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Ryan McDonnell
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I think it is interesting that the four Nobel laureate economists felt compelled to write a statement to President Obama and Congress. It goes to show how important the issue is to them. I would agree that a balanced budget amendment would be bad because when we do need to borrow to make "vital investments," such as the article says, we would not be able to do so. Other people think that such amendment is necessary because of worries about the growing national debt. I would like to know what effect national debt has on the US and world economies, as well as international relations.
I think that although there are other ways to attempt to stimulate the economy, as shown by the stimulus plan of 2009, the best way is indeed to execute public spending on research, education, and infrastructure, as Eichengreen states. It is just important that the money actually produces results, because these days it seems like many projects to improve those three economic factors fail even with a lot of money at hand. WE must be diligent about researching the best ways to spend the money, because while it is bad to fear economic intervention from the government, we must also be able to put our trust in the government to invest in research, education, and infrastructure in a way that optimizes the benefit of society. I think that the collective input of unbiased leaders of education, infrastructures, and research is an important ingredient for the process, and will help reduce all of the political noise and bias surrounding those facets of the economy.
I am surprised that professor DeLong and Stigliz believe that we are in an economic malaise. All of the news about unemployment numbers and the general economy over the past couple years have been positive, besides China recently. I would like to know exactly what Larry Summers meant in his comments about why the FED should raises interest rates, as his first point, in particular, seemed confusing. I would also like to know the specifics of Stiglitz’s point about inequality being an issue – is he talking about inequality in job opportunities? About income inequality? It is interesting that inflation responsiveness to changes in unemployment has decreased by 3/4, as it shows that the inflation rate is more dependent on other factors in the economy like economic growth.
As with most things, moderation is best. It certainly seems to be the case with minimum wage increases and the effects they have on the restaurant industry. It makes sense that smaller increases in minimum wage does not hurt the restaurant industry, considering that the demand for restaurant food did not suffer with a small rise in prices. It would be interesting to find the threshold price increase for decreasing demand in restaurants. That threshold would depend on income distribution in the restaurant's area as well as the cost of living, or CPI. Perhaps, for this reason, there should be more minimum wages set for each city than for each state, as is happening on the west coast.
Simon Wren-Lewis’s article is interesting because of how strongly he opposes the work of people like Bartholomew. He claims that Bartholomew skews the picture of the economy in Great Britain and Europe by omitting plenty of necessary information. Also intriguing is his claim that “anyone can write this kind of stuff about anything in macroeconomics…there are lots of things going on.” Similar to what we talked about in class, it is easy to create a poor model because the world is very complicated. Consequently, he claims that politicians may be lying about where they get their information on the economy from in order to promote their own policies. Policies should be influenced by quality economic analysis, but economic analysis should not be influenced by policies. It is interesting that he points to “econometric studies” as a good tool to show the effectiveness of fiscal policies. Why is that so? Also, toward the end of the article, he mentions the situation in the USA, where “with the left in disarray and flirting with non-mainstream economics, the right has an excellent opportunity…[to] cast off the quackery of the Ferguson and Bartholomew ilk.” I would love to learn why the left is “flirting with non-mainstream economics,” because it seems that the economy has done well under Obama.
Toggle Commented Jan 26, 2016 on Another one for 102 students at Jolly Green General
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Jan 25, 2016