Asian authorities were understandably smug in the aftermath of the financial crisis of 2008-2009. Growth in the region slowed sharply, as might be expected of export-led economies confronted with the sharpest collapse in global trade since the 1930’s. But, with the notable exception of Japan, which suffered its deepest recession of the modern era, Asia came through an extraordinarily tough period in excellent shape.
That was then. For the second time in less than four years, Asia is being hit with a major external demand shock. read more
Keywords: Asia, Europe, Contagion
Keywords: Government, Government Intervention
The spread between Spanish and German 10-year debt reached new euro-era highs: see chart on FT Alphaville
Keywords: Spain, Germany, 10-year Debt Spread
Keywords: Wealth of Nations, Economic Prosperity
Keywords: Education, Skills
How right he was!
Keywords: Monetary Policy, Printing Money, Taxation
read Ezra Klein's interpretation here:
Keywords: Mitt Romney, Barack Obama, Bain Capital
Is China poised to become the world’s next superpower? This question is increasingly asked as China’s economic growth surges ahead at more than 8% a year, while the developed world remains mired in recession or near-recession. China is already the world’s second largest economy, and will be the largest in 2017. And its military spending is racing ahead of its GDP growth. read more
Keywords: China, Chinese Economy
"This paper asks whether increases in government spending stimulate private activity. The first part of the paper studies private spending. Using a variety of identification methods and samples, I find that in most cases private spending falls significantly in response to an increase in government spending. These results imply that the average GDP multiplier lies below unity. In order to determine whether concurrent increases in tax rates dampen the spending multiplier, I use two different methods to adjust for tax effects. Neither method suggests significant effects of current tax rate changes on the spending multiplier. In the second part of the paper, I explore the effects of government spending on labor markets. I find that increases in government spending lower unemployment. Most specifications and samples imply, however, that virtually all of the effect is through an increase in government employment, not private employment. I thus conclude that on balance government spending does not appear to stimulate private activity."
Keywords: Government Spending, Private Activity
Americans' expectations for their personal financial situations have recovered from the low point of four years ago, with 63% now saying they expect to be better off a year from now, up from 52% in late May/early June 2008. The 18% who say they will be financially worse off in a year is by one percentage point the lowest since 2003. read more on Gallup Wellbeing
Keywords: US Economy, Expectations of US Citizens
Keywords: Innovation, Regulation
Keywords: US Economy, Incentives for Enterprises
What Peter Thiel, paypal founder and facebook investor, said about theories on the bubble and bust economy in 2008. (For Peter Thiel a big financial event is ahead - the facebook IPO).
Keywords: Asset Bubbles, Bubble Economics
Keywords: Technology, Economic Development, Economic Growth, Stagnation
With the sap rising and the governments falling, all the European powers are merrily acting in national character.
In the midst of a severe financial crisis, the French have just elected a champagne socialist on promises of a 75 percent top tax rate and a lower retirement age. The Greeks also had an election in which the established parties lost to a ragbag of splinter groups. The outcome of the election was that they need to have another election. (Cue Zorba the Greek theme music.) Meanwhile, the wailing gloom of the flamenco emanates from Spain, where youth unemployment is now around 50 percent. read more
Keywords: European Crisis, European Nationalistic Tendencies
....."The developed world’s economies are headed for social, political, and economic disaster if the terms of the debate are not transformed to include the extraordinary and untapped potential of aging populations as a central part on the growth side.
Michael W. Hodin, Ph.D., is Adjunct Senior Fellow at The Council of Foreign Relations and Executive Director of The Global Coalition on Aging."
Keywords: Aging Population, Social Systems
Keywords: Taxes, Corporate Income Taxes
Keywords: European Crisis, US Economy
Daniel Gros has a good article on Project Syndicate expressing his views on the wrong focus of many European politicians when tackling growth:
Here is an excerpt:
"The urge to be seen to be “doing something” is leading Europe’s policymakers to rely on the few instruments with which the EU can claim to foster growth. But they should recognize that today’s growth crisis is different. The real bargain should not be austerity plus a Marshall Plan for the south, but rather continued austerity plus labor-market reforms in the south, combined with more infrastructure investment in Germany and other AAA-rated countries like the Netherlands.
CommentsDeep service-sector reforms in Germany would also help to unlock the country’s productivity potential and open its market to services exports from southern Europe. That way, the South would have a chance to find jobs for its rather well-educated young people, whose only choice now is between unemployment and emigration." Source: Project Syndicate
Keywords: European Crisis, European Economic Stagnation, Growth Measures
Keywords: Road to Serfdom, F.A. Hayek, Milton Friedman
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