Found 27 article(s) for author 'Robert Barro'

Taxes and the macro economy

Taxes and the macro economy. Robert Barro, December 17, 2019, Paper, “My research with Furman (2018) assessed the 2017 U.S. tax reform and concluded that economic growth would be boosted by about 1 percent per year for 2018-19 and to a lesser extent for the following eight years. This forecast accorded well with realizations through the first quarter of 2019, but subsequent growth is slower, likely due to adverse effects from the ongoing trade war. Extensions from the previous research consider effects from businesses’ choices of legal form between corporate and pass-through status. Corporate form conveys benefits from perpetual legal identity, limited liability, potential for public trading of shares, and ability to retain earnings. However, legal changes have enhanced pass-through alternatives, for example, through the invention of the S-corporation in 1958 and the improved legal status of LLCs (limited liability companies) at the end of the 1980s. Corporate form is subject to a time varying tax wedge, which offsets the productivity benefits. In a theoretical framework, with a distribution of firms’ productivities associated with corporate and pass-through status, the tax wedge determines the fraction of firms that opt for corporate status, the level of economywide output (productivity), and the share of output generated by corporations. This framework underlies the empirical analysis of corporate shares of business economic activity. Long-difference regressions for 1968-2013 show that a higher tax wedge reduces the corporate share of gross assets. The corporate share also exhibits downward trends, likely reflecting underlying legal changes.” Link

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Trump’s Mercantilist Mess

Trump’s Mercantilist Mess. Robert Barro, September 5, 2019, Opinion, “When US President Donald Trump boasted that trade wars are “easy to win” in March 2018, it was convenient to dismiss the remark as a rhetorical flourish. Yet it is now clear that Trump meant it, because he genuinely believes the bizarre and anachronistic macroeconomic theories underlying his approach.Link

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Is Politics Getting to the Fed?

Is Politics Getting to the Fed? Robert Barro, July 23, 2019, Opinion, “In the early 1980s, the chairman of the US Federal Reserve, Paul Volcker, was able to choke off runaway inflation because he was afforded the autonomy necessary to implement steep interest-rate hikes. Today, the Fed is clearly under unprecedented political pressure, and it is starting to show.Link

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Trump Is Slowing US Economic Growth

Trump Is Slowing US Economic Growth. Robert Barro, June 4, 2019, Opinion, “The current state of US macroeconomic policymaking across four key areas does not bode well. Although the 2017 tax legislation has done its job in promoting faster growth, rising trade tensions, persistent regulatory burdens, and a lack of investment in infrastructure all threaten to limit the US economy’s potential.Link

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My Best Growth Forecast Ever

My Best Growth Forecast Ever. Robert Barro, April 29, 2019, Opinion, “The Trump administration’s tax reform of 2017, which took effect in 2018, was viewed prospectively, and now retrospectively, as a contributor to US economic growth. But there was – and remains – a great deal of controversy over the size of the macroeconomic effects of the tax changes.Link

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Disaster Probability and Options-Pricing with Disaster Risk

Disaster Probability and Options-Pricing with Disaster Risk. Robert Barro, April 2019, Paper, “We derive a new option-pricing formula from recursive preference and estimate disaster probability from option prices. The new options-pricing formula applies to far-out-of-the money put options on the stock market when disaster risk dominates, the size distribution of disasters follows a power law, and the economy has a representative agent with Epstein-Zin utility. The formula conforms with data on put-options prices for the U.S. S&P index from 1983 to 2018 and for analogous indices for other countries starting in the mid-1990s. The estimated disaster probability, inferred from monthly fixed effects, is highly correlated across countries and peaks during the financial crisis of 2008-09. The estimated disaster probability forecasts downside risk in the economy. Using quantile regressions, we find that the disaster probability forecasts growth vulnerabilities, defined GDP and Industrial Production growth at the lowest decile.Link

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Interview with Harvard Professor Robert Barro

Interview with Harvard Professor Robert Barro. Robert Barro, September 1, 2018, Opinion, “Robert Barro is a highly influential economist and has written extensively about macroeconomics. He is the Paul M. Warburg Professor of Economics at Harvard University, a senior fellow at Stanford University and co-editor of the Quarterly Journal of Economic. Barro shares a free market view of the current economic climate during an in-depth conversation with Filthy Lucre.Link

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The macroeconomic effects of the 2017 tax reform

The macroeconomic effects of the 2017 tax reform. Robert Barro, Jason Furman, March 4, 2018, Paper, “In December 2017, Congress enacted the most sweeping set of tax changes in a generation, lowering statutory tax rates for individuals and businesses and altering the tax base—in some cases to remove distortionary tax preferences and in some cases to create new ones. The law generated substantial debate on many issues, notably about its long-term impact on the capital-labor ratio, GDP per worker, real wages and, in the transition to the new steady state, economic growth. One of us (Robert) joined a group of economists (Wall Street Journal, November 26, 2017) to argue that the corporate-tax part of the tax reform would have substantially positive long-term effects in all of these dimensions. Another of us (Jason) was a consistent critic of the law.Link

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The Ricardian Approach to Budget Deficits

The Ricardian Approach to Budget Deficits. Robert Barro, 2017, Book Chapter, “In recent years there has been a lot of discussion about US budget deficits. Many economists and other observers have viewed these deficits as harmful to the US and world economies. The supposed harmful effects include high real interest rates, low saving, low rates of economic growth, large currentaccount deficits in the United States and other countries with large budget deficits, and either a high or low dollar (depending apparently on the time period).” (Reprint from 1989) Link

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