Currency crises can cause real downturns that last a long time. Most currency crises can be attributed to the central bank attempting to target the exchange rate while simultaneously conducting independent monetary policy, an impossible task.
Traffic is stop-and-go when the number of cars per mile of highway gets too large. A working paper by Jennifer La’O of the University of Chicago examines whether a recession can be explained by a similar mechanism.
Since the end of World War II, industrial production in the Rust Belt has declined slowly, but dramatically. This decline was largely driven by the unique technological advantages of firms and relationships with their workers.
Economics requires theory to form testable hypotheses, and theory often required heavy use of mathematics. Without theory and testable hypotheses, we would be unable to understand the economy.
Economics claims to be a social science, but is it really a science? Controlled experiments are often impossible, but statistical tools make it possible for economists to rigorously and objectively examine data.
Buying an electric car reduces carbon emissions in the long-run, but there are significantly lower-cost methods of reducing carbon emissions.
Balancing the budget is very hard in the short run. The keys to a restoration of sound fiscal policy are to adopt policies that encourage more rapid growth of the economy and put meaningful and enforceable caps on expenditures.
Tax season will soon be upon us. Wouldn’t it be nice if filing taxes was not such a long, drawn-out process?
Taxes are in the news lately. French film star, Gerard Depardieu announced in December he would be moving from France to neighboring Belgium to avoid an increase in taxes.
So we avoided the fiscal cliff. Forgive me if I am less than impressed with our political leaders.
Recently the U.S. Commodity Futures Trading Commission issued a complaint against the online prediction market firm Intrade.
Every time there is a significant natural disaster, I eventually — and unfortunately — hear from someone that there is at least one upside: the disaster will be good for the economy. And every time I respond, “Wrong!”
A common theme this election cycle and over the last four years has been Chinese currency manipulation
As many observers expected, the U.S. Federal Reserve began a new round of quantitative easing this fall in an attempt to stimulate the economy by increasing the supply of available money.
A modern investor takes a pool of money and optimally distributes these funds over a set of investment assets. Some of these assets are very safe, and have low rates of return. Others are risky, but compensate for this risk by offering higher payoffs. The decisions investors make depend on how averse to risk they are and on how high the returns of the assets are relative to their risk.
You may have noticed there is a presidential election coming up. The Republican Party met this past week in Tampa, Florida and officially nominated Mitt Romney as their candidate. Democrats are meeting this week in Charlotte, North Carolina to renominate President Barack Obama. Of course all that really matters is the counting of electoral college votes, and those will be decided on November 6th.
The current federal minimum wage is $7.25 per hour. For an employee working 40 hours per week for 52 weeks, that amounts to an annual before-tax income of $15,080.
The U.S Social Security system is in big trouble.
In a campaign speech, President Barack Obama noted that Mitt Romney “has a theory of the economy that basically says, if I’m maximizing returns for my investors, for wealthy individuals like myself, then everybody’s going to be better of
Greed in and of itself is not a problem if markets are competitive. It is only when monopoly power can be imposed that economic inefficiencies arise.
The U.S. economy has been through several rough years, beginning with a severe recession in 2008 and an anemic recovery since. The economy has actually been growing since June 2009, but it hasn’t felt like it to many Americans.
Social Security is in trouble. While the system is currently generating tax revenue that is approximately equal to the benefit payouts, this will not be the case in the near future. Many state and local pension funds are in a similar situation.
Congress passed the American Recovery and Reinvestment Act in February of 2009. But did it do its job?
In terms of public opinion, the past couple of years have not been kind to people who work in financial markets.
Kim Jung Il, the ruler of North Korea, died almost two weeks ago, reportedly of a massive stroke. He will be missed by no one.