Growthpolicy Exclusives: Interviews with Harvard Faculty on Jobs, Inequality & Preventing the Next Financial Crisis. Link

Growthpolicy Exclusives: Interviews with Harvard Faculty on Jobs, Inequality & Preventing the Next Financial Crisis: * Richard Parker (April 2016) * Jeffrey Frankel (December 2015) * Ricardo Hausmann (December 2015) * Henry Lee (November 2015) * Benjamin Friedman (October 2015) * Richard Zeckhauser (September 2015)

Mihir Desai explains the Wisdom of Finance. Mihir Desai, December 15, 2017, Audio, “In this episode of Alphachat, Matt Klein talks with Harvard professor Mihir Desai about the deep connections between finance and the humanities. Special thanks to Elisheba Ittoop for help with editing this episode.Link

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We are even more convinced that thousands will die prematurely if the ACA is repealed. Lawrence Summers, December 12, 2017, Opinion, “On Monday, The Washington Post published an article by Casey Mulligan and Tomas Philipson attacking Lawrence Summers’s statement that “thousands” of individuals would die if the Republican tax bill became law. Summers reached his estimate after carefully reviewing the literature and consulting with health economists Jonathan Gruber and Mulligan and Philipson’s University of Chicago colleague Dean Kate Baicker, who has published a number of influential studies on the effect of health insurance on health.Link

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The Economy is on a Sugar High, and Tax Cuts Won’t Help. Lawrence Summers, December 10, 2017, Opinion, “Lawrence H. Summers is a professor at and past president of Harvard University. He was treasury secretary from 1999 to 2001 and an economic adviser to President Barack Obama from 2009 through 2010.  The approaching end of President Trump’s first year in office, another strong employment report and a still-strong stock market make it appropriate to revisit my year-old judgment that the economy is enjoying a “sugar high.” Unfortunately, the best available evidence suggests that signs of current market and economic strength are largely unrelated to government policy, that the drivers of this year’s economic strength are likely transient and that the structural foundation of the U.S. economy is weakening. Sugar high remains the right diagnosis, and tax cuts are very much the wrong prescription.Link

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The Efficiency Consequences of Heterogeneous Behavioral Responses to Energy Fiscal Policies. Joseph Aldy, December 2017, Paper, “The behavioral responses to taxes and subsidies are often subject to various behavioral biases and transaction costs—what we define as “microfrictions.” We develop a theoretical framework to show how these microfrictions—and their heterogeneity across the population and policy instruments—affect the design of Pigouvian policies. Standard Pigouvian pricing still holds with transaction costs, but requires adjustment with behavioral biases. We use transaction-level data from the US appliance market to estimate the heterogeneous behavioral responses to an array of energy fiscal policies and to quantify microfrictions. We then assess optimal fiscal policies and find that it is rarely optimal to couple a Pigouvian tax on energy with an investment subsidy in this context. We also find that energy labels—intended to increase the salience of energy information—can interact in perverse ways with both taxes and subsidies.Link

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Surveillance: Feldstein Sees Capital Inflows if Tax Bill Passes. Martin Feldstein, December 6, 2017, Audio, “Martin Feldstein, Harvard University George F. Baker Professor of Economics, says now is the time for tax reform because the politics are right. Henry Olsen, EPPC Senior Fellow, says President Trump needs to recover his populist mojo. Matt Hornbach, Morgan Stanley Global Head of Interest Rates Strategy, says it’s time for the next bond market phase. Michael Chui, McKinsey & Co. Senior Fellow, says there is enough work for people to do, even with the increased use of robots.Link

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Largest Mass. Companies Are Mostly Silent On GOP Tax Plans. Mihir Desai, December 6, 2017, Audio, “Corporations are the cornerstone of both the House and Senate versions of the tax overhaul. Both bills propose deep cuts in the corporate tax rate — from 35 percent to 20 percent. The bills also call for a territorial tax system to replace the current worldwide tax system, in which multinational corporations with headquarters in the United States are required to pay the U.S. tax rate if they want to bring profits back into the country.Link

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Yes, the Senate GOP tax plan would cause ‘thousands’ to die. Lawrence Summers, December 3, 2017, Opinion, “I suggested on Friday when it became clear that the tax bill would pass that “thousands would die.” In light of my sharp criticism of other economists’ claims regarding the legislation, some have asked whether my statement is well grounded. I think it is, but this should be open to debate.Link

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The Long and Winding Road to a Haircut. Carmen Reinhart, November 30, 2017, Opinion, “There are significant differences between Puerto Rico and Venezuela regarding the origins of their economic crises, their political systems, their relationship with the US and the rest of the world, and much else. Nonetheless, some notable similarities are likely to emerge as their debt sagas unfold.Link

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