael Siegenthaler: The Pass-through of Minimum Wages into US Retail Prices: Evidence from Supermarket Scanner Data: "We use high-frequency scanner data and leverage a large number of state-level increases in minimum wages between 2001 and 2012. We find that a 10% minimum wage hike translates into a 0.2% increase in grocery prices. This magnitude is consistent with a full pass-through of cost increases into consumer prices...
If you believe Robert Barro, the nine less-than-professional Republican economists, or any of a host of others, we ought to be seeing annual investment spending leaping upward by $600 billion this year. We are not: Pedro Nicolaci da Costa: Tax cuts fail to boost corporate investment plans, Fed survey shows: "Trump claimed the tax bill would lead to a huge boost in business spending—but there's no sign of it yet...
The best coverage of the bill that is actually not called "The Tax Cut and Jobs Act" was provided by Greg Leiserson of Equitable Growth. Now as we approach the one-year anniversary, we can actually begin estimating what the tax cut's effects truly were. To get ready to do so, remember Greg's primer on how to assess: Greg Leiserson: Assessing the economic effects of the Tax Cuts and Jobs Act: "An assessment... should focus on the impact of the legislation on wage rates for workers, the return on business investment, and the size of future federal budget deficits...
Alix Gould-Werth: Getting Information We Need to Advance Conversation on Paid Leave: "The Washington Center for Equitable Growth brought together researchers who study paid leave and related topics, state data administrators, and experts in federal and private-sector data systems to talk about data.... Stay tuned for a report.... The attendees at the Equitable Growth event benefitted tremendously from the presence of paid leave administrators in states large (California, Washington) and small (Rhode Island, New Jersey)...
Sam Bell: "Curiously, the Wall Street Journal editorial page no longer so enthusiastic about running down the balance sheet or hiking interest rates... and is suddenly interested in prime age epop... https://www.wsj.com/articles/the-feds-welcome-rethink-1543450104 #WelcomeToThePartyYouAreADecadeLate
The Federal Reserve's public view of the likely path of the economy now lacks coherence. This is a bad thing. It may mean that the Federal Reserve's private view of the likely path of the economy now lacks coherence, in which case policy will lack coherence. It certainly means that market participants can no longer plan on the Federal Reserve having a known coherent view of the economy: Joe Gagnon: Tension Remains at the Heart of the Fed’s Forecast: "The Federal Open Market Committee (FOMC, or Fed) surprised no one at its September meeting by raising the target for the federal funds rate a quarter of a percentage point to a range of 2.00 to 2.25 percent. The FOMC has been tightening monetary conditions very slowly since late 2015...
I have never understood this argument. And—to my knowledge—there is no underlying model behind it at all. What is the mechanism by which raising interest rates now so you can lower them later beats keeping interest rates the same now and then lowering them later if both ultimately wind up at the same place?: Martin Feldstein: Raise Rates Today to Fight a Recession Tomorrow: "As I have argued in these pages since 2013, the Fed should have begun raising the fed-funds rate several years earlier. Doing so would have prevented the recent sharp increases in the prices of equities and other assets, which will collapse when long-term interest rates rise...
Bradley L. Hardy, Trevon D. Logan, and John Parman: The Historical Role of Race and Policy for Regional Inequality: "Contemporary racial inequality can be thought of as the product of a long historical process with at least two reinforcing sets of policies: First are the policies governing the spatial distribution of the black population, and second are the policies that had a disparate impact on black individuals because of their locations...
Scott Lemieux: A Randroid Fraud Departs In A Cloud of Pure Bulls---: "In order to facilitate his agenda of upper-class tax cuts, increasing funding for an already bloated military, and trying to strip healthcare from tens of millions of people, Ryan actively covered up for an unprecedentedly corrupt and unfit president and the ratf---ing campaign that helped put him in office. So...
Paul Krugman writes: "As Greg Leiserson of the Washington Center for Equitable Growth points out, 'every month in which wage rates are not sharply higher than they would have been absent the legislation, and investment returns are not sharply lower, is a month in which the benefits of those corporate tax cuts accrue primarily to shareholders'. A tax cut that might significantly raise wages during, say, Cynthia Nixon’s second term in the White House, but yields big windfalls for stock owners with only trivial wage gains for the next five or 10 years, is not what we were promised..." See Greg Leiserson: Assessing the economic effects of the Tax Cuts and Jobs Act: "Key takeaways: An assessment... should focus on the impact... on wage rates... [on] the return on business investment, and... [on] future federal budget deficits, as these will determine the impact... and the fiscal sustainability of the law...
Paul Krugman: The Economic Future Isn’t What It Used to Be: "The most compelling evidence, cited by both Fatás/Summers and Ball, is that the size of the Great Shortfall varies a lot between countries and the countries whose estimated economic potential has taken the biggest hit are precisely the countries that had the biggest slumps in the economic crisis. Indeed, the relationship between output decline in the crisis and the fall in long-run potential GDP is pretty much one-for-one... #hysteresis #macro
Scott Lemieux: Cheneyism Is No Better Than Trumpism : "Good piece by Yglesias about how while the Weekly Standard is being euthanized for the wrong reason it represents a highly pernicious strain of thought in its own right...
Matthew Yglesias: Weekly Standard vs. Trump: Neoconservatives Are The Most Dangerous Conservative Faction: "The most principled resistance to Trump comes from conservatism’s most dangerous faction.... The Weekly Standard... was most notably the creator of the preventive war doctrine that spurred President George W. Bush’s invasion of Iraq. Its current editor, Stephen F. Hayes, made his bones with the absurd 2004 book The Connection: How al-Qaeda’s Collaboration With Saddam Hussein Has Endangered America...
