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Italy's 'this time it's different' moment: With rejoinder by Giavazzi | vox - 0 views

www.voxeu.org/...rent-moment-rejoinder-giavazzi italy time moment rejoinder vox
shared by Gene Ellis on 05 Sep 12 - No Cached
  • Gene Ellis on 05 Sep 12
     
    Wyplosz - good article on self-fulfilling phrophicies
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Technological change: The last Kodak moment? | The Economist - 0 views

www.economist.com/21542796
shared by Gene Ellis on 19 Feb 15 - No Cached
  • Technological change The last Kodak moment?
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Car Factories Offer Hope for Spanish Industry and Workers - NYTimes.com - 0 views

www.nytimes.com/...nish-industry-and-workers.html car offer hope spanish industry workers
shared by Gene Ellis on 28 Dec 12 - No Cached
  • Four years of economic turmoil and the euro zone’s highest jobless rate have made the Spanish labor market so inviting — an estimated 40 percent less expensive than those of Europe’s other biggest car-making countries, Germany and France — that Ford and Renault recently announced plans to expand their production in Spain.
  • Some experts say such gains in competitiveness and investment are exactly what Spain needs for its economy to recover and to remove any doubts about whether the country can remain in the euro union.
  • Because Spain no longer has its own currency to devalue as a way to lower the price of its exports, it is having to find its competitive advantage in lower labor costs. Many economists have argued that societies cannot survive such painful downward adjustments.
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  • That is the lowest level since 1972.
  • Its trade deficit has been shrinking — down 28 percent for the first 10 months of this year,
  • “From 2008, we suddenly realized that we had lost a lot of competitiveness and needed to work very hard to improve things, particularly in terms of labor issues and logistics,
  • Over all, Spain’s unit labor costs — a measure of productivity — are down 4 percent since 2008, according to Eurostat, the European statistics agency.
  • In a related measurement, the most recent Eurostat data put Spain’s average hourly labor cost at 20.60 euros which was well below Germany’s 30.10 euros and France’s 34.20 euros.
  • Unlike most other Spanish industries, car manufacturing has no sectorwide collective bargaining agreement with unions. As a result, each carmaker has been able to adjust working hours with its own employees, in response to changing demand.
  • In return, the companies have promised workers that they will not be subjected to the huge layoffs made in other parts of the economy,
  • I don’t want to give lessons to anybody. But at such a delicate moment for Spain, showing that we believe in flexibility and consensus has certainly been highly valued by the carmakers.”
  • The car sector employs 280,000 people in Spain, including parts suppliers, and accounts for a tenth of the country’s economic output. About 85 percent of the industry’s workers are on long-term contracts.
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Has the U.S. Economy Been Permanently Damaged? : The New Yorker - 0 views

www.newyorker.com/...ad-news-and-the-good-news.html damage us economy
shared by Gene Ellis on 09 Jan 14 - No Cached
  • Although the study uses some sophisticated statistical methods, its basic point is straightforward: in the long term, economic output (G.D.P.) is constrained by the quantity and the quality of economic inputs (labor, capital, and technology). If the growth rate and quality of these inputs decline, the potential growth rate of G.D.P. will fall, too—it’s just a matter of arithmetic.
  • With hiring rates down, many workers have given up searching for jobs and have dropped out of the labor force.
  • With budgets tight, corporations and government departments have cut back on investments in new plants and machinery, computer hardware and software, and research and development.
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  • The authors come up with a variety of numbers, including one that has received a lot of attention: potential G.D.P.—broadly speaking, the level of G.D.P. consistent with stable inflation—“is currently about 7 percent below the trajectory it appeared to be on prior to 2007.” According to the latest figures from the Commerce Department, the G.D.P. is now close to seventeen trillion dollars, and seven per cent of that figure is $1.2 trillion. This is a lot of money to have gone missing, especially if it will never be recovered. Hence Krugman’s dire conclusion: “By tolerating high unemployment we have inflicted huge damage on our long-run prospects …. What passes these days for sound policy is in fact a form of economic self-mutilation, which will cripple America for many years to come.”
  • As well as figuring out the current level of potential G.D.P., the authors estimate its growth rate. This is the more important figure, because it’s what determines living standards over the long term
  • In the period from 2000 to 2007, the paper says the average potential growth rate of G.D.P. was 2.6 per cent.
  • For 2012, the authors estimate the potential growth rate at only 1.3 per cent.
  • In the nineteen-eighties, Larry Summers and Olivier Blanchard, who is now the chief economist of the I.M.F., resurrected the idea and gave it a new name, which they borrowed from engineering: hysteresis. Blanchard and Summers examined hysteresis in Europe, where high rates of unemployment have long been a problem.
  • The good news is that things aren’t quite as bad as the figures in the Fed paper might suggest. If we can get policy right and sharply increase the level of over-all demand in the economy, most of the damage done in the past five years is reversible.
  • At the moment, sadly, there is no prospect of any more fiscal stimulus, let alone a war-sized one, and the onus is falling on the Fed to gee up the economy.
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