On June 22, Reuters published a profile of National Economic Council director Larry Summers.
In an article in the Summer issue of National Affairs, Harvard economist Greg Mankiw examines the premises of the Obama administration’s economic policy. While critical of many aspects, he is sympathetic to the fact that crisis-related policies had to be developed and implemented very quickly. Mankiw, who was chairman of the Council of Economic Advisers under George W. Bush, concludes that the jury is still out on the success or failure of these policies.
In a paper released on June 21, the Tax Foundation examined income mobility between 1999 and 2007. Based on tax data, it found that 60% of people in the bottom quintile of income in 1999 were in a higher quintile in 2007, and 40% of those in the top quintile were in a lower one over the same period.
Also on June 21, the Bank for International Settlements released a paper arguing that policies to cope with the financial crisis have been too short-term oriented, with insufficient attention paid to adjustments in the financial sector that would form the basis for long-term growth.
A report released by McKinsey Global on June 18 examines the role of multinational corporations in the U.S. economy. Although they represent just one percent of companies, they account for 23% of private sector output and half of U.S. exports.
The Federal Reserve Bank of Richmond released a study on June 16 which estimates that the federal government guaranteed $25 trillion in financial liabilities at the end of 2008, 58% of the total market.
In a June 14 paper, University of California, Santa Barbara, economist Henning Bohn argues that the key to debt sustainability is whether the Treasury can borrow at interest rates below the growth rate of the economy.
In a paper released on June 8, economist Robert Gillingham reviewed the experience of the Greenspan Commission on Social Security in 1983 and asks whether it provides a model for dealing with today’s entitlement spending problem. He concludes that it does not because the nature of the problem Greenspan faced is very different from the one we face today.
The June issue of the European Central Bank’s Monthly Bulletin strongly supports the need for fiscal consolidation. Although it may lead to slower growth in the short run, the longer term benefits are “undisputed,” it says (p. 85).
● In a June 17 blog post, economist Paul Krugman criticized the ECB position as “magical thinking.”
In a May lecture, Stanford economist John Taylor summarized his research on the economic crisis. He calls the period leading up to it and the reaction to it the “Great Deviation” because it represented a deviation from economic principles that were previously accepted. These deviations are what caused the crisis and led to incorrect policy responses that have prolonged it, he says.
Bruce Bartlett is an American historian and columnist who focuses on the intersection between politics and economics. He blogs daily and writes a weekly column at The Fiscal Times. Read his most recent column here. Bartlett has written for Forbes Magazine and Creators Syndicate, and his work is informed by many years in government, including as a senior policy analyst in the Reagan White House. He is the author of seven books including the New York Times best-seller, Impostor: How George W. Bush Bankrupted America and Betrayed the Reagan Legacy (Doubleday, 2006).
Previous posts:
June 24: Focus on Global Imbalances
June 23: Focus on Sin Taxes
June 22: Focus on Inflation
June 21: Focus on Energy
