Posted: 26 Aug 2015 12:33 AM PDT
Paul Krugman has advice for the Fed:
It's Getting Tighter: When thinking about the market madness and its possible real effects, here's something you — where by "you" I mean the Fed in particular — really, really need to keep in mind: the markets have already, in effect, tightened monetary conditions quite a lot.
First of all, if break-evens (the difference between interest rates on ordinary bonds and inflation-protected bonds) are any guide, inflation expectations have fallen sharply...
Second, while interest rates on Treasuries are down, rates on private securities viewed as even moderately risky are up quite a lot...
So real borrowing costs are up sharply for many private borrowers. This is a significant headwind for the U.S. economy, which was hardly growing like gangbusters in any case.
A Fed hike now looks like an even worse idea than it did a few days ago.
Posted: 26 Aug 2015 12:24 AM PDT
From Tim Taylor:
John Kenneth Galbraith on Writing, Inspiration, and Simplicity: John Kenneth Galbraith (1908-2006) was trained as an economist, but in books like The Affluent Society (1958) and The New Industrial State (1967), his found his metier as a social critic. In these books and voluminous other writings, Galbraith didn't propose well-articulated economic theories, and carry out systematic empirical tests, but instead offered big-picture perspectives of the economy and society of his time. His policy advice was grindingly predictable: big and bigger doses of progressive liberalism, what he sometimes called "new socialism."
Posted: 26 Aug 2015 12:17 AM PDT
Stefania Albanesi, Claudia Olivetti, and Maria Prados at the NY Fed's Liberty Street Economics:
Incentive Pay and Gender Compensation Gaps for Top Executives: The persistence of a gender gap in wages is shaping the debate over women's equality in the workplace and underscores the challenge facing policymakers as they consider their potential role in closing it. While the disparity affects females at all income levels, women in professional and managerial occupations tend to experience greater gender-pay differences than those in working-class jobs. The rise in the use of incentive pay, which has been linked to the growth of income inequality (Lemieux, MacLeod, and Parent), might have contributed to the gender gap in earnings (Albanesi and Olivetti). In this post, which is based on our related New York Fed staff report, we document three new facts about gender differences in the structure of executive compensation.
Posted: 26 Aug 2015 12:06 AM PDT
Posted: 25 Aug 2015 08:34 AM PDT
I have a new column:
The Politics of Income Inequality: f the policies favored by some Republicans seeking the nomination for president turned into reality, we'd roll back or eliminate our social insurance programs, cut taxes on the wealthy, cut spending even more to slash the deficit, and turn health care over to the private sector.
The "you're on your own no matter what bad luck comes your way" society is a desirable outcome according to this view because it creates the correct incentives for people to be gainfully employed and take care of themselves. Never mind that history shows many people won't prepare for retirement, purchase health care, set aside funds in case of job loss, and so on unless they are forced to do so by government programs, and will thus then end up being an even bigger burden to the rest of society, Those who support these policies appear to believe that this time will somehow be different.
What do these issues have in common? ...