Read More Leer más Join the discussion Participa en la discusión
Read More Leer más Join the discussion Participa en la discusión
Read More Leer más Join the discussion Participa en la discusión
Paul Krugman had a nice blogpost outlining some of the key issues in the literature on optimal currency unions. The question is what happens in a currency union like the euro zone, which is not optimal for many reasons, if there is free mobility of labor.
Krugman points to the experience of Portugal and argues that mobility of labor actually makes the situation worse, not better. The story is that much of Portugal’s prime age labor force is emigrating to other countries in the European Union, leaving behind a population of retirees, without a working age population to pay their benefits. This is similar to the story with Puerto Rico, although as Krugman points out, due to the fiscal union with the rest of the United States, retirees in Puerto Rico can still count on their Social Security and Medicare, as well as other payments that flow from Washington.
It is worth taking another step with this one to think about Detroit. There we have a situation where the the downturn in the auto industry is a big hit to the city and the region. However, white workers were able to escape many of the bad effects by stepping over the city lines and move to the suburbs. Due to discrimination in housing and lending, African Americans find the move to the suburbs much more difficult, therefore leaving many of them stuck dealing with the effects of the loss of much of the city’s employment base.
This picture is clearly somewhat exaggerated. People can move to other cities and many African Americans have moved to Detroit’s suburbs, but the reality of discrimination, certainly in the very recent past and which undoubtedly continues to some extent into the present, has made it considerably more difficult for African Americans in Detroit to escape the fallout from the collapse of the auto industry than for its white population.
Paul Krugman had a nice blogpost outlining some of the key issues in the literature on optimal currency unions. The question is what happens in a currency union like the euro zone, which is not optimal for many reasons, if there is free mobility of labor.
Krugman points to the experience of Portugal and argues that mobility of labor actually makes the situation worse, not better. The story is that much of Portugal’s prime age labor force is emigrating to other countries in the European Union, leaving behind a population of retirees, without a working age population to pay their benefits. This is similar to the story with Puerto Rico, although as Krugman points out, due to the fiscal union with the rest of the United States, retirees in Puerto Rico can still count on their Social Security and Medicare, as well as other payments that flow from Washington.
It is worth taking another step with this one to think about Detroit. There we have a situation where the the downturn in the auto industry is a big hit to the city and the region. However, white workers were able to escape many of the bad effects by stepping over the city lines and move to the suburbs. Due to discrimination in housing and lending, African Americans find the move to the suburbs much more difficult, therefore leaving many of them stuck dealing with the effects of the loss of much of the city’s employment base.
This picture is clearly somewhat exaggerated. People can move to other cities and many African Americans have moved to Detroit’s suburbs, but the reality of discrimination, certainly in the very recent past and which undoubtedly continues to some extent into the present, has made it considerably more difficult for African Americans in Detroit to escape the fallout from the collapse of the auto industry than for its white population.
Read More Leer más Join the discussion Participa en la discusión
Read More Leer más Join the discussion Participa en la discusión
Read More Leer más Join the discussion Participa en la discusión
The NYT ran an article on the goal for greenhouse gas emission reduction set by the Australian government. The article noted criticism of the goal as being inadequate. In particular, it refers to criticism from the Marshall Islands’ government that this sort of action will not be sufficient to keep the islands from being destroyed by rising sea levels.
While it would be a tragedy if the Marshall Islands were destroyed and its 53,000 people had to be relocated, this would be a relatively minor consequence of the failure to address global warming. By comparison, Bangladesh has a population of almost 160 million, most of whom live in relatively low-lying areas that are subject to frequent flooding. With rising oceans, these floods would be much more severe.
No one has a plausible plan to locate the hundreds of millions of people in Bangladesh and other low-income countries whose lives will be put at risk from rising oceans. Similarly, hundreds of millions of people live in areas of Sub-Saharan Africa that will be faced with severe drought if world temperatures continue to rise.
If the point was to call attention to the consequences of the failure to address global warming, these situations probably deserve more attention than the fate of the Marshall Islands.
The NYT ran an article on the goal for greenhouse gas emission reduction set by the Australian government. The article noted criticism of the goal as being inadequate. In particular, it refers to criticism from the Marshall Islands’ government that this sort of action will not be sufficient to keep the islands from being destroyed by rising sea levels.
While it would be a tragedy if the Marshall Islands were destroyed and its 53,000 people had to be relocated, this would be a relatively minor consequence of the failure to address global warming. By comparison, Bangladesh has a population of almost 160 million, most of whom live in relatively low-lying areas that are subject to frequent flooding. With rising oceans, these floods would be much more severe.
