Macro Musings

Adam Millsap is an assistant director at the L. Charles Hilton Center at Florida State University and a senior affiliated scholar at the Mercatus Center. Today, he joins the show to discuss how different regional economies can lead to business cycles at the regional and state levels, rather than the federal level. This creates difficulty for monetary policy at the federal level as looser monetary policy may be appropriate for states like West Virginia, but may not be appropriate for states like California. He and David also discuss the decline of inter-state labor mobility and how bad regulation deters people from moving to areas with better job prospects. Description: David’s blog: macromarketmusings.blogspot.com/ Macro Musings podcast site: macromusings.com/ David’s Twitter: @DavidBeckworth Adam Millsap’s website: http://adammillsap9.wixsite.com/personal Adam Millsap’s Mercatus profile: https://www.mercatus.org/adam-millsap Adam Millsap’s Twitter: @AA_Millsap Related links: “Recessions Don’t Have the Same I

Betsey Stevenson is an associate professor of public policy at the University of Michigan and previously served as the chief economist at the U.S. Labor Department. Today, she joins the show to discuss her experience working at the Labor Department at a time of high unemployment as well as her more recent research on challenges in the U.S. labor market. Specifically, she talks about the problem of decreased male labor force participation and why “manly men need to do more girly jobs.” David’s blog: http://macromarketmusings.blogspot.com/ Macro Musings podcast site: https://macromusings.com/ David’s Twitter: @DavidBeckworth Betsey Stevenson’s University of Michigan profile: http://fordschool.umich.edu/faculty/betsey-stevenson Betsey Stevenson’s Twitter: @BetseyStevenson Related links: “Manly Men Need to More Girly Jobs” by Betsey Stevenson https://www.bloomberg.com/view/articles/2016-12-07/manly-men-need-to-do-more-girly-jobs “Want to Help the Economy? Learn to Trust” by Betsey Stevenson https://www.bloomberg.

Greg Mankiw is a professor of economics at Harvard University and served as the chair of the Council on Economic Advisers under President George W. Bush. Today, he joins the show to discuss the history of macroeconomics and how macroeconomists function as both scientists, who formulate and test theories, and as engineers, who set out to solve real world problems. Greg also shares his thoughts on the debate between the New Keynesian School and New Classical School and how that debate has shaped how we think about economics. David’s blog: macromarketmusings.blogspot.com/ Macro Musings podcast site: macromusings.com/ David’s Twitter: @DavidBeckworth Greg Mankiw’s Harvard profile: https://scholar.harvard.edu/mankiw/home Greg Mankiw’s blog: https://gregmankiw.blogspot.com/ Related links: “The Macroeconomist as Scientist and Engineer” by Greg Mankiw https://scholar.harvard.edu/files/mankiw/files/macroeconomist_as_scientist.pdf Macroeconomics by Greg Mankiw https://www.amazon.com/Macroeconomics-N-Gregory-Mankiw/dp/1

Edward Harrison is a consultant with Global Macro Advisers and founder of the investment news blog *Credit Writedowns.* Today, he joins the show to discuss the political forces that led to the establishment of the Eurozone and the turmoil that has plagued it since the Great Recession. Edward also shares his thoughts on whether the Eurozone will survive. David’s blog: http://macromarketmusings.blogspot.com/ Macro Musings podcast site: https://macromusings.com/ Edward’s blog: https://pro.creditwritedowns.com/ David’s Twitter: @DavidBeckworth Edward Harrison’s Twitter: @edwardnh Related links: “Macron Will Need to Target Reforms Like a Laser” by Edward Harrison http://www.businessinsider.com/macron-will-need-to-target-reforms-like-a-laser-2017-5 “Some Pre-European Debt Crisis Signs are Popping Up Again” by Edward Harrison http://www.businessinsider.com/some-pre-european-debt-crisis-signs-are-popping-up-again-2017-4

