Friday , October 22 2021
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J. W. Mason: SLACK WIRE

Josh Mason, an Assistant Professor of Economics at City University of New York, blogs at The Slack Wire. This economics blog primarily revolves around macroeconomics issues and economic history, which Josh captures extremely well. He does an excellent job of analyzing economic news.

The Politics of Pay-Fors Revisited

A couple of weeks ago  I wrote a post on the logic of pay-fors. The key point of that post was that you might support the principle that public spending ought to be be paid for, even if you did not believe that government faces a genuine financing constraint. Specifically, you might think that linking spending to tax increases would (1) enforce a stricter prioritization of public spending, eliminating programs of minimal or negative social value that would otherwise be adopted; and/or, (2)...

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The Politics of Pay-Fors: A Simple Framework

One of the central economic debates among progressives is over the necessity or desirability of accompanying new public spending with similar-sized tax increases. In recent years perhaps the most visible, or at least the most heated, instances of this debate have been around Modern Mone(tar)y Theory. But the debate itself is broader and older. These debates are in part about economic questions — both what the constraints on issuing new public-sector liabilities (“borrowing”) are in...

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Inflation for Whom?

EDIT: I am getting some very confused readers, who note that historically rent, education and health care have historically risen in price faster than most goods, while in this post I’m saying they are rising more slowly. The original post, should have, but did not, make clear that the pattern of price changes over the past year or so is quite different from what we are used to. That said, this is not all about the pandemic. As I did note, inflation in education has been slowing for a long...

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Alternative Visions of Inflation

Like many people, I’ve been thinking a bit about inflation lately. One source of confusion, it seems to me, is that underlying concept has shifted in a rather fundamental way, but the full implications of this shift haven’t been taken on board. I was talking with my Roosevelt colleague Lauren Melodia about inflation and alternative policies to manage it, which is a topic I hope Roosevelt will be engaging in more in the later part of this year. In the course of our conversation, it occurred...

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At Age of Economics: How Should an Economist Be?

The website Age of Economics has been carrying out a series of interviews with economists about what the purpose of the discipline it is, and what its relationship is to capitalism as a historical social system. I believe there will be 52 of these interviews, one each week over the course of 2021. Earlier this spring, they interviewed Arjun Jayadev and myself. You can watch video of the interview here. I’ve pasted the transcript below. Q: Why does economics matter? JWM: The most obvious...

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At The International Economy: How Worried Should We Be about Asset Bubbles?

(I am an occasional contributor to roundtables of economists in the magazine The International Economy. This month’s topic was “What about the Risk of a Bursting Asset Bubble?”, with corporate debt and equity mentioned as possibilities. Contributors were asked to rank their level of concern from 1 to 10. My response is below.) Any time you have an asset held primarily for capital gains, a story that allows people to extrapolate from recent price increases to future ones, and a...

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At Roosevelt: Reimagining Full Employment

Mike Konczal, Lauren Melodia and I have a new report out from the Roosevelt Institute, on what true full employment might look like in the United States. This is part of a larger project of imagining what an economic boom would look like. As Mike and I argued in our recent New York Times op-ed, there’s a real possibility that the coming years could see a historic boom, thanks to the exceptionally strong stimulus measures of the past year and, hopefully, the further expansions of...

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A new macroeconomics?

[On Friday, July 2, I am taking part in a panel organized by Economics for Inclusive Prosperity on “A new macroeconomics?” This is my contribution.] Jón Steinsson wrote up some thoughts about the current state of macroeconomics. He begins: There is a narrative within our field that macroeconomics has lost its way. While I have some sympathy with this narrative, I think it is a better description of the field 10 years ago than of the field today. Today, macroeconomics is in the process...

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The Roaring 2020s: Further Reading

Mike Konczal and I have a piece in the New York Times arguing that the next few years could see a historic boom for the US economy, if policy makers recognize that strong demand and rising wages are good things, and don’t get panicked into turning toward austerity.  Mike and I and our colleagues at the Roosevelt Institute are planning a series of papers on “planning for the boom” over the coming year. The first, asking how high employment could plausibly rise under conditions of...

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The Persistence of Demand

Here’s the very short version of this very long post: Hysteresis means that a change in GDP today has effects on GDP many years in the future. In principle, this could be because it affects either future aggregate demand or potential output. These two cases aren’t distinguished clearly in the literature, but they have very different implications. The fact that the Great Recession was followed by a period of low inflation, slow wage growth and low interest rates, rather than the...

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