Archives for posts with tag: NY Times

An interesting take from Greg Mankiw on potential ways to stimulate the stalled economic recovery.  The article makes an interesting juxtaposition between the current economic downturn and the recession of 1982.  What stands out is the stark contrast in the strength of business investment levels in either recovery.  While the stimulus policies and efforts of the government have focused on bolstering the level of consumption within the economy, it has become apparent that federal stimulus has done little to support or encourage the overall level of business investment.  Mankiw believes that this is indicative of a general lack of investor confidence and certainty in the long-term problems facing the country.  As discussion of a third round of quantitative easing heats up, it is important to question as to whether essentially the same strategy a third time will truly do anything to assuage investor uncertainly or help to reinvigorate the economy.

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As the August 2nd deadline for increasing the federal debt ceiling approaches, both parties continue to drag their feet finding common ground and reaching a compromise.  The Atlantic ran a piece addressing how an idyllic Washington might find compromise on the debate by both raising the ceiling and addressing the structural inefficiencies that continue to perpetuate our current deficit problems.  Much of the article follows recommendations made by the Bowles-Simpson Deficit Commission as a primary source for inspiration to both cut spending and lower overall tax rate while closing tax expenditure loopholes and reducing the deficit.  Unfortunately, this idealism is hard to share given the political grandstanding which continues to plague the negotiation process.  Yet while Republicans and Democrats continue to bicker over whether decreasing spending or increasing the tax rate is the fundamentally best way to reconcile the deficit, as Greg Mankiw points out in this older op-ed article, their difference lies mainly in political spin.

With the American economy creeping slowly upwards, many policymakers and economists have begun to discuss the significance of the dollar’s value in the global recovery.  An article by Yolaiki Gonzalez and Ariel Nelson on CNBC’s website discusses the relatively strong negative correlation recently between dollar value and the level of the S&P 500.  They observe that this relationship seems rather atypical given empirical evidence from the recent past and suggests that low U.S. interest rates continue to play a key role in the weakness of the dollar.  Former Obama adviser Christina Romer discusses the relationship in more theoretical terms in her NY Times editorial.  Her article illustrates her belief that when examining the relationship between the relative strength of both the economy and dollar, the principal consideration should be on the underlying influences which affect their prices rather than trying to discover some universal correlation between the two by blindly observing their respective levels.  Her principal example demonstrates how an economy with strong U.S. industrial production and one with high national deficit can both lead to a strong dollar.  What is important to consider, therefore, is the underlying policy decisions which lead to the dollar’s strength or weakness.  Both articles do an effective job of examining the correlation between these two indexes, with Romer’s approaching the subject from a purely theoretical perspective and Gonzalez and Nelson’s article examining contemporary empirical evidence and hypothesizing on possible causes for the data.

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