In this week’s episode in front of a live audience, Scott Sumner, the director of the Program on Monetary Policy at the Mercatus Center and blogger at *The Money Illusion,* returns to the show to share his thoughts on the Federal Reserve’s performance from the Great Recession to the present. Scott explains how forecast targeting and price level targeting could have mitigated the economic decline in 2008 and 2009. He also shares his thoughts on how the cognitive biases of central bankers can cause them to make mistakes in evaluating the stance of monetary policy and offers some solutions to address this problem. Note: this episode was recorded as part of a special Mercatus Center event in June 2017. David’s Twitter: @DavidBeckworth David's blog: macromarketmusings.blogspot.com Scott’s Mercatus profile: https://www.mercatus.org/scott-sumner Scott's blog: www.themoneyillusion.com/ Related links: *The Midas Paradox: Financial Markets, Government Policy Shocks, and the Great Depression* by Scott Sumner https://www

Lisa Cook is an Associate Professor of Economics at Michigan State University and formerly served as a senior economist at the Council of Economic Advisers under President Obama. Today, she joins the show to discuss her work on how the Great Recession affected households in the U.S. She also shares her thoughts on the prospects for economic development in Africa. Finally, she and David also discuss the U.S. patent system and whether the system is in need of reforms. (Note: We experienced some technical difficulties during the record of this episode. You’ll notice a slight change in audio quality around the 5 minute mark.) David’s blog: http://macromarketmusings.blogspot.com/ Lisa Cook’s profile: https://msu.edu/~lisacook/ David’s Twitter: @DavidBeckworth Lisa Cook’s Twitter: @drlisadcook Related links: “Consumer Finance and the Financial and Economic Crises: Implications from Household Surveys in Michigan” by Lisa Cook https://msu.edu/~lisacook/mich_cons_fin_jconed_022511.pdf “Were the Nigerian Banking Reform

Ryan Cooper is a national correspondent at *The Week.* He joins the show to discuss how bad economic policy has hindered strong economic recovery from the Great Recession. Furthermore, Ryan argues economic anxiety stemming from the Great Recession has given rise to populist and even extremist political movements throughout the world. Finally, Ryan and David discuss the folly of limiting population growth as a means of combating climate change and how slowing population growth presents many long-term economic challenges. David’s blog: http://macromarketmusings.blogspot.com/ Ryan Cooper’s *The Week* archive: http://theweek.com/authors/ryan-cooper David’s Twitter: @DavidBeckworth Ryan Cooper’s Twitter: @ryanlcooper “The Great Recession Clearly Gave Rise to Right-Wing Populism” by Ryan Cooper http://theweek.com/articles/685813/great-recession-clearly-gave-rise-rightwing-populism “The Federal Reserve is Still Wrecking America” by Ryan Cooper http://theweek.com/articles/696914/federal-reserve-still-wrecking-america

Stephen Matteo Miller is a Senior Research Fellow at the Mercatus Center at George Mason University. He joins the show to discuss his work on the history of financial crises as well as the evolution of the U.S. banking system since the late 1800s. Steph stresses the importance of capital requirements (how much capital or equity a bank holds relative to its liabilities) in combating financial crises. Furthermore, he argues that higher and simpler capital requirements, rather than more regulation, are the keys to a more market-disciplined banking system. David’s blog: http://macromarketmusings.blogspot.com/ Stephen Miller’s Mercatus profile: https://www.mercatus.org/stephen-matteo-miller David’s Twitter: @DavidBeckworth Stephen Miller’s Twitter: @SMatteoMiller Related links: “Ending Too-Big-to-Fail May Require More Than the Minneapolis Fed Too-Big-to-Fail Plan” by Stephen Miller https://www.mercatus.org/publications/too-big-to-fail-minneapolis-fed “A Primer on the Evolution and Complexity of Bank Regulatory Cap

