Tuesday, April 25, 2006
Monday, April 24, 2006
WASHINGTON (Reuters) - Federal Reserve Chairman Ben Bernanke said tax cuts can spur greater economic activity and boost economic efficiency, but generally do not wholly pay for themselves.
"Tax cuts that reduce marginal tax rates will likely improve the efficiency of the economy and boost overall economic activity," Bernanke said in an April 18 letter to Rep. Brad Sherman (news, bio, voting record).
"Because they increase economic activity, cuts in marginal tax rates typically lead to revenue losses that are smaller than implied by so-called static analyses, which hold economic activity constant," he said. "However, under normal conditions, tax cuts do not wholly pay for themselves."
The letter, released by Sherman's office on Wednesday, was in response to written questions the California Democrat submitted in connection with a February 15 hearing on monetary policy at which Bernanke testified.
Things that he wouldn't even say if he was only a former CEA, and not head of the fed.
Here we see Greg Mankiw and Glenn Hubbard still being elliptical as Brad DeLong puts it. The sad thing is they had the gunner's chair, they had the inside job, and they could not deliver. Disappointing.
Keywords: Taxes, ECO120
Thursday, April 13, 2006
How can a corrupt central bank line the pockets of state-connected businessmen? A report from AllAfrica.com counts the ways the Kenya Central Bank has done it:And they also have a post on Turkey's newly nominated CB leader. Who adheres to sharia, the Muslim law prohibiting the charging of interest. Pretty good idea to put someone like that in charge of interest rates.
1. Printing extra cash for the government to disburse.
2. Sweetheart deals on (controlled) foreign exchange.
3. Sweetheart deals on government bonds.
4. Favoritism in bank supervision.
Wednesday, April 12, 2006
Given the global nature of the decline in yields, an explanation less centered on the United States might be required. About a year ago, I offered the thesis that a "global saving glut"--an excess, at historically normal real interest rates, of desired global saving over desired global investment--was contributing to the decline in interest rates. In brief, I argued that this shift reflects the confluence of several forces. On the saving side, the factors include rapid growth in high-saving countries on the Pacific Rim, export-focused economic development strategies that directly or indirectly hold back the growth of domestic demand, and the surge in revenues enjoyed by oil producers. On the investment side, notable factors restraining the global demand for capital include the legacy of the Asian financial crisis of the late 1990s, which led to continuing sluggishness in investment in some of those economies, and the slower growth of the workforce in many industrial countries. So long as these factors persist, global equilibrium interest rates (and, consequently, the neutral policy rate) will be lower than they otherwise would be.
Keywords: Interest Rates, ECO301, ECO712
Hopefully it will be thrown out of court.
Update: Levitt posts the tribune article here.
Monday, April 03, 2006
Here is Keith's piece. And here is my piece.
There has been a lot written recently on this topic. Here is Greg Mankiw's take and Don Bourdeaux captures my sentiments on the misappropriation of the term 'illegal'. His co-blogger Russ Roberts has a nice post here as well.
Keywords: Immigration, ECO305, ECO120