The Bankwatch

Tracking the consumer evolution of financial services

Posts Tagged ‘stimulus

Inflation or no inflaton coming | Econobrowser

James at Econobrowser always offers insightful views on the economy. This post deals with the prospect for the current hot topic, of inflation or not. My read is that earlier inflation is the more likely prospect, given sectoral imbalances are more likely than not.

Will stimulating nominal aggregate demand solve our problems?

My personal view is that real-world unemployment arises from the interaction of sectoral imbalances with frictions in the wage and price structure of the sort documented by Truman Bewley and Alan Blinder. The key empirical test, in my opinion, is at what point inflationary pressures begin to pick up. If Krugman is correct, we could have much bigger monetary and fiscal stimulus without seeing any increase in inflation. If the sectoral imbalances story is correct, it would be possible for inflation to accelerate even while unemployment remains quite high.

Written by Colin Henderson

October 7, 2009 at 23:12

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Getting back to normal economic growth | we have it all wrong!

These two headlines tonight following the bank bailout and the auto bailout serve to validate my new view.  We are not going back to where we were.  Yet all activities of the governments’ to date are premised on the notion that after this hickup we will return to 1-2% annual growth in GDP reasonable interest rates, and increasing home prices.

Who believes that now?  Where is the pragmatic thinking that plans for GDP at a fraction of what it was in 2007 ?  Where are the scenario plans for GDP at 75% and 50% of 2007 levels.  Such plans would draw confidence amongst people.  We are in the midst of a multi year shift in value and while the government stimuli will have an impact, that impact is not well understood in terms of immediate economic change nor future inflationary impact.

Obama team plans biggest boost in history to save American economy | Guardian

Barack Obama’s administration in waiting signalled yesterday that it was preparing the biggest economic stimulus in US history to avert mass unemployment in a stuttering economy that could face the toughest recession in half a century.

Japan Exports Plunge Record 27% as Recession Deepens | Bloomberg

Dec. 22 (Bloomberg) — Japan’s exports plunged the most on record in November as global demand for cars and electronics collapsed, signaling more factory shutdowns and job cuts are likely as the recession deepens.  Exports fell 26.7 percent from a year earlier,

Written by Colin Henderson

December 21, 2008 at 21:57

Posted in Uncategorized

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