Ricardo Reis is a professor of economics at the London School of Economics and the editor of the prominent Journal of Monetary Economics. He joins the show to discuss the state of macroeconomics, which has recently come under attack from many commentators who claim the discipline lacks empirical rigor and has failed to accurately forecast economic conditions. Ricardo gives a nuanced defense of macroeconomics, arguing macroeconomic research is, indeed, quite vibrant and empirical. Furthermore, he argues that although there have been shortcomings, macroeconomics has greatly improved over the past few decades in its ability to forecast and inform policy debates. David Beckworth’s blog: http://macromarketmusings.blogspot.com/ Ricardo Reis’s LSE profile: http://personal.lse.ac.uk/reisr/ David’s Twitter: @DavidBeckworth “Is Something Really Wrong with Macroeconomics?” by Ricardo Reis http://personal.lse.ac.uk/reisr/papers/17-wrong.pdf “Achieving Price Stability by Manipulating the Central Bank's Payment on Reserves

Matt Yglesias is a columnist and editor for the news website Vox, which he co-founded in 2014. Today, he joins the show to talk about the politics shaping Fed policy. Matt discusses why he thinks President Barack Obama’s biggest policy failure was in failing to appoint members to the Fed's Board of Governors. He also shares his thoughts on where the Left and Right currently stand on monetary issues. David’s blog: http://macromarketmusings.blogspot.com/ Matt Yglesias’s Vox archive: https://www.vox.com/authors/matthew-yglesias David’s Twitter: @DavidBeckworth Matt Yglesias’s Twitter: @MattYglesias Related links: “Obama’s Biggest Economic Policy Mistake” by Matt Yglesias https://www.vox.com/2014/9/17/6219247/obamas-biggest-economic-policy-mistake “Fed Up” by Matt Yglesias (Feature in *Democracy: A Journal of Ideas*) http://democracyjournal.org/magazine/20/fed-up/

In this week’s episode, David is joined by two guests, who make a case for economic optimism. Michael Mandel, chief economist at the Progressive Policy Institute, and Bret Swanson, president of Entropy Economics and visiting scholar at the American Enterprise Institute, are the co-authors of the new paper, “The Coming Productivity Boom: Transforming the Physical Economy with Information.” Michael and Bret argue that, despite the slowdown in productivity of the last few decades, innovations in information technology such as artificial intelligence are going remake our economy for the better. David’s blog: http://macromarketmusings.blogspot.com/ Michael Mandel’s homepage: http://www.progressivepolicy.org/author/mmandel/ Brett Swanson’s homepage: http://www.bretswanson.com/ David’s Twitter: @DavidBeckworth Michael Mandel’s Twitter: @MichaelMandel Bret Swanson’s Twitter: @JBSay Related links: “The Coming Productivity Boom: Transforming the Physical Economy with Information” by Michael Mandel and Bret Swanson http

Steven Horwitz is a professor of economics at Ball State University and a senior affiliated scholar at the Mercatus Center at George Mason University. He joins the show to discuss monetary disequilibrium (the condition when the supply and demand for money are not aligned, which leads to either inflation or deflation). David and Steve also examine Austrian Business Cycle Theory – a theory of how “malinvestment” caused by bad policy leads to an unsustainable boom and inevitable bust. Steve also explains how monetary disequilibrium led to the Great Recession and offers some solutions for minimizing business cycles in the future. David’s blog: http://macromarketmusings.blogspot.com/ Steve Horwitz’s personal website: http://myslu.stlawu.edu/~shorwitz/ Steve Horwitz’s Mercatus profile: https://www.mercatus.org/steven-horwitz David’s Twitter: @DavidBeckworth Related links: *Microfoundations and Macroeconomics: An Austrian Perspective* by Steven Horwitz https://www.amazon.com/Microfoundations-Macroeconomics-Perspecti

