Banking's Past, Present, and Future
Writing nearly 40 years ago, historian Ernest R. May warned of the dangers of misusing history for policy purposes. May was primarily concerned that policy makers drew the wrong lessons from the past. In their opinion piece in yesterday’s Wall Street Journal, Glenn Hubbard, dean of Columbia Business School and an advisor to Mitt Romney, … Read more
Writing in today’s Wall Street Journal about how to reduce government spending, Columbia University economist and former chairman of George W. Bush’s Council of Economic Advisors R. Glenn Hubbard chooses to disregard some important facts. According to Hubbard, “President Obama’s answer is higher taxes.” Well, not exactly. What President Obama proposed was a combination of … Read more
Winston Churchill said that democracy is the worst form of government except all those other forms that have been tried. The financial crisis has tested Churchill’s assertion. In Greece, the austerity measures imposed on the country by the EU and the ensuing domestic unrest led Prime Minister George Papandreou to call for a referendum to … Read more
Remember when “liberal” became the insult of choice among Republicans? Apparently, “Keynesian” has now taken on that status for Republican economists. Never mind that Keynesian is ill-defined (old Keynesian? new Keynesian? the Keynesian part of the neoclassical synthesis?)–making Keynesian a dirty word and applying it to those with whom you disagree has become the tactic … Read more
In a recently published op-ed piece in the Wall Street Journal, Stanford economists John Cogan and John Taylor argue that: “Temporary, targeted tax reductions and increases in government spending are not good economics. They have repeatedly failed to increase economic growth on a sustainable basis. What may come as a surprise is that such policies … Read more
When you teach economics, you spend a fair amount of time dwelling on the distinctions between the short run and the long run. If a firm is not making a profit but is meeting its short-run costs (e.g., wages, utilities), microeconomic theory says that the firm should continue in business rather than shut down. In … Read more
The White House has already given some indication of the sort of proposals it will put forward after Labor Day to help boost the economy. These include extending payroll tax cuts for another year, extending unemployment benefits, and speeding the approval of free trade agreements with Colombia, South Korea, and Panama. These are all worthwhile … Read more
Writing in today’s Wall Street Journal, WSJ op-ed board member Stephen Moore offers a variety of dubious–and at least one outrageous–opinion on the economy and economic policy. (1) The economy would be in better shape today in the absence of the economic stimulus. No, it wouldn’t. Even fellow WSJ contributor Ed Lazear believes that the … Read more
In case you have been asleep for the last couple of days, the sovereign debt rating of the United States was downgraded on Friday has been downgraded by the Standard and Poor’s (S&P) from AAA to AA+. This has not made S&P too popular in some quarters, particularly in the US government. President Obama and … Read more
Apparently, the editors of the Wall Street Journal have a rule about the number of op-eds each week that praise Ronald Reagan. I haven’t figured out the exact count yet, but Robert Barro’s piece in Monday’s Journal gets the paper off to a nice start on their weekly quota. It’s a pity that there are … Read more