A central argument we have made on this blog and in our book is that the distribution of income/wealth matters a great deal for thinking about the macro-economy. Convincing some of this fact is not easy — many continue to work within a modeling framework in which all distributional considerations are assumed away, the so-called “representative-agent” framework. Perhaps the …
Why the Income Distribution Matters for Macroeconomics Read More »
Here is a chart from Ed Leamer showing jobless recoveries after the last two recessions. There are several ways to see jobless recoveries in the data, but this one is particularly striking. It may take a little effort to follow it, but it is worth the effort. On the horizontal axis is the total amount of hours …
We all know that households cut back on spending dramatically during the Great Recession. Are they spending now? Has spending caught up to the trend the United States was on before? The red line in the chart below plots retail spending in real terms in the United States from 1992 to 2013. We want to …
The FOMC meets this week, and most expect them to continue to taper their purchases of longer term MBS and Treasuries at a slow pace. Of course, there could be a surprise around the corner. If there is a surprise, what assets are likely to be affected? And why? The second question is challenging–it has …
For the past couple of years, the quarterly release of the Federal Reserve Flow of Funds data has been cheered because it has shown a sharp rise in household wealth, particularly of financial assets. This goes hand in hand with increasing incomes through means outside of employment. We agree this is good news, but the …