Matt Klein is a columnist for the Financial Times and blogger at FT Alphaville. Today, he joins the show to discuss his work on the Eurozone, optimal currency areas, and safe assets. David and Matt examine the monetary policy problems and debt burdens facing the Eurozone area and Greece, in particular. They also chat about the possibility of the United States becoming less of an optimal currency, which would make Fed policy more challenging. David’s blog: http://macromarketmusings.blogspot.com/ Matt Klein’s bio: https://ftalphaville.ft.com/meet-the-team#matthew-c-klein David’s Twitter: @DavidBeckworth Matt Klein’s Twitter: @M_C_Klein Related links: “Is the United States Becoming Less of an Optimal Currency Area?” by David Beckworth http://macromarketmusings.blogspot.com/2017/05/is-united-states-becoming-less-of.html “Will Nevada Ever Recover from the Housing Boom?” by Matt Klein https://ftalphaville.ft.com/2017/03/06/2185515/will-nevada-ever-recover-from-the-housing-bust/ “The IMF Implies Greece Should Have L

Jay Shambaugh is a professor of economics and international affairs at The George Washington University and a former member on the Council of Economic Advisers (CEA). Today, he joins the show to discuss his work on the “Macroeconomic Trilemma” (or “Impossible Trinity”): the problem that a country cannot maintain a fixed exchange rate, free movement of capital, and an independent monetary policy all at once. He also shares stories from his time at the CEA as well as thoughts on current monetary policy both for the U.S. and the Eurozone. David’s blog: http://macromarketmusings.blogspot.com/ Jay Shambaugh’s GW profile: https://www2.gwu.edu/~iiep/about/faculty/jshambaugh/ David’s Twitter: @DavidBeckworth Jay Shambaugh’s Twitter: @JayCShambaugh Related links: “The Euro’s Three Crises” by Jay C. Shambaugh https://www.brookings.edu/bpea-articles/the-euros-three-crises/ “Financial Stability, the Trilemma, and International Reserves” by Maurice Obstfeld, Jay C. Shambaugh, & Alan M. Taylor http://www.nber.org/paper

David Schleicher is an Associate Professor of Law at Yale Law School and is an expert in election law, land use, local government law, urban development, transportation, and local regulation of the sharing economy. He joins the show to discuss his new journal article, “Stuck! The Law and Economics of Residential Stability,” which argues that government regulations, such as occupational licensing and land-use laws, have led to a significant decline in inter-state mobility. Schleicher describes the negative macroeconomic implications of this trend and explains how we can reverse it. David’s blog: http://macromarketmusings.blogspot.com/ David Schleicher’s Yale profile: https://law.yale.edu/david-n-schleicher David Beckworth’s Twitter: @DavidBeckworth David Schleicher’s Twitter: @ProfSchleich Related links: “Stuck! The Law and Economics of Residential Stability” by David Schleicher https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2896309

Paul Krugman is a Nobel Laureate in economics, a columnist at *The New York Times,* and a Distinguished Professor of Economics at the Graduate Center of the City University of New York. He joins the show to discuss his work on liquidity traps, Japan’s Lost Decade, and lessons from the Great Recession. Paul also explains how Isaac Asimov’s science fiction inspired him to become an economist. David’s blog: http://macromarketmusings.blogspot.com/ Paul Krugman’s CUNY profile: https://www.gc.cuny.edu/stonecenter/Paul-Krugman Paul Krugman’s blog: https://krugman.blogs.nytimes.com/ Paul Krugman’s NYT archive: https://www.nytimes.com/column/paul-krugman David’s Twitter: @DavidBeckworth Paul Krugman’s Twitter: @paulkrugman Related links: “It’s Baaack: Japan’s Slump and the Return of the Liquidity Trap” by Kathryn M. Dominguez, Kenneth S. Rogoff, and Paul R. Krugman https://www.brookings.edu/bpea-articles/its-baaack-japans-slump-and-the-return-of-the-liquidity-trap/ "Debt, Deleveraging, and the Liquidity Trap: A Fisher

