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August 19, 2006
Greg Mankiw takes a (late) shot at me
Greg Mankiw, eminent Harvard economist and textbook author, just took a shot at an article I wrote two years ago:
Back in 2004, Michael Mandel of Businessweek gave me grief for saying that the 2001 recession began in late 2000, rather than at the official NBER date of March 2001. My view (and the view of the nonpartisan CEA staff) was that the data were substantially revised after the NBER committee made their call, and the March 2001 date no longer seemed right in light of the revised data. Mandel's view was that I was a Republican stooge.
A stooge! What a nice turn of phrase...I wish I had thought of it back then. I was actually much kinder and gentler in my article.
Still fighting this two-year old battle, Mankiw unearths a new academic paper which seems to suggest that the 2001 recession did begin in September 2000, before George W. Bush was elected. Brad DeLong disagrees, while Menzie Chinn raises some objections.
I gotta say..I had forgotten about that 2004 piece, but I think it holds up pretty well. The NBER dating committee still puts the beginning of the recession at March 2001.
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? Dating business cycle turning points from Econbrowser
Thanks much to Menzie for holding down the fort while I was away last week. Now that I'm back, I'd like to weigh in on the issue of when did the recession of 2001 begin, a topic on which Thanks much to Menzie for holding down the fort while I was away last week. Now that I'm back, I'd like to weigh in on the issue of when did the recession of 2001 begin, a topic on which [Read More]
Tracked on August 22, 2006 03:24 PM
? Talk is Cheap, But Is It Informative? from Economist's View
Jeremy Piger reviews research on the reaction of financial markets to non-quantitative written and oral Fed communications, and, separately, provides estimates of recession probabilities for the U.S.: Is All That Talk Just Noise?, by Jeremy Piger, Mone... [Read More]
Tracked on August 26, 2006 06:11 AM
If you had used "stooge" to describe him, I am not gonna forgive you. Thats too nice a word for a consummate stupid
Posted by: Dr. Dan at August 20, 2006 10:44 AM
If the point of the timing exercise is about who was more precise - then what a waste of time to discuss it. A few months are meaningless.
If the point is to tie the recession to a particular president, then it is also a waste because economic turns follow policy by very long lags. Using March of 2001, or any prior date, the seeds of that recession were sown long before the 2000 election.
The truth is that the first year of a new president's term is really just a continuation of the prior president's budget. Any impact from a new budget will have no real effect until at least another six months after that.
However, I think people give far too much credit (and blame) to presidents for the economic conditions.
Posted by: Zephyr at August 22, 2006 01:13 AM
The government has little control over the economy. Clinton is no more responsible for the boom than Bush is for the collapse. The Federal Reserve is the most likely culprit for the boom, and the bust is a very normal result. The interplay between the Fed and Wall St. exacerbates both sides of the swing. I think the bubble and it's correction are done and through. The housing bubble can be blamed on the Fed to a large degree, and the correction to it is just beginning. However, I believe the economic situation - with budget and trade deficits and huge disconnects between reported numbers and the situation of the median citizen - is structural. Our hyrdocarbon-base is a big piece of this. Our current economic structure is not just not-sustainable, it is decidedly anti-sustainable. We're going to pay for that in the coming decades.
Posted by: Brandon W at August 22, 2006 10:16 AM
The President does have little actual direct control over the economy. However, an administration's policies along with those of the legislative branch do have long lasting effects. Shifts in regulation and deregulation have huge effects on the economy of the country. Tax policy also makes a big difference. I personally believe whole-heartedly in Reagan's idea of "trickle-down" economics. Many people in this country have become very anti-capitalist and love to draw a line between the haves and have-nots. The fact of the matter is though that if it werent for extremely wealthy people, there would be many fewer jobs and many more poor people.
Posted by: Piense El Tanque at August 23, 2006 12:07 PM
Silly argument, inasmuch as it seems to revolve around whether we can blame the recession on Bush
or not. As if a U.S. president could have such direct control over a 13-trillion dollar economy of 300 million people. How idiotic, but most journalists never question that fallacy.
I recall first-hand the vicious downturn in the semiconductor cycle, and loads of people getting escorted out of the Motorola plant on a Black Friday in January of 2001. I'm pretty sure Motorola laid those poeple off as a result of months of plumetting sales and bookings, and not because George Bush was about to take the oath of office. However we might technically define a recession, the economy was clearly already falling out of bed well before that inauguration.
The roots clearly go back to March 2000, when the Nasdaq started tanking and the speculative tech
bubble clearly, finally began to burst. (So was that Clinton's fault? or was George Bush in Austin
secretly doing something to the economy then?)
Actually the roots of the recession go back to the late 1990s, when so many companies with no prospect of ever making a profit were getting funded and going public. And they were taking that
money and making business investment and marketing spending that in turned boosted other companies'
businesses -- but it was all vapor, and it never really should have happened. The unemployment
rate was so low then because a lot of jobs that should not have existed, did. So was it Bill Clinton's fault that people in 1998 invested money in DrKoop.com, and that DrKoop.com hired a bunch of people who were destined to lose those jobs in a couple of years, or was that George Bush's fault? Because that's where your recession came from.
Posted by: Kevin at August 23, 2006 04:47 PM
Recessions do not suddenly start - they slowly develop over many months or longer. By the time the measurements show an actual decline in GDP the economy has been losing strength for many months.
Monetary policy is the strongest government factor - and it takes about nine months before it has any measurable effect on the economy. The President has much less influence on the economy in the short run.
To believe that a recession in March of 2001 was in anyway related to a new president taking office about 6 weeks earlier requires extreme ignorance of economics.
Posted by: zephyr at August 26, 2006 10:43 AM