Plain Sense Economics

Robert Frank, Cornell economist and co-author of the principles textbook that we use in class, wrote in the New York Times this past Sunday:
The consensus is that short-run deficits help end recessions, and that whether long-run deficits matter depends entirely on how government spends the borrowed money. If failure to borrow meant forgoing productive investments, [...]

The National Bureau of Economic Research announced on Monday that we are in a recession and that this recession started back in December 2007. As we discuss in class, the common rule of thumb about recessions is that they represent at least two quarters of declining real GDP. Officially, however, NBER and their Business Cycle [...]

From the New York Times, May 1, 2008
After the terrorist attacks of 2001 deflated the economy, Mr. Lauder [Chm of the Estée Lauder Companies] noticed that his company was selling more lipstick than usual. He hypothesized that lipstick purchases are a way to gauge the economy. When it’s shaky, he said, sales increase as women [...]

The Federal (Reserve) Open Market Committee (FOMC) announced last week that it was lowering its main interest rate target, the Fed Funds Rate, by one quarter of a percent. You can read the statement they released here.
Part of their statement and deliberations include concern about inflationary pressures. So they have to balance the need to [...]

April 3 congressional testimony – as presented by the Wall Street Journal. As my students agreed, he won’t win American Idol, but if you listen closely you’ll hear all the various, important pieces of the current economic situation.
Click to see 3′30″ video clip

This segment on NPR highlights the discussions taking place in Washington as the prospects for a recession increase. Reporter Jim Zarolli describes a panel discussion among notable economists and policy experts, including Harvard’s Martin Feldstein, and past Treasury Secretary Robert Rubin – on the topic of using fiscal policy to stimulate the economy.
As a quick [...]