Dirk Niepelt

I was asked to play devil’s advocate in a debate about “secular stagnation.” Here we go: Alvin Hansen, the “American Keynes” predicted the end of US growth in the late 1930s—just before the economy started to boom because of America’s entry into WWII. Soon, nobody talked about “secular stagnation” any more. 75 years later, Larry Summers has revived the argument. Many academics have reacted skeptically; at the 2015 ASSA meetings, Greg Mankiw predicted that nobody would talk about secular...

MA course at the University of Bern. Lectures follow chapters 1–4 in this text. Time: Wed 10-12. KSL course site. Course assistant: Christian Myohl.

In the FT, Jeevan Vasagar reports about a study according to which the haze spreading from Indonesian forest fires in Fall 2015 killed about 100 000 people in Southeast Asia.

More discussion about falling employment of young men in the US: John Rust publicizes the facts in a speech: Unskilled young men spend more time playing video games and less time in the labor market. “In 2015, 22 percent of lower-skilled men aged 21–30 had not worked at all during the prior 12 months.” They live in the basement of their parents’ houses and are not married. (And on his 12-year old son: “If we didn’t ration video games, I am not sure he would ever eat. I am positive he...

In BPEA, Natasha Sarin and Larry Summers argue that bank stock has not: … we find that financial market information provides little support for the view that major institutions are significantly safer than they were before the crisis and some support for the notion that risks have actually increased. … … financial markets may have underestimated risk prior to the crisis … Yet we believe that the main reason for our findings is that regulatory measures that have increased safety have been...

In the JEEA 14(4) (August 2016) Klaus Adam and Junyi Zhu argue that unexpected price-level movements generate sizable wealth redistribution in the Euro Area (EA) … The EA as a whole is a net loser of unexpected price-level decreases, with Italy, Greece, Portugal, and Spain losing most in per capita terms, and Belgium and Malta being net winners. Governments are net losers of deflation, while the household (HH) sector is a net winner … HHs in Belgium, Ireland, Malta, and Germany experience...

The New York Times’ Upshot. Currently the odds are 3/4 to 1/4.

In a Resolution Foundation report, Adam Corlett examines the “Elephant Curve.” The curve shows that between 1988 and 2008 income growth in the 70th to 95th percentile range of the world income distribution was much lower than for almost all other percentiles. Since the lower middle class of rich countries is situated around the 80th percentile of the distribution the Elephant curve has been interpreted as evidence for stagnating middle class incomes in the rich countries. Corlett...

On his blog, Ben Bernanke weighs the pros and cons of negative (nominal) interest rates vs. a higher inflation target to create monetary “policy space.” His main points are: Lower rates work immediately. In contrast, a higher inflation target only works once agents’ expectations adjust. A higher target may not be politically tenable a thus, not be credible. In contrast, “institutional changes … [such] as eliminating or restricting the issuance of large-denomination currency, could expand...

The Economist is very sceptical.