Found 281 article(s) for author 'Lawrence Summers'

On falling neutral real rates, fiscal policy, and the risk of secular stagnation

On falling neutral real rates, fiscal policy, and the risk of secular stagnation. Lawrence Summers, March 7, 2019, Paper, “This paper demonstrates that neutral real interest rates would have declined by far more than what has been observed in the industrial world and would in all likelihood be significantly negative but for offsetting fiscal policies over the last generation. We start by arguing that neutral real interest rates are best estimated for the block of all industrial economies given capital mobility between them and relatively limited fluctuations in their collective current account. We show, using standard econometric procedures and looking at direct market indicators of prospective real rates, that neutral real interest rates have declined by at least 300 basis points over the last generation. We argue that these secular movements are in larger part a reflection of changes in saving and investment propensities rather than the safety and liquidity properties of Treasury instruments.Link

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The left’s embrace of modern monetary theory is a recipe for disaster

The left’s embrace of modern monetary theory is a recipe for disaster. Lawrence Summers, March 4, 2019, Opinion, “We’ve seen this movie before. There is widespread frustration with the performance of the economy. Traditional policy approaches are not delivering hoped-for results. A relatively unpopular president is loathed to an unusual extent by a frustrated opposition party that lost the previous presidential election while running a pillar of its establishment. And altered economic conditions have led to the development of new economic ideas that reflect a significant break with previous orthodoxy.Link

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No trade deal can dictate our relationship with China

No trade deal can dictate our relationship with China. Lawrence Summers, February 4, 2019, Opinion, “Lawrence 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. As the United States and China continue to joust over trade and technology, the U.S. policy debate contrasts two views of the primary problem.Link

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Who’s Afraid of Budget Deficits?

Who’s Afraid of Budget Deficits? Jason Furman, Lawrence Summers, January 27, 2019, Opinion, “The United States’ annual budget deficit is set to reach nearly $1 trillion this year, more than four percent of GDP and up from $585 billion in 2016. As a result of the continuing shortfall, over the next decade, the national debt—the total amount owed by the U.S. government—is projected to balloon from its current level of 78 percent of GDP to 105 percent of GDP. Such huge amounts of debt are unprecedented for the United States during a time of economic prosperity.Link

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Negative Nominal Interest Rates and the Bank Lending Channel

Negative Nominal Interest Rates and the Bank Lending Channel. Lawrence Summers, January 2019, Paper, “Following the crisis of 2008, several central banks engaged in a new experiment by setting negative policy rates. Using aggregate and bank level data, we document that deposit rates stopped responding to policy rates once they went negative and that bank lending rates in some cases increased rather than decreased in response to policy rate cuts. Based on the empirical evidence, we construct a macro-model with a banking sector that links together policy rates, deposit rates and lending rates. Once the policy rate turns negative, the usual transmission mechanism of monetary policy through the bank sector breaks down. Moreover, because a negative policy rate reduces bank profits, the total effect on aggregate output can be contractionary. A calibration which matches Swedish bank level data suggests that a policy rate of -0.50 percent increases borrowing rates by 15 basis points and reduces output by 7 basis points.Link

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There Is “Significant Risk” Of Recession

There Is “Significant Risk” Of Recession. Lawrence Summers, January 10, 2019, Video, “There is “significant risk” of a recession in the next two years, former U.S. Treasury Secretary Larry Summers repeated yesterday on Bloomberg TV. Summers, now an economist at Harvard University, focused his comments on China’s economy, which he warned was “seeing as difficult a moment… as any they’ve had in the last 10 or 20 years.” Link

 

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We must prepare now for the likelihood of a recession

We must prepare now for the likelihood of a recession. Lawrence Summers, January 7, 2019, Opinion, “When people are fundamentally healthy, they do not yet know what will cause their death. An economic recovery is healthy if it is not clear what will cause the next recession. By this standard, the recovery from the 2008 financial crisis, although disappointingly slow, has been healthy for most of the last decade.Link

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Can anything hold back China’s economy?

Can anything hold back China’s economy? Lawrence Summers, December 3, 2018, Opinion, “Presidents Trump and Xi Jinping reached an agreement over the weekend at the Group of 20 meeting in Argentina on a framework for trade dialogue that will delay the imposition of new U.S. tariffs. While surely better than the alternative, this step does not address any of the fundamental tensions in the economic relationship between the United States and China.Link

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The US-China conundrum

The US-China conundrum. Lawrence Summers, November 30, 2018, Video, “Former U.S. Treasury Secretary Larry Summers said America has an inalienable right to police unfair trade practices by major trading partners. “We, in the United States, need to be very clear, we are entitled and we are right to reject Chinese cheating, Chinese violation of the rules, rules that don’t cover unfair practices,” Summers said during an interview on FOX Business’ “WSJ At Large With Gerry Baker Opens a New Window. ” on Friday. ”We’re right when we’re against that.”Link

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50 percent chance of a US recession by 2020

50 percent chance of a US recession by 2020. Lawrence Summers, November 15, 2018, Video, “Former Treasury Secretary Larry Summers has put the chances of a U.S. recession at 50 percent within the next two years. The economist told CNBC’s Joumanna Bercetche on Thursday that a slowdown in growth was a “near certainty” before adding “the recession risk is nearly 50 percent over the next two years, maybe slightly less.Link

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