Ethan Ilzetzki is an assistant professor of economics at the London School of Economics and a research affiliate at the Centre for Economic Policy Research. He joins the show to discuss exchange rate regimes, anchor currencies, and the new Triffin dilemma. Ethan points out how the U.S. dollar is connected to a staggering 70 percent of global GDP. David and Ethan discuss what the dollar’s dominant role in the global economy means for U.S. monetary policy, both at home and abroad. David’s blog: http://macromarketmusings.blogspot.com/ Ethan Ilzetzki’s LSE profile: http://personal.lse.ac.uk/ilzetzki/index.htm/ David’s Twitter: @DavidBeckworth Ethan Ilzetzki’s Twitter: @ilzetzki Related links: “Exchange Arrangements Entering the 21st Century: Which Anchor Will Hold?” by Ethan Ilzetzki (with Carmen Reinhart and Kenneth Rogoff) http://personal.lse.ac.uk/ilzetzki/index.htm/Research/Ilzetzki&Reinhart&Rogoff.pdf “How Big (Small?) are Fiscal Multipliers?” by Ethan Ilzetzki (with Enrique G. Mendoza and Carlos A.

Daniel Griswold is a Mercatus Center Senior Research Fellow and Co-Director of the Program on the American Economy and Globalization at the Mercatus Center at George Mason University. He joins the show to discuss the theory of trade, dating back to Adam Smith, and his work on current US trade policy. Daniel and David discuss some of the misconceptions surrounding trade and why Americans should embrace free trade instead of protectionism. David’s blog: http://macromarketmusings.blogspot.com/ Daniel Griswold’s blog: https://madabouttrade.com/ David’s Twitter: @DavidBeckworth Daniel Griswold’s Twitter: @DanielGriswold Related links: “Plumbing America’s Balance of Trade” by Daniel Griswold https://www.mercatus.org/publications/american-balance-of-trade *Mad About Trade: Why Main Street America Should Embrace Globalization* by Daniel Griswold https://www.amazon.com/Mad-About-Trade-America-Globalization/dp/193530819X “The China Shock: Learning from Labor-Market Adjustment to Large Changes in Trade” by David Autor,

Josh Zumbrun is a national economics correspondent for the Wall Street Journal. David and Josh discuss what seems to be the diminished status of economists in a populist era and what role economists will play in the Trump Administration. Josh also shares his thoughts on life as an economics journalist in the digital age. David’s blog: http://macromarketmusings.blogspot.com/ Josh Zumbrun’s WSJ archive: http://topics.wsj.com/person/Z/josh-zumbrun/7972 David’s Twitter: @DavidBeckworth Josh Zumbrun’s Twitter: @JoshZumbrun Related links: “How to Restore Faith in Economics” by Noah Smith https://www.bloomberg.com/view/articles/2017-03-15/how-to-restore-faith-in-economics “Donald Trump’s Cabinet Won’t Include Chairman of CEA” by Josh Zumbrun https://www.wsj.com/articles/donald-trumps-cabinet-wont-include-chairman-of-cea-1486670755?tesla=y

In this week’s episode, Jim Bullard, the president and CEO of the Federal Reserve Bank of St. Louis, joins the show to discuss his work as a Federal Reserve executive and as a researcher in monetary policy. Bullard shares his thoughts on why inflation has been so persistently low since 2008 and whether the Fed should pursue a more symmetric inflation target. He and David also discuss the Fed’s plans for monetary policy in 2017. In Bullard’s view, the Fed should focus on reducing its balance sheet before it turns to raising rates further. (Note: this episode was recorded on April 5, 2017) Interview transcript: https://www.mercatus.org/podcasts/04172017/macro-musings-53-james-bullard-federal-reserve David’s blog: http://macromarketmusings.blogspot.com/ Jim Bullard’s Federal Reserve profile: https://www.stlouisfed.org/from-the-president David’s Twitter: @DavidBeckworth St. Louis Fed’s Twitter: @stlouisfed Related links: “Comments on the FOMC's Amendments to Its Statement on Longer-Run Goals” by James Bullard htt