James Alexander | Scott Sumner wrote an interesting blog post on his vision of macro. It is a useful way of seeing where Scott stands today. However, we were puzzled. Should unemployment really be the centerpiece variable or should it be stable nominal spending growth at an appropriate level?
Xu Bin and Zhou Dongsheng via Caixin | Comparing this year’s results of the China Europe International Business School (CEIBS) Business in China Survey with those from the last seven years shows what Chinese and foreign executives who are doing business in China think about issues such as overcapacity, the effectiveness of the Shanghai Free Trade Zone, and the government’s efforts at economic reform.
Trump’s attempt to get rid of the Obamacare health scheme has turned into a complete fiasco, and a similar fate might await his plans to revamp public expenditure. Trump’s own party mates share his will to reduce corporation tax, but have expressed deep concern about huge deficits. So much of the presidential agenda might end up in the dustbin.
Despite Republicans still had no deal on their health care bill to repeal Obamacare on Wednesday’s midnight, the House of Representatives must vote later today to “repeal and replace” the law. Much to the disappointment of many observers, the Trump administration has given priority to this topic over tax cuts and infrastructure spending.
There’s a new monetary theory doing the rounds here which claims to be revolutionary: the Modern Monetary Theory (MMT. Not to be confused with the Market Monetary Theory). I agree with some of its points. But when some of its supporters say the state deficit and debt are not important – that they don’t have damaging consequences – the theory becomes a huge deliberate fallacy.
Lu Bingyang and Coco Feng via Caixin | China’s state-owned train maker has started work on a plant in Chicago, a year after clinching a $1.3 billion contract to supply rail cars to the Chicago Transit Authority.
Daniel Kapellmann | Whereas it took some 10 years to negotiate and enforce a mechanism to strengthen commercial bonds between Canada, the United States and Mexico, today, after 23 years in existence, the North American Free Trade Agreement (NAFTA) may be overrun in just a couple of months.
I believe central banks don’t control long-term rates – which are decisive for investment – and that they can influence them in what we would call normal circumstances, namely when GDP is expanding and inflation is at its optimum level. The central bank trys to control the private market’s expectations, but it doesn’t always succeed.
Benjamin Cole | The econosphere is again rumbling about Chinese debt and China banks, evidently forgetting the long serious faces made many times about Chinese debt and China banks in the recent past. But China keeps growing. Japan is another story that defies Western orthodox macroeconomics.
Peter Isackson | The fact that something that contradicts official accounts sounds like a possible conspiracy theory doesn’t mean it may not be true.