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Tag Archives: Aggregate demand

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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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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Video: The Macro Case for the Green New Deal

(Earlier this week, I gave a virtual presentation at an event organized by the Roosevelt Institute and the Green New Deal Network. Virtual events are inferior to live ones in many, many ways. But one way they are better, is that they are necessarily on video, and can be shared. Anyway, here is 25 minutes on why the economic situation calls for even more spending than the (surprisingly ambitious) proposals from the Biden administration, and also on why full employment shouldn’t be seen...

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The Summer Slowdown Collides With The Summers Acceleration Theory

You’d think Larry Summers would know better. Not that he stepped in it, again, but rather why he did this particular time. Making a big deal out of inflationary aggregate demand when he’s been practically the lone mainstream Economist to look at the post-2008 economy in an honest and serious fashion to then somehow failing to incorporate that view into our current place. What got Summers in hot water a few days ago was a rather careless throwaway surrounding his usual partisan politics....

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26/5/20: COVID19 Impact on Travel and Consumer Demand

Some dire numbers from Factset on changes in consumer preferences / sentiment through March-April 2020: "According to The Conference Board, consumer confidence has weakened significantly with the overall index falling from 118.8 in March to 86.9 in April, the lowest reading since June 2014."  "... older Americans (aged 55 and over) are much less optimistic than survey respondents under 55. This poses a problem as we look to economic recovery... [as] households in which the head...

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You Will Never Bring It Back Up If You Have No Idea Why It Falls Down And Stays Down

It wasn’t actually Keynes who coined the term “pump priming”, though he became famous largely for advocating for it. Instead, it was Herbert Hoover, of all people, who began using it to describe (or try to) his Reconstruction Finance Corporation. Hardly the do-nothing Roosevelt accused Hoover of being, as President, FDR’s predecessor was the most aggressive in American history to that point, economically speaking. Roosevelt just took it a step (or seven) further. The principle is of pump...

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Good News on the Economy, Bad News on Economic Policy

(Cross-posted from the Roosevelt Institute blog. I am hoping to start doing these kinds of posts on new economic data somewhat regularly.) On Friday, the the Bureau of Labor Statistics released the unemployment figures for May. As expected, the reported unemployment rate was very low—3.6 percent, the same as last month. Combined with the steady growth in employment over the past few years, this level of unemployment—not seen since the 1960s—suggests an exceptionally strong labor market by...

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Could Trump Have a Point about Rate Hikes?

(Cross-posted from The Next New Deal at The Roosevelt Institute.) At its December meeting, the Federal Reserve raised its benchmark interest rate a quarter point. The move, while widely expected, represented a clear rebuke to President Trump, who has repeatedly urged the Fed to keep rates low. He took to Twitter after the move to attack Fed head Jerome Powell as a golfer who has no touch (“he can’t putt”)—strong words in the president’s social circle. Trump’s critics on the left may be...

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Macroeconomic Lessons from the Past Decade

Below the fold is a draft of a chapter I’m contributing to an edited volume on aggregate demand and employment. My chapter is supposed to cover macroeconomic policy and employment in the US, with other chapters covering other countries and regions.  The chapter is mostly based on material I’ve pulished elsewhere, mainly my Roosevelt papers “What Recovery?” and “A New Direction for the Federal Reserve.” My goal was something that summarized the arguments there for an audience of...

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