Found 84 article(s) for author 'Martin Feldstein'

An end to austerity will not boost Europe

An end to austerity will not boost Europe. Martin Feldstein, July 9, 2013, Opinion. “The eurozone periphery is on a risky path to end fiscal austerity and accept larger budget deficits. Portugal is the most recent dramatic shift in that direction; Italy, Spain and even France are also abandoning plans to cut spending and raise taxes. This move away from budget discipline reflects a combination of popular political pressure, more accommodating bond markets and encouragement from the International Monetary Fund. But ending fiscal austerity is not a strategy for achieving growth. It will reduce downward pressure on aggregate spending but will not lift growth and employment…” Link verified March 28, 2014

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The Fed Should Start to ‘Taper’ Now

The Fed Should Start to ‘Taper’ Now. Martin Feldstein, July 2, 2013, Opinion. “The Federal Reserve should begin now to end its program of long-term asset purchases. It should not wait for the improved labor market that it predicts will come later this year, an improvement that is unlikely to occur. Instead, the Fed should emphasize that the pace of quantitative easing must adjust to the likely effectiveness of the program itself, and to the costs and risks of continuing to buy large quantities of bonds. Although the economy is weak, experience shows that further bond-buying will have little effect on economic growth and employment. Meanwhile, low interest rates are generating excessive risk-taking…” Link verified April 3, 2014

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Why Is US Inflation So Low?

Why Is US Inflation So Low?. Martin Feldstein, June 28, 2013, Opinion. “Why has quantitative easing coexisted with price stability in the United States? Or, as I often hear, “Why has the Federal Reserve’s printing of so much money not caused higher inflation?” Inflation has certainly been very low. During the past five years, the consumer price index has increased at an annual rate of just 1.5%. The Fed’s preferred measure of inflation – the price index for personal consumption expenditures, excluding food and energy – also rose at a rate of just 1.5%. By contrast, the Fed’s purchases of long-term bonds during this period has been unprecedentedly large…”  Link verified April 3, 2014

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America’s Misplaced Deficit Complacency

America’s Misplaced Deficit Complacency. Martin Feldstein, May 30, 2013, Opinion. “The United States still faces a dangerous fiscal deficit, but one might not know it from the complacency that dominates budget discussions in Washington. Regarded as an urgent problem until recently, the federal deficit is now being placed on the back burner of American politics. The shift in thinking was triggered by the revised deficit forecasts recently published by the Congressional Budget Office, the independent technical agency responsible for advising Congress on budget issues. According to the CBO’s report, the US fiscal deficit will decline from 7% of GDP in 2012 to 4% in 2013. This reduction reflects the cuts in government spending…” Link 

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The Federal Reserve’s Policy Dead End

The Federal Reserve’s Policy Dead End. Martin Feldstein, May 9, 2013, Opinion. “The Federal Reserve recently announced that it will increase or decrease the size of its monthly bond-buying program in response to changing economic conditions. This amounts to a policy of fine-tuning its quantitative-easing program, a puzzling strategy since the evidence suggests that the program has done little to raise economic growth while saddling the Fed with an enormous balance sheet. Quantitative easing, or what the Fed prefers to call long-term asset purchases, is supposed to stimulate the economy by increasing share prices, leading to higher household wealth and therefore to increased consumer spending…” Link verified April 3, 2014

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China’s New Path

China’s New Path. Martin Feldstein, April 29, 2013, Opinion. “The opaque nature of China’s government makes it difficult to see where Chinese economic policy is heading, and thus how the Chinese economy will develop in the years ahead. But the scale of China’s economy and its role in global trade and financial markets compel us to try to understand the intentions of China’s new leadership.  A useful starting point is to examine the key appointments that have been made since President Xi Jinping assumed office. One surprise was the decision to retain Zhou Xiaochuan as Governor of the People’s Bank of China (PBOC). Zhou had come to the end of his term…” Link verified April 3, 2014

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Bond Bubble Breakdown

Bond Bubble Breakdown. Martin Feldstein, April 22, 2013, Opinion. “Near multi-generational low bond yields, driven at least in part by US Federal Reserve asset purchases, have pushed the question of whether or not the bond market is a bubble to Top of Mind. We ask three experts if there is a “bond bubble”: Martin Feldstein (Harvard and NBER) – yes and the Fed is entirely to blame; Francesco Garzarelli (GS rates strategy) – no, but yields look expensive and the market is too complacent about rate hikes; and Paul McCulley (former PIMCO partner) – absolutely not and the Fed has done everything right…” Link verified April 3, 2014

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When Interest Rates Rise

When Interest Rates Rise. Martin Feldstein, March 30, 2013, Opinion. “Long-term interest rates are now unsustainably low, implying bubbles in the prices of bonds and other securities. When interest rates rise, as they surely will, the bubbles will burst, the prices of those securities will fall, and anyone holding them will be hurt. To the extent that banks and other highly leveraged financial institutions hold them, the bursting bubbles could cause bankruptcies and financial-market breakdown. The very low interest rate on long-term United States Treasury bonds is a clear example of the current mispricing of financial assets…” Link verified April 3, 2014

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It’s time to cap tax deductions

It’s time to cap tax deductions. Martin Feldstein, March 13, 2013, Opinion. “President Obama’s recent meetings with members of Congress have raised hopes that a major fiscal deal will replace the “sequester” and put the federal debt on a healthier long-term path. But the key barrier to such a deal remains the disagreement between Republicans and Democrats about the balance between raising revenue and cutting government spending. Republicans say they are against any further increase in taxes. Democrats, including the president, say that any budget deal must include additional revenue as well as spending cuts. Fortunately, Democrats indicate that they want to raise…” Link verified April 3, 2014

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Two Dollar Fallacies

Two Dollar Fallacies. Martin Feldstein, February 28, 2013, Opinion. “The United States’ current fiscal and monetary policies are unsustainable. The US government’s net debt as a share of GDP has doubled in the past five years, and the ratio is projected to be higher a decade from now, even if the economy has fully recovered and interest rates are in a normal range. An aging US population will cause social benefits to rise rapidly, pushing the debt to more than 100% of GDP and accelerating its rate of increase. Although the Federal Reserve and foreign creditors like China are now financing the increase, their willingness to do so is not unlimited…Link verified April 3, 2014

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