No one has a plausible plan to locate the hundreds of millions of people in Bangladesh and other low-income countries whose lives will be put at risk from rising oceans. Similarly, hundreds of millions of people live in areas of Sub-Saharan Africa that will be faced with severe drought if world temperatures continue to rise.
If the point was to call attention to the consequences of the failure to address global warming, these situations probably deserve more attention than the fate of the Marshall Islands.
Read More Leer más Join the discussion Participa en la discusión
Several of the articles discussing the decision of China’s central bank to lower the value of the yuan have referred to the assessment of the I.M.F. that the Chinese currency now reflects its market value. Many have pointed out that China’s central bank has stopped buying large amounts of foreign exchange to keep the yuan from rising, implying that the current value now reflects the market rate.
The problem with this story is that China’s central bank is still sitting on more than $4 trillion in foreign exchange reserves. If we apply the rule of thumb that it should keep around 6 months worth of imports on hand as a buffer, this implies $3 trillion of excess reserves. This large holding of excess reserves, helps keep up the price of the dollar and other reserve currencies relative to the yuan.
This is the same situation as the Fed is in with its holding of $3 trillion in assets as a result of its quantitative easing programs. There are few people who would argue that the Fed’s holding of these assets doesn’t have the effect of keeping interest rates down. It would be very difficult to come up with a story whereby the Fed’s holding of assets keeps interest rates down, but China’s central bank’s holdings of foreign exchange doesn’t keep the value of the yuan down.
Several of the articles discussing the decision of China’s central bank to lower the value of the yuan have referred to the assessment of the I.M.F. that the Chinese currency now reflects its market value. Many have pointed out that China’s central bank has stopped buying large amounts of foreign exchange to keep the yuan from rising, implying that the current value now reflects the market rate.
The problem with this story is that China’s central bank is still sitting on more than $4 trillion in foreign exchange reserves. If we apply the rule of thumb that it should keep around 6 months worth of imports on hand as a buffer, this implies $3 trillion of excess reserves. This large holding of excess reserves, helps keep up the price of the dollar and other reserve currencies relative to the yuan.
This is the same situation as the Fed is in with its holding of $3 trillion in assets as a result of its quantitative easing programs. There are few people who would argue that the Fed’s holding of these assets doesn’t have the effect of keeping interest rates down. It would be very difficult to come up with a story whereby the Fed’s holding of assets keeps interest rates down, but China’s central bank’s holdings of foreign exchange doesn’t keep the value of the yuan down.
Read More Leer más Join the discussion Participa en la discusión
We here at CEPR were glad to see that new research confirms what we had shown earlier, the Affordable Care Act (ACA) did not create a “part-time” nation as many of its opponents warned. In contrast to these studies, our work actually looked at the period when employers would have expected the sanctions to have been in effect, the first six months of 2013.
We did find a small increase in the percentage of workers employed between 25 and 29 hours a week, just under the 30 hours a week cutoff for the sanctions, as the opponents of the bill predicted. However this increase in the share of people working 25-29 hours was due to a reduction in the percentage of people working less than 25 hours a work, not a reduction in the number working more than 30 hours a week. In other words, there was no evidence that employers were shortening workweeks to escape the sanctions in the ACA.
This meant the bad story, that people who needed full-time jobs would only be able to find part-time work, was not true. But there is also a good story, that because people can now get insurance through the exchanges, many people will opt to work fewer hours at jobs that don’t provide health insurance. This is likely to be the case with many parents with young children and possibly among older pre-Medicare age workers who might find it difficult to work full time jobs.
We used the Current Population Survey (CPS) to examine the change in voluntary part-time employment between 2013 and 2014, the first year the exchanges were operating. We found a large increase in the number of young parents (the CPS only gives ages of the parents, not the children) who were choosing to work part-time. We also found an increase in the number of older workers, especially women, who were voluntarily working part-time.
In short, our takeaway is that the ACA is not taking away full-time jobs from people who need them, but it is giving many people an option to work part-time that they did not previously have. That looks like a pretty good deal.
We here at CEPR were glad to see that new research confirms what we had shown earlier, the Affordable Care Act (ACA) did not create a “part-time” nation as many of its opponents warned. In contrast to these studies, our work actually looked at the period when employers would have expected the sanctions to have been in effect, the first six months of 2013.
