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Article Artículo

Saving Clintonism? How About an Honest Discussion?

David Shribman wants to tell us how to "save Clintonism." In doing so he seriously misrepresents the issues at hand.

He tells readers:

"The 42nd president left the White House with high approval ratings after serving during years of economic growth. Many liberals felt bruised, even betrayed — there were some high-profile repudiations of the president, especially when he signed a welfare overhaul in 1996 that set time limits on benefits. But no one doubted that he had given new life to the party when he left office in 2001."

Of course, Clinton left the White House as the stock bubble that had fueled the prosperity of his second term was in the process of collapsing. It led to a recession that began less than two months after he left office. From the perspective of working people this was the worst recession of the post-World War II era until the Great Recession. The economy did not get back the jobs lost until January of 2005.

Shribman's treatment of this period would be comparable to a situation where George W. Bush left office at the end of 2007 and describing his departure as being a period of prosperity. Of course by the end of 2007, the seeds of the crash had already been planted just as was the case with the recession of 2001.

Clinton also left a large and rapidly rising trade deficit. The United States has only been able to fill the demand lost as a result of this trade deficit with asset bubbles: first the stock bubble in the 1990s and then the housing bubble in the last decade.

CEPR / May 22, 2016

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