Found 413 article(s) in category 'Monetary Policy'

No Idea What Trump Means by Reciprocal Tax

No Idea What Trump Means by Reciprocal Tax. Martin Feldstein, May 3, 2017, Video, “Martin Feldstein, professor of economics at Harvard University, discusses his thoughts on tax policy and the Trump administration. He speaks with Bloomberg’s David Westin and Jonathan Ferro on “Bloomberg Daybreak: Americas.” (Source: Bloomberg)” Two Parts –  Link  1 “Reciprocal Tax” Link 2 – “Big Issue is Tax Reform

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Currency Politics in the Developing World

Currency Politics in the Developing World. Jeffry Frieden, Spring 2017, Paper, “The exchange rate is often said to be the most important price in any economy, for it affects all other prices. Americans are not used to thinking in these terms, in part because the US economy is relatively closed, and in part because the dollar is the world’s principal reserve currency. Nonetheless, a country’s exchange rate has a powerful impact on its economic activity, and this is especially true for developing countries. Because currency policy structures a country’s economic relations with the rest of the world, it can be crucial in determining a poor country’s developmental prospects.Link

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Twenty Years of Time Series Econometrics in Ten Pictures

Twenty Years of Time Series – Econometrics in Ten Pictures. James Stock, Spring 2017, Paper, “Twenty years ago, empirical macroeconomists shared some common understandings. One was that a dynamic causal effect—for example, the effect on output growth of the Federal Reserve increasing the federal funds rate—is properly conceived as the effect of a shock, that is, of an unanticipated autonomous change linked to a specific source. Following Sims (1980), the use of vector autoregressions to estimate the dynamic causal effect of shocks on economic variables was widespread.Link

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The Debate on Corporate Tax Reform Just Started for Real

The Debate on Corporate Tax Reform Just Started for Real. Mihir Desai, May 2017, Opinion, “President Trump’s announcement of his proposed tax reforms, as skeletal as it was, is better news than most commentators have suggested. First, it signals that the administration is coming to the view that tax reform is the most important agenda item for the first term — and that is great news. Second, the fact that the corporate piece of the proposal did not embrace the plan proposed by House Ways and Means Chair Kevin Brady and Speaker Paul Ryan, and its so-called border adjustment tax, is also good news. So, there is some good news in what it signals and what’s not in it. What about what is in it?Link

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How Best to Tax Business

How Best to Tax Business. N. Gregory Mankiw, April 23, 2017, Opinion, “The details of the tax code may not make your heart sing, but they are enormously important and, at long last, they may be changing. In fact, the next 12 months are shaping up to be a critically important time.  Despite an uneven start, tax reform is on the agenda in Congress. And the ideas being considered, especially regarding business taxation, are not mere tweaks to our ossified system. They would profoundly alter how the government raises money and upend the incentives for private decision makers. This is fascinating to tax policy nerds like me. But it is important for everyone to understand.Link

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Optimal Taxation and Insurance Using Machine Learning

Optimal Taxation and Insurance Using Machine Learning. Maximilian Kasy, April 10, 2017, Paper, “How should one use (quasi-)experimental evidence when choosing policies such as tax rates, health insurance copay, unemployment benefit levels, class sizes in schools, etc.? This paper suggests an approach based on maximizing posterior expected social welfare, combining insights from (i) optimal policy theory as developed in the field of public finance, and (ii) machine learning using Gaussian process priors. We provide explicit formulas for posterior expected social welfare and optimal policies in a wide class of policy problems.Link

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Interest Rate Conundrums in the Twenty-First Century

Interest Rate Conundrums in the Twenty-First Century. Samuel Hanson, March 31, 2017, Paper, “A large literature argues that long-term interest rates appear to react far more to high-frequency (for example, daily or monthly) movements in short-term interest rates than is predicted by the standard expectations hypothesis. We find that, since 2000, such high-frequency “excess sensitivity” remains evident in U.S. data and has, if anything, grown stronger. By contrast, the positive association between low-frequency changes (such as those seen at a six- or twelve-month horizon) in short- and long-term interest rates, which was quite strong before 2000, has weakened substantially in recent years. As a result, “conundrums”— defined as six- or twelve-month periods in which short rates and long rates move in opposite directions—have become far more common since 2000.Link

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Getting From Here to There: The Transition Tax Issue

Getting From Here to There: The Transition Tax Issue. Stephen Shay, March 27, 2017, Paper, “If there is fundamental U.S. international income tax reform, regardless of the reform option chosen, the United States must decide how to handle the $2.4 trillion to $2.6 trillion of previously untaxed foreign income accumulated by U.S. multinational corporations. In this report, Fleming, Peroni, and Shay argue that the proper approach is to treat the income as a subpart F inclusion in the year before the effective date of fundamental reform and to tax it at regular rates with an option to make the payments in installments that bear market-rate interest. The authors explain why the case for a low or deferred tax on this income is inferior to the case for full immediate taxation.Link

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The Currency-Plus-Commodity Basket: A Proposal for Exchange Rates in Oil-Exporting Countries to Accommodate Trade Shocks Automatically

The Currency-Plus-Commodity Basket: A Proposal for Exchange Rates in Oil-Exporting Countries to Accommodate Trade Shocks Automatically. Jeffrey Frankel, March 2017, Paper, “The paper proposes an exchange rate regime for oil-exporting countries. The goal is to achieve the best of both flexible and fixed exchange rates. The arrangement is designed to deliver monetary policy that counteracts rather than exacerbates the effects of swings in the oil market, while yet offering the day-to-day transparency and predictability of a currency peg. The proposal is to peg the national currency to a basket, but a basket that includes not only the currencies of major trading partners (in particular, the dollar and the euro), but also the export commodity (oil). The plan is called Currency-plus-Commodity Basket (CCB). The paper begins by fleshing out the need for an innovative arrangement that allows accommodation to trade shocks.Link

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