ES EN
Menu Menú

Publications

Publicaciones

Search Publications

Buscar publicaciones

Filters Filtro de búsqueda

to a

clear selection Quitar los filtros

none

Article Artículo

Globalization and Trade

The Impact of the Trans-Pacific Partnership on Trade Flows

The United States International Trade Commission (USITC) recently came out with projections on the economic effects of the Trans-Pacific Partnership (TPP) trade deal. The USITC’s report is the third major study on the TPP from the past two years. The USITC is legally required to provide this report.

The USITC report shows that the TPP would have relatively little impact on the volume of trade. This is consistent with the projections from a study by the United States Department of Agriculture (USDA) (which only examined the impact on agriculture), but is far out of line with the projections by the Peterson Institute for International Economics, the producer of the third major study.

Dean Baker / May 19, 2016

Article Artículo

Economic Growth

United States

FedWatch: William Dudley, President of the Federal Reserve Bank of New York and Vice- Chairman of the Federal Open Market Committee

This is the fourth in a series of profiles of the members of the Federal Reserve Board’s Open Market Committee [FOMC]. The profiles will focus on their writings, public statements, and voting records as members of the FOMC.

Since assuming office in January 2009, New York Federal Reserve Bank President William Dudley has been considered one of the Fed’s more dovish members. With some exceptions, Dudley has generally been a supporter of stimulus measures such as quantitative easing (QE) and low interest rates.

In a November 2010 New York Times article titled Under Attack, Fed Officials Defend Buying of Bonds, Dudley argued that QE was lowering long-term interest rates and raising employment.[1] He also said that high inflation was a non-existent problem and that policymakers should be worried instead about deflation.[1] In a speech the previous month, Dudley stated that “low and falling inflation is a problem for several reasons,” most notably because low inflation makes it hard for borrowers to pay off their debts and because low inflation in the short-term leads to declining expectations for future inflation.[2] The latter factor, he argued, can actually push down present inflation.[2] In discussing a possible drop in inflation expectations, Dudley made it clear that he viewed joblessness as a far more significant problem than inflation:

“Such a tightening would clearly be highly undesirable at a moment when unemployment is too high, inflation is too low and the economy has only moderate forward momentum.”[2]

Dudley also went on to state that “inflation being ‘too low’ (just like inflation being ‘too high’) is an impediment to achieving the full employment objective of the [Fed's] dual mandate.”[2] He furthermore argued that if the Fed were to target a given rate of inflation (it was not targeting 2 percent inflation at the time of Dudley’s speech), it should allow the economy to go over the target inflation rate for a given period of time in order to offset the time spent below the target rate.[2] Dudley continued making these same arguments in 2011, stating that the Fed shouldn’t withdraw monetary stimulus, as such a move would hinder the Fed’s dual mandate of full employment and price stability.[3] He reiterated that inflation was running problematically low and said that the labor market was well short of full employment; he also stated that in order to return to full employment in 2012, the economy would have to add 300,000 jobs per month.[3]

CEPR and Nicolas Buffie / May 16, 2016

Article Artículo

Economic Growth

United States

Workers

Wage Growth vs. Benefit Growth in the Post-Recession Economy

The Federal Reserve Board, along with most economists, has been closely tracking the rate of increase in the average hourly wage reported by the Bureau of Labor Statistics in its monthly employment report. This series has shown a modest uptick in growth over the last two years. While the current pace (2.5 percent over the last year) is only slightly above the Fed’s 2.0 percent inflation target, it actually overstates the extent to which workers are benefiting from the recovery.

While wage growth has accelerated modestly from its pace earlier in the recovery, the rate of growth in benefits, most importantly healthcare, has slowed. As a result, there has been almost no change in the rate of growth in total compensation.

Dean Baker and Nicolas Buffie / May 13, 2016

Article Artículo

Mind Readers and Bad Math at the Washington Post on Trump and Ryan

It would be nice if the Washington Post tried to hire more reporters and fewer mind readers. In a piece explaining that presumptive Republican presidential nominee Donald Trump opposes the privatization of Medicare and Social Security championed by House Speaker Paul Ryan, the Post told readers:

"First, Medicare: Many Republicans think the expensive federal system that guarantees unlimited health-care coverage to those 65 and older threatens to bankrupt the nation without spending cuts or significantly higher taxes" (emphasis added).

Reporters don't know what Republican politicians think, they just know what they say. It would be best if the Post tried to restrict itself to reporting on the latter. As far as the substance, the Post is once again trying to push a story with no basis in reality that implies future generations will be worse off than today's workers and retirees due to the cost of Social Security and Medicare. To advance this view it uncritically presents the account of Representative David Schweikert, a proponent of privatizing Medicare.

"'I don’t care about my grandkids,' Rep. David Schweikert (R-Ariz.) recalled one voter saying at a town-hall meeting, after Schweikert had explained that entitlements needed to be cut so debt would not overwhelm future generations. 'I want every dime,' the man said."

In fact, all the economic projections from official sources, like the Congressional Budget Office (CBO) and the Social Security Trustees, show that on average this person's grandkids will be hugely richer than the voter to whom Rep. Schweikert referred. The main threat to their living standards is the continuation of the policies that have been redistributing income upwards over the last thirty five years, such as high unemployment, trade policies that protect doctors, lawyers, and other highly paid professionals while deliberately exposing less educated workers to competition, and stronger and longer patent and copyright protections. Most Republicans strongly support these policies, which should make a reporter question whether the well-being of our grandchildren could be the real reason they support privatizing Medicare.

CEPR / May 12, 2016