Search

Begin New Search Political Geography United States Author Adam S. Posen

1. Wages and Labor Market Slack: Making the Dual Mandate Operational

Author:
Adam S. Posen and David G. Blanchflower
Publication Date:
09-2014
Content Type:
Working Paper
Institution:
Oxfam Publishing
Abstract:
In this paper we examine the impact of rises in inactivity on wages in the US economy and find evidence of a statistically significant negative effect. These nonparticipants exert additional downward pressure on wages over and above the impact of the unemployment rate itself. This pattern holds across recent decades in the US data, and the relationship strengthens in recent years when variation in participation increases. We also examine the impact of long-term unemployment on wages and find it has no different effect from that of short-term unemployment. Our analysis provides strong empirical support, we argue, for the assessment that continuing labor market slack is a key reason for the persistent shortfall in inflation relative to the Federal Open Market Committee's (FOMC) 2 percent inflation goal. Further, we suggest our results point towards using wage inflation as an additional intermediate target for monetary policy by the FOMC.
Topic:
Economics, Markets, and Labor Issues
Political Geography:
United States and Middle East

2. The Realities and Relevance of Japan's Great Recession: Neither Ran nor Rashomon

Author:
Adam S. Posen
Publication Date:
06-2010
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics
Abstract:
Japan's Great Recession was the result of a series of macroeconomic and financial policy mistakes. Thus, it was largely avoidable once the initial shock from the bubble bursting had passed. The aberration in Japan's recession was not the behaviour of growth, which is best seen as a series of recoveries aborted by policy errors. Rather, the surprise was the persistent steadiness of limited deflation, even after recovery took place. This is a more fundamental challenge to our basic macroeconomic understanding than is commonly recognized. The UK and US economies are at low risk of having recurrent recessions through macroeconomic policy mistakes—but deflation itself cannot be ruled out. The United Kingdom worryingly combines a couple of financial parallels to Japan with far less room for fiscal action to compensate for them than Japan had. Also, Japan did not face poor prospects for external demand and the need to reallocate productive resources across export sectors during its Great Recession. Many economies do now face this challenge simultaneously, which may limit the pace of, and their share in, the global recovery.
Topic:
Economics, Markets, Monetary Policy, and Financial Crisis
Political Geography:
United States, Japan, and United Kingdom

3. A Solution for Europe's Banking Problem

Author:
Adam S. Posen and Nicolas Véron
Publication Date:
06-2009
Content Type:
Policy Brief
Institution:
Peterson Institute for International Economics
Abstract:
Since mid-2007, public authorities in the European Union have broadly met the challenge of ensuring a functional degree of liquidity and preventing financial meltdown. The Eurosystem has even been ahead of the curve compared with the Federal Reserve and the Bank of England in discounting early on a wide variety of assets to a range of counterparties. However, despite unprecedented central bank intervention, extensive government guarantees since October 2008, and macroeconomic assistance (with the International Monetary Fund) to the European Union's weakest member states, the underlying state of continental Europe's banking industry remains very fragile.
Topic:
Economics, Markets, and Monetary Policy
Political Geography:
United States, United Kingdom, and Europe

4. The United States Needs German Economic Leadership

Author:
Adam S. Posen
Publication Date:
01-2006
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics
Abstract:
On January 13, Germany's new chancellor, Angela Merkel, will have her first official visit with US President George W. Bush. Washington, or at least the part of Washington that still pays attention to transatlantic issues, not just the Bush administration, will be glad to see her given that she is not her US-bashing predecessor Gerhard Schroeder. Though this change in atmosphere is welcome, no one should make too much of it. It is unlikely to make much difference on security issues, where Iran's own actions are forcing the United States and Germany to come together, where German public opinion will keep the governments apart on Iraq, and where neither country is prepared to make major changes to defense budgets and approaches. The Masri case will certainly limit Merkel's interest in appearing too chummy with Bush on security matters.
Topic:
Development and Economics
Political Geography:
United States, Iraq, Europe, Iran, Washington, and Germany

5. What Went Right in Japan

Author:
Adam S. Posen
Publication Date:
09-2004
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics
Abstract:
Japan's recovery is strong. Real GDP growth will exceed 4 percent this year and likely be 3 percent or higher in 2005 and perhaps even 2006. The Japanese economy has been growing solidly for the last five quarters (average real 3.2 percent annualized rate), and the pace is sustainable, given Japan's underlying potential growth rate (which has risen to 2 to 2.5 percent per year) and the combination of catch-up growth closing the current output gap and some reforms that will raise the growth rate for quarters to come (though not permanently). Indicators of domestic demand beyond capital investment are increasingly positive, including housing starts bottoming out, inventories drawing down, and diminished deflation. Moreover, on the external side, while China was the main source of export growth in 2003, the composition of exports has become more balanced this year and is widening beyond that seen in other recoveries. Just as in the United States and other developed economies, a sharp slowdown in Chinese growth and a sustained further increase in energy prices represent the primary risks to the outlook.
Topic:
Development and Economics
Political Geography:
United States, Japan, China, Israel, East Asia, and Asia

6. Finance and Changing US-Japan Relations: Convergence Without Leverage—Until Now

Author:
Adam S. Posen
Publication Date:
08-2001
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics
Abstract:
In the postwar era, US-Japan economic relations have been characterized by substantial tensions, yet this has not damaged the underlying security relationship or critically harmed the multilateral economic framework. In fact, these two economies have become more integrated over time even as these tensions played out. These tensions, however, have required an enormous expenditure of political capital and officials' time on both sides of the Pacific and have led to foregone opportunities for institution building and policy coordination. They have deepened since Japan “caught up” with the United States around 1980, and Japanese and US firms began increasingly to compete for profits and market share in the same sectors. Moreover, as both the US and Japanese economies continue to mature – both in terms of the age of their populations and their industrial mix – they will likely face even greater tensions between them over allocating the management and costs of industrial adjustment.
Topic:
Economics, International Trade and Finance, and Political Economy
Political Geography:
United States, Japan, Israel, and East Asia

7. Inflation, Monetary Transparency, and G3 Exchange Rate Volatility

Author:
Adam S. Posen and Kenneth N. Kuttner
Publication Date:
07-2000
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics
Abstract:
Short-term volatility in G3 bilateral exchange rates has been a fact of life since the beginning of the post-Bretton Woods float. It has been established, surprisingly, that this volatility is not only disproportionately large relative to the variation in relative macroeconomic fundamentals of Germany, Japan, and the United States, but is in fact largely unrelated to them. The apparent disconnect between fundamentals and dollar-yen and dollar-euro exchange rate fluctuations has led to perennial complaints about persistent exchange rate “misalignments,” and their real effects on the G3 (and other) economies, giving rise in turn to recurring proposals for government policies to limit this volatility. The idea that volatility reflects nothing more than the (perhaps rational, certainly profit-seeking) behavior of foreign exchange traders seems to give justification for a policy response. Yet, the disjunction between macroeconomic expectations and the volatility seems to indicate as well that some deviation from domestic monetary policy goals would be necessary to intervene against exchange rate swings.
Topic:
Economics, International Trade and Finance, and Political Economy
Political Geography:
United States, Japan, and Germany