Article Artículo
The Deficit Hawks: When Did They Stop Being Wrong About the Economy?Dean Baker
The Guardian Unlimited, January 28, 2013
Dean Baker / January 28, 2013
report informe
Macroeconomic Policy Advice and the Article IV Consultations: A European Union Case StudyMark Weisbrot and / January 28, 2013
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Latin America and the Caribbean
The World Bank and IMF’s Repeatedly Over-Optimistic Economic Growth Projections for HaitiCEPR / January 28, 2013
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Latin America and the Caribbean
World Bank and IMF Forecasts Follow Predictable Pattern for Haiti, VenezuelaThe World Bank has joined the “doom and gloom” chorus on Venezuela’s economy. And in Haiti, the Washington-based institution again appears overly optimistic.
On Tuesday, January 15, the World Bank released its latest global economic forecast, which projects 2013 global GDP growth at 3.4%, up 0.4% from its preliminary estimate for 2012 and down a half a percentage point from its previous forecast in June. The Bank emphasized that the low rates were largely a result of sluggish growth in the U.S. and Europe. As for Latin America and the Caribbean, the regional predicted growth for 2013 is listed at 3.6%, up more than half a point from the estimated figure for 2012.
As with many media commentators over the past few years, the World Bank predicts that Venezuela’s economic recovery from the global recession cannot hold up. The Bank forecasts 1.8% growth in 2013, a sharp drop from an estimated 5.2% last year. Since the Venezuelan economy is not slowing, there is no obvious reason to predict a collapse in economic growth.
Furthermore, we can see that the projection numbers follow a trend. Both the World Bank and the IMF have been consistently underestimating growth projections in Venezuela.
CEPR, and / January 28, 2013
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Timothy Geithner Saved Wall Street, not the EconomyDean Baker
Truthout, January 28, 2013
Dean Baker / January 28, 2013
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The Financial Markets Agree With President Obama and Disagree with Paul RyanDean Baker / January 28, 2013
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Fun With Robert Samuelson: The Good News Is Bad NewsIt's always entertaining to read Robert Samuelson's columns on Monday mornings. They are so deliciously orthogonal to reality. Today's column, asking whether America is in decline, is another gem.
He starts with a set of "good news" items from a paper issued by Goldman Sachs:
"For starters, the U.S. economy is still the world’s largest by a long shot. Gross domestic product (GDP) is almost $16 trillion, “nearly double the second largest (China), 2.5 times the third largest (Japan).” Per capita GDP is about $50,000; although 10 other countries have higher figures, most of the countries are small — say, Luxembourg."
That sounds good, except that having double the GDP of China depends on looking at exchange rate measures of GDP. This figure is inflated by the over-valued dollar and under-valued yuan. Using the purchasing power parity measure of GDP, the gap is much smaller, with the IMF projecting it will go the other way by 2017. According to some estimates China's GDP is already larger than ours, so it's probably best to keep this celebration short.
It is true that the U.S. has a higher per capita income than Germany, France, and most other wealthy countries. But by far the main reason for this gap is that we work about 25 percent more on average than workers in Western Europe who all get 4-6 weeks a year vacation, paid parental leave, and paid sick days. This is far more an issue of a different trade-off between work and leisure than a question of people in the United States being richer.
Next we get the good news about our massive energy resources:
"In turn, the oil and gas boom bolsters employment. A study by IHS , a consulting firm, estimates that it has already created 1.7 million direct and indirect jobs. By 2020, there should be 1.3 million more, reckons IHS."
Dean Baker / January 28, 2013
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Larry Summers Says the Clinton Administration Didn't Have Access to Government Economic DataDean Baker / January 27, 2013
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Latin America and the Caribbean
Kerry on Latin America: More of the Same?Alexander Main / January 26, 2013
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Housing Wealth Effects: Arithmetic Lesson for Neil Irwin and the Washington PostKnowledge of arithmetic is a skill in short supply for people involved in economic policy debates. This is especially the case for the Washington Post (Wonkblog excepted).
Neil Irwin gives us an example of the problem when he expresses the hope that increasing house prices will provide a large boost to consumption and thereby spur growth. Irwin cites a recent academic paper on the size of the housing wealth effect:
"In a paper last year, Charles Calomiris, Stanley Longhofer, and William Miles found that the wealth effects from housing vary significantly depending on whether the homeowner is old or young, poor or rich—but their overall estimate is that a dollar of extra housing wealth triggers five to eight cents in additional spending."
He then notes that with house prices rising by roughly $1 trillion this year, this would imply an increase in consumption of between $50 and $80 billion (0.3 to 0.5 percent of GDP).
So far, so good. The Calomiris, Longhofer, and Miles estimate of the wealth effect is certainly within the range of other estimates, although it is worth noting that about 40 percent of the gain in house prices last year could be attributable to inflation. In other words, if house prices had not risen by at least 2.0 percent last year, the real wealth effect on consumption would be lower in 2013 than in 2012. The gains in terms of consumption have to be adjusted accordingly.
But the real problem is when Irwin tells us:
"In the Great Recession, spending fell by even more than could be attributed solely to the wealth effects caused by falling home prices. A vicious cycle set in through which falling home prices contributed to people being underwater on their mortgages, which had an outsized impact on their spending. Research by Atif Mian, Kamalesh Rao, and Amir Sufi last year found that in counties with high degrees of household debt and home price declines, retail sales fell much more than elsewhere."
Hmm, spending fell by even more than could be attributed to the wealth effect. Let's check that one.
Dean Baker / January 26, 2013
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Labor Market Policy Research Reports, January 5 – January 25, 2013CEPR and / January 25, 2013
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Testimony on Return Assumptions on New Mexico Pension PlansJanuary 23, 2013, Joint Session of the Labor and Education Committees New Mexico State Legislature
Dean Baker / January 25, 2013
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Debt to China: Budget Deficits and Trade DeficitsMuch of the concerns about the budget deficit often relates to the fact that we owe a substantial portion of the debt to China. Linking the debt to China with the budget deficit reflects a mistaken understanding of the economy. In a post for the Roosevelt Institute's Econobytes, economist Dean Baker, co-director of the Center for Economic and Policy Research argues there is no direct tie between the size of the budget deficit and our debt to China.
The debt to China is in fact far more dependent on the trade deficit, which should be the main concern for those troubled by this debt.
There is no special importance to the fact that China’s government is buying government bonds, as opposed to any other asset.
Dean Baker / January 25, 2013
Article Artículo
Workers Earning More and Less than the Social Security Payroll Tax CapJanuary 25, 2013
CEPR / January 25, 2013
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State Union Membership, 2012John Schmitt, Janelle Jones and / January 25, 2013
report informe
State Union Membership, 2012CEPR, , and / January 25, 2013
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Raising the Social Security Payroll Tax Cap: How Many Workers Would Pay More?John Schmitt, Janelle Jones and / January 24, 2013