More in Global Economy


5 years

Building Connections with Active Labor Market Policies

"Passive" labor market policies involve paying money to the unemployed, like with unemployment insurance. "Active" labor market policies involve a range of programs to assist the unemployed with finding jobs. In both categories, the US has long lagged well behind other high-income countries. Chad P. Bown and Caroline Freund review the evidence in "Active Labor Market Policies: Lessonsfrom Other Countries for the United States" (Peterson Institute for International Economics, January 2019. 19-2).

5 years

Reducing Health Care Costs in America

The US spends about 18% of GDP on health care. Other high-income countries spend an average of about 11%. Thus, the Society of Actuaries and Henry J. Kaiser Family Foundation have created Initiative 18/11 to consider ways of holding down US heath care spending. A first report from the initiative, "What Can We Do About the Cost of Health Care?" (January 2019), doesn't yet offer proposals for action. But it offers a useful sense of what many of the main targets are likely to be of any serious effort to reduce healthy care costs. Here are some of my own reactions and takeaways from the report.

5 years

Why Did Simon Kuznets Want to Leave Military Spending out of GDP?

Simon Kuznets (Nobel 1971) usually gets the credit for doing as much as anyone to organize our modern thinking about what should be included in GDP, or left out. But I had not known that Kuznets apparently argued for leaving military spending out of GDP, on the grounds that it wasn't actually "consumed" by anyone, but should instead be treated as an intermediate input that supported production and consumption. Here's how Hugh Rockoff tells the story in his essay, "On the Controversies behind the Origins of the Federal Economic Statistics," in the Winter 2019 issue of the Journal of Economic Perspectives. [Full disclosure: I work at JEP as Managing Editor.]  Rockoff writes:

5 years

Why Have Other Countries Been Dropping Their Wealth Taxes?

A wealth tax is what it sounds like: a tax imposed not on income, but on wealth. The standard economic definition of wealth includes both nonfinancial assets like real estate and financial assets like stocks and bonds. Thus, a wealth tax doesn't care if the value of someone's wealth went up or down in the last year/ It is not a tax on the transfer of wealth to others, like an inheritance tax or a gift tax. It is just imposed on the amount of wealth.

5 years

The Puzzle of the US Productivity Slowdown

In the long-run, the average standard of living in an economy is determined by the average productivity of its workers. For example, Paul Krugman started Chapter 1 of his 1990 book, The Age of Diminished Expectations, by stating: "Productivity isn't everything, but in the long run it is almost everything. A country's ability to improve its standard of living over time depends almost entirely on its ability to raise its output per worker."

5 years

Sustainable Government Debt – An Old Idea Refreshed

New research from the Peterson Institute suggests bond yields may fall once more. Demographic forces and unfunded state liabilities point to an inevitable reckoning. The next financial crisis may be assuaged with a mix of fiscal expansion plus QQE. Pension fund return expectations for bonds and stocks need to be revised lower.

5 years

Digitization of Media Industries: Quantity and Quality

Digitization has revolutionized media industries. The equipment needed to produce a movie, television show, or musical album has gotten remarkably cheaper. The cost of distributing video, sound, or text has dropped dramatically, too, in some cases to nearly zero. In addition, the power of the "gatekeepers" who used to determine what content would be broadly distributed--producers and publishers--has been substantially diminished.

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