Real Economic Growth Analyzed

Excellent read from Yale economist and Federal Reserve Bank of Minneapolis consultant Timothy Kehoe. He expresses that economic growth is driven by productivity growth as opposed to prevailing view of capital accumulation as driver.

This is shown with his use, as the beginning stage and presented in excerpt below, of the Malthusian Trap. Fascinating to me and fundamentally important is how this can be applied to global economic growth beyond his analysis.

From 1999 to 2013 (set in 2013 dollars) the World GDP – per capita (PPP) rose from $6800 to $13,100.

How do we move forward with this information?

  1. wait and see: continued development and economic growth
  2. search for post Kehoe analysis: next level (Kehoe 4?) and new cycle of leader-style
  3. present consideration: spread of investment into a global economy

The median annual household income worldwide is $9,733, and the median per-capita household income is $2,920″ by Glenn Phelps and Steve Crabtree via Gallup.

Article excerpt:

Stages of economic growth

We classify the countries in our sample into four stages of economic growth. (For details on country data and classification, see the appendix.)

0. Malthusian trap
1. Taking off into growth
2. Catching up to the economic leader
3. Joining the economic leader

The Stages of Economic Growth Revisited, Part 1

by Timothy J. Kehoe

The Stages of Economic Growth Revisited, Part 2

Quantitative and Qualitative monetary easing an Overview

Introduction of “Quantitative and Qualitative Monetary Easing with a Negative Interest Rate”

Speech at the Kisaragi-kai Meeting in Tokyo
Haruhiko Kuroda
Governor of the Bank of Japan
Document provided by Fiscal Post (article link)

Continue reading Quantitative and Qualitative monetary easing an Overview

TPP and Jobs

Reddit has posted a host of articles currently questioning decreases in jobs due to the Trans Pacific Partnership when the President suggested there would be an increase in income and jobs. Well you silly geese here is why there is a reduction, it precedes the income increases and increase to jobs available as immediately the restructuring sends the lower earning work overseas.

U.S. Chamber of Commerce Senior Vice-President for International Policy

Trans Pacific Partnership and Jobs

Article by John G. Murphy

Economics of Subjective Welfare

New research teaches us more about interpretive difficulties of subjective welfare as it relates to analysis of data.

The author links to various articles including one by Deaton during a review of the research. Discussion includes fixed personal characteristics, set point theory, lottery winner analysis, and locus of control.

Why our personalities pose a challenge for economists

by Jed Friedman – senior economist in the Development Research Group (Poverty and Inequality Team) at the World Bank

Movement in “Fight for $15”

, staff writer for New Republic, reviews his analysis of the ‘Fight for $15’ movement.  He points to Los Angeles as the newest of several cities (including San Fransisco and Seattle) to move toward the $15 per hour minimum wage.  This move places minimum wage on par with approximately 50% of median wage as charted in the article.  Points are credited toward the movement for accomplishing goals however future impact has yet to be seen.
Continue reading Movement in “Fight for $15”

China Focuses on Entrepreneurs to Develop Domestic Consumption

According to an article from the Economic Times (article link) China has supported the development of approximately six million start-ups between March and August of this year.  Incentivized by cutting taxes/fees and lending, start-ups have focused in areas of e-commerce this falls in line with China’s hopes of shifting away from an export dependent economy as growth slows.  Further reading on this topic can be found via links within the article.

Federal Reserve and Economic Recovery

Ben Bernanke explains how Federal Reserve actions have assisted in positives for the U.S. especially in comparison to the world market with regard to unemployment and economic output and discusses Federal Reserve controls regarding Monetary Policy and Inflation.

How the Fed saved the economy

By: Ben S. Bernanke – Distinguished Fellow in Residence (Economic Studies): Brookings Institution

Comment by RickRussellTX on Reddit

To be honest, I have to wonder if we’re just entering a new, flatter economic domain which is tied most directly to the stabilization of national populations in the first world.

Japan got there first, and since the 80s has been looking at very little but stagnation. While they have their share of problems, they have ample resources to take care of their population and provide a reasonable level of employment. Automation can take up the slack caused by population shrinkage to a degree.

The bigger question is, “what do we do in a post-scarcity economy where most people’s work is in insufficient demand to command a high price that will pay their consumer needs?”

That’s the world we’re headed for; we either force *everybody* to work less (implicitly driving up the value of labor), or we artificially set the value of labor (minimum wage), or we give up on pricing labor and set a minimum income so that people can feed themselves.