The following is the conclusion from an NBER paper by Anmol Bhandari, David Evans, Mikhail Golosov and Thomas J. Sargent. Published in September, it looked at the relationship between taxes, debts and wealth transfers, and how economic context effects them.
In other words, when it can, or cannot, be helpful to run high debt. Read more
Deutsche Banks’ China economics analysts are pondering why their forecast for 8.5 per cent growth next year is well above consensus (and even well above the IMF’s 7.7 per cent and the World Bank’s 8 per cent).
They have come up with a list of reasons why everyone else might be overlooking some positive possibilities for future economic growth. We’re not sure if we agree, but bear with us (haha) anyway. Read more
The Bank for International Settlements says there’s a problem. Governments, by and large, haven’t done enough to address the issues that have emerged during/since the financial crisis. Some monetary policymakers have done rather a lot, but much of it is in unchartered territory and carries risks. So, says BIS, monetary policymakers should just stop it henceforth.
From the latest BIS annual report: Read more
Carmen Reinhart and Ken Rogoff wrote a letter to Paul Krugman.
He responded, and so did some others. (DeLong for Krugman; Hamilton for R&R.)
On it goes.
And why not? Austerity is an important subject, the empirical data or lack of it deserves a great deal of attention. Economists calling each other names, probably less so. But it’s so entertaining… Read more
Let’s take a moment for a high level overview of public debt-to-GDP ratios in the eurozone. If that’s not your idea of fun, well, you probably wouldn’t be reading FT Alphaville.
Courtesy of a note by Lasse Holboell W. Nielsen of the Economics Research team at Goldman Sachs (we may have added some kittens)… Read more
A warning to Great Britain from UK-based investment fund Hinde Capital (a hedge fund that specializes in precious metals):
We wish to outline the gravity of the situation in which the UK finds itself, and by assessing how we got here we can begin to offer our solutions both for monetary and political reforms. Unfortunately we are deeply concerned that far from being cynics or purveyors of doom, the very harsh reality is that the UK is caught in an intractable spiral of negative outcomes. Read more
On Friday, Dennis Gartman of the Gartman Letter directed our attention to the following chart from this month’s Forbes Magazine: