The Unassuming Economist

From Conversable Economist:

“Steve Hanke has devoted considerable effort to building up data on hyperinflations during the last century or so. He offers a quick overview of this work in Forbes (January 20, 2019). Below is his list of hyperinflations. When it comes to Venezuela, he writes:

Now, let’s turn to the world’s only current hyperinflation: Venezuela. It ranks as the 23rd most severe. Today, the annual rate of inflation is 120,810%/yr. While this rate is modest by hyperinflation standards, the duration of Venezuela’s hyperinflation episode, as of today, is long: 27 months. Only four episodes of hyperinflation have been more long-lived.

Here’s the table of all 58 hyperinflations:”

 

From Conversable Economist:

“Twice a year the Congressional Budget Office publishes a “just the facts” overview of the federal budget picture and the US economy. The latest version is “The Budget andEconomic Outlook:2019 to 2029 (January 2019). Here, I’ll focus on the US budget deficit and debt.

Here’s the pattern of US federal government spending and revenues in the last 50 years. Average outlays during that time were 20.7% of GDP. Average revenues were 17.4% of GDP. Contrary to the widespread belief that US government spending and taxes have over time surged ever higher, to me the more obvious pattern here over the half-century is one of stability. Sure, government spending is higher and taxes are lower than the historical averages during the Great Recession. But during boom times like the late 1990s, taxes are above their historical average while spending is below. When President Trump took office early in 2017, US government spending and taxes were–whether for better or worse–almost bang on their long-run averages.

 

But under the surface, two changes are going on–one medium-term and one longer-term. The medium-term change is that the usual pattern over time has been that when the US economy is proceeding strongly, with sustained growth and a relatively low unemployment rate, the budget deficits are usually lower, or in the late 1990s even turned into surpluses. But at present, the trajectory is a relatively healthy economy but with larger-than-usual budget deficits.

This CBO figures shows that if one looks back at years when the unemployment rate was below 6%, the average budget deficit has been 1.5% of GDP. But although the current unemployment rate has been substantially below 6% for several years, the projected budget deficits for the next decade are projected at 4.4% of GDP.

Continue reading here.

From a new IMF working paper by Barry J. Eichengreen, Asmaa A ElGanainy, Rui Pedro Esteves, Kris James Mitchener:

“We consider public debt from a long-term historical perspective, showing how the purposes for which governments borrow have evolved over time. Periods when debt-to-GDP ratios rose explosively as a result of wars, depressions and financial crises also have a long history. Many of these episodes resulted in debt-management problems resolved through debasements and restructurings. Less widely appreciated are successful debt consolidation episodes, instances in which governments inheriting heavy debts ran primary surpluses for long periods in order to reduce those burdens to sustainable levels. We analyze the economic and political circumstances that made these successful debt consolidation episodes possible.”

From American Enterprise Institute:

As 2018 draws to a close, below is our list of the top ten blogs of the year.

1. RIP Herman Stekler, A Forecasting Giant
2. RIP Deena Khatkhate, far-sighted IMF and RBI economist
3. How Well Do Economists Forecast Recessions? A Groundhog Day Update
4. Economic Growth from Octavian to Obama
5. Affordable Housing: Views from Albert Saiz
6. The Distribution of Gains from Globalization
7. Housing View – January 5, 2018 [2018 AEA Annual Meeting Special Edition]
8. Household Credit, Global Financial Cycle, and Macroprudential Policies: Credit Register Evidence from an Emerging Country
9. Understanding Singapore’s Housing Market
10. Growth and well-being: policy should not be based on GDP alone

Photo by Colton Duke