The Latest from the Brookings Panel

I’m back from my favorite conference of the year—the Brookings Papers on Economic Activity.  It was a terrific line-up of papers.  And to call the discussion lively would be an understatement. (Full disclosure: David Romer and I are the co-editors.)

While a close reading of technical research papers is my idea of a good time, I’m told not everyone is wired this way.  So I went into the studio to record a very simple summary of my thoughts on the papers.  You won’t quite get the whole two days of economic policy wonk-ery, but this video is a start:


If you are interested in the full line-up, click on through, below:

  • Steve Davis and Til von Wachter on “Recession and the Costs of Job Loss.” That cost? It’s huge.  The WSJ’s Sara Murray notes that: “Workers who were laid off in recessions experienced, on average, $112,095 in income losses — three years of pre-layoff earnings. Those laid off in expansionary times experienced a $65,424 loss.”
  • Erik Hurst and Benjamin Pugsley asking “What do Small Business Do?” Slate’s Annie Lowrey summarizes: “The stereotype of the small-businessperson as a start-up innovator is pervasive. But it’s not true”.
  • Jesse Rothstein on “Unemployment and Job Search in the Great Recession.” The surprise: Extending UI didn’t much raise unemployment.  Here’s Yahoo!’s Zachary Roth: “the various extensions of jobless benefits enacted during the current downturn raised the unemployment rate by around 0.2 to 0.6 percentage points… But hold on! Rothstein says that half or more of this effect is thanks to ‘reduced labor force exit among the unemployed.’”
  • Arvind Krishnamurthy and Annette Vissing-Jorgensen analyze “The Effects of Quantitative Easing on Interest Rates.” The WSJ’s Jon Hilsenrath summarizes: “the first round of Fed quantitative easing reduced long-term borrowing costs by more than one percentage point, and the second round reduced these costs by 0.2 percentage points, but the impacts benefited mostly safe borrowers like the U.S. government and only high-rated corporate bonds.”
  • Lars Svensson on “Practical Monetary Policy: Examples from Sweden and the US”  Yes, this is the Deputy Governor of the Sveriges Riksbank arguing that the Swedes got their monetary policy wrong.  More here from the WSJ’s Luca Di Leo.


I am not an economist but if low interest rates are only helping the government and highly rated corporations then isn't the action by the Fed a scam to help keep down government debt and take it out on savers, including the elderly who depend on interest payments? I would think Obama, if he is for the little guy would encourage the Fed to raise rates somewhat since apparently the low rates are not encouraging businesses to invest anyway (and a lot of them have a lot of money they are sitting on anyway) and he claims to be for the little guy.