Wrap Up for August 2017

Now that Hurricane Harvey has finally moved on from the Texas coast, all of us are keeping a close watch on the rising rivers. With a little luck, the small town where I live will be able to manage its own systems, and any further evacuations here can be kept to a minimum. Meanwhile I'll post the monthly wrap up this morning, just in case...

Some skepticism from New Zealand, regarding MMT and guaranteed employment.

A working paper from Jeffrey Hummel
"Central Bank Control Over Interest Rates: The Myth and the Reality"

Like it or not, "The slowdown is happening"

Fredrik Erixon explains to James Pethokoukis, how services are holding back economic dynamism:

Another thing which has happened is the gradual shift in the Western economy with less reliance on traditional industrial sectors and more focus on services sectors. What we know from services sectors is, firstly, that the degree of openness to trade and openness to traditional forms of competition tend to be smaller in the services sectors. We can see that the services sectors that are built on highly specialized human capital lead markets in the direction so that human capital almost becomes an institutional type of form. It's almost impossible to compete with. So that shift in itself has also had the consequence of gradually declining the degree of openness of the market for new players to come in and actually do something very different.

How would a minimum $15 an hour affect today's two-tier labour market?

Marcus Nunes illustrates how in an extended economic recovery, appearances can be deceiving.

Is the economy becoming less legible?

Nick Rowe puts immigration into perspective.

Do 16 percent of the public really believe the Fed is responsible for consumer credit scores?

"The rising return to non-cognitive skill"

Jefffrey Hummel addresses some very important considerations in his review of Kenneth Rogoff's "The Curse of Cash". He provides highlights of the review (and additional links) in a post for Alt-M.

Brookings maps where the robots are.

Larry Summers for the Financial Times:
"...the economy is probably quite brittle within the current inflation targeting framework. This is underappreciated."

Some new evidence, that IOR was a serious contractionary monetary policy error

Exports are on the decline
"Between 2009 and 2014, exports accounted for 25 percent of the growth in U.S. gross domestic product (GDP). But U.S. exports declined in 2015 and again in 2016, hampered by a strong dollar and sagging global demand."

The Hutchins Center takes a look at the Fed's balance sheet

David Beckworth sounded the alarm in October of 2008, that the new tool of IOER was likely to have contractionary effects http://macromarketmusings.blogspot.com/2017/08/the-ioer-debate-redux.html

It's been fifty years since Galbraith's "The New Industrial State" was published. Joshua Gans reconsiders its basic message in a blog post.

Heard at Jackson Hole:
"The inverse relationship between unemployment and inflation is dead"

Two articles from Vox on William Baumol.

Decentralized water collection, as a better long term solution for flood control.

A closer look at job market search effectiveness. (from the San Francisco Fed)