We did find a small increase in the percentage of workers employed between 25 and 29 hours a week, just under the 30 hours a week cutoff for the sanctions, as the opponents of the bill predicted. However this increase in the share of people working 25-29 hours was due to a reduction in the percentage of people working less than 25 hours a work, not a reduction in the number working more than 30 hours a week. In other words, there was no evidence that employers were shortening workweeks to escape the sanctions in the ACA.
This meant the bad story, that people who needed full-time jobs would only be able to find part-time work, was not true. But there is also a good story, that because people can now get insurance through the exchanges, many people will opt to work fewer hours at jobs that don’t provide health insurance. This is likely to be the case with many parents with young children and possibly among older pre-Medicare age workers who might find it difficult to work full time jobs.
We used the Current Population Survey (CPS) to examine the change in voluntary part-time employment between 2013 and 2014, the first year the exchanges were operating. We found a large increase in the number of young parents (the CPS only gives ages of the parents, not the children) who were choosing to work part-time. We also found an increase in the number of older workers, especially women, who were voluntarily working part-time.
In short, our takeaway is that the ACA is not taking away full-time jobs from people who need them, but it is giving many people an option to work part-time that they did not previously have. That looks like a pretty good deal.
Read More Leer más Join the discussion Participa en la discusión
One of the most bizarre debates in national politics is over whether China “manipulates” its currency. It is bizarre both because of the term used and also because the fact that China manages its currency is really not a debatable point.
The use of the term “manipulation” is bizarre because it implies that China is doing something sneaky in the middle of the night when no one is looking. There actually is nothing sneaky about it. China openly targets the value of its currency at a level that is well below the market clearing rate. The question is not whether we can somehow catch them in the act, the question is what do we think about the policy.
Anyhow, China just gave deniers another degree worth of global warming to explain away when the bank lowered the target rate for its currency against the dollar in order to boost its economy. There are three points worth making here.
First, China is quite obviously acting in currency markets to keep down the value of its currency. Do we have to pretend we didn’t see this? The $4 trillion in reserves that China’s central bank was sitting on should also have been a big hint on this issue. (For those who confuse the importance of stocks, rather than just flows, almost everyone believes that the Fed’s holding of $3 trillion in assets puts downward pressure on U.S. interest rates. It’s the same story with China’s central bank’s reserves and China’s currency.)
The second point is that China’s government obviously believes that the relative value of its currency affects its trade balance. That also should not really be arguable, but there were some policy experts who believed that imports and exports from China are not affected by relative prices. Of course they may still be right, but this move demonstrates that China’s government does not agree with them.
The third point is that several other currencies moved in step with China’s currency against the dollar. This contradicts a common assertion that if China raised the valued of its currency against the dollar then we would just import more from other countries. In fact, since many countries’ currencies follow the Chinese yuan, the improvement in the U.S. trade balance with China that would result from a higher yuan is likely to be amplified by an improvement in our trade balance with other countries as well.
One of the most bizarre debates in national politics is over whether China “manipulates” its currency. It is bizarre both because of the term used and also because the fact that China manages its currency is really not a debatable point.
The use of the term “manipulation” is bizarre because it implies that China is doing something sneaky in the middle of the night when no one is looking. There actually is nothing sneaky about it. China openly targets the value of its currency at a level that is well below the market clearing rate. The question is not whether we can somehow catch them in the act, the question is what do we think about the policy.
Anyhow, China just gave deniers another degree worth of global warming to explain away when the bank lowered the target rate for its currency against the dollar in order to boost its economy. There are three points worth making here.
First, China is quite obviously acting in currency markets to keep down the value of its currency. Do we have to pretend we didn’t see this? The $4 trillion in reserves that China’s central bank was sitting on should also have been a big hint on this issue. (For those who confuse the importance of stocks, rather than just flows, almost everyone believes that the Fed’s holding of $3 trillion in assets puts downward pressure on U.S. interest rates. It’s the same story with China’s central bank’s reserves and China’s currency.)
The second point is that China’s government obviously believes that the relative value of its currency affects its trade balance. That also should not really be arguable, but there were some policy experts who believed that imports and exports from China are not affected by relative prices. Of course they may still be right, but this move demonstrates that China’s government does not agree with them.
The third point is that several other currencies moved in step with China’s currency against the dollar. This contradicts a common assertion that if China raised the valued of its currency against the dollar then we would just import more from other countries. In fact, since many countries’ currencies follow the Chinese yuan, the improvement in the U.S. trade balance with China that would result from a higher yuan is likely to be amplified by an improvement in our trade balance with other countries as well.
Read More Leer más Join the discussion Participa en la discusión
