Potential for Trouble: The IMF's Estimates of Potential GDP

This issue brief examines the IMF's methodology for estimating potential GDP, and its pitfalls and problems. A number of economists have noted recent problems with overestimates of actual GDP in recent years in Greece, and the IMF's own research has found that the multipliers associated with fiscal tightening had been underestimated.  But the policy and political implications of potential GDP estimates, which are not only forecasts but also continuously revised for past estimates, may be even more important

Response to Vanderbilt University's LAPOP Critique of CEPR Report, "Have US-Funded CARSI Programs Reduced Crime and Violence in Central America?"

This report is a response to Vanderbilt University's Latin American Public Opinion Project (LAPOP) critique of our report, "Have US-Funded CARSI Programs Reduced Crime and Violence in Central America?" released in September 2016. That September report was an examination of the only publicly accessible impact assessment of USAID-funded anticrime and community-based violence prevention programs carried out under the umbrella of the US State Department's Central American Regional Security Initiative (CARSI). LAPOP took issue with our illustration of certain methodological flaws in LAPOP's study, as well as with the manner in which we presented our conclusions. LAPOP's criticisms appear to be largely based on misunderstanding and misinterpretation of our arguments and fail to address our main findings. The problems with the LAPOP study that we identified still stand, as does the validity of our conclusion: LAPOP's study cannot support the conclusion that intervention caused the areas subject to treatment in the CARSI programs to improve relative to those areas where no intervention took place

Gains from Trade? The Net Effect of the Trans-Pacific Partnership Agreement on U.S. Wages

Recent estimates of the U.S. economic gains that would result from the proposed Trans-Pacific Partnership (TPP) are very small -- only 0.13 percent of GDP by 2025. Taking into account the un-equalizing effect of trade on wages, this paper finds the median wage earner will probably lose as a result of any such agreement. In fact, most workers are likely to lose -- the exceptions being some of the bottom quarter or so whose earnings are determined by the minimum wage; and those with the highest wages who are more protected from international competition. Rather, many top incomes will rise as a result of TPP expansion of the terms and enforcement of copyrights and patents. The long-term losses, going forward over the same period (to 2025), from the failure to restore full employment to the United States have been some 25 times greater than the potential gains of the TPP, and more than five times as large as the possible gains resulting from a much broader trade agenda

The Gains from Trade in a New Model from the IMF: Still Very Small

This paper takes a careful look at a recent International Monetary Fund (IMF) Working Paper that claims to find significant gains for liberalization of trade through the World Trade Organization. It is not clear that the reported gains are at all large. The IMF paper shows that multilateral liberalization increases consumption perhaps 0.014 percent. This would be about 43 cents per person per month in the United States.One significant result of the IMF paper is that potential gains of multilateral trade liberalization are very small even in a formal New Keynesian model incorporating economies with significant power in international markets

Troubled Assets: The IMF's Latest Projections for Economic Growth in the Western Hemisphere

This issue brief examines the International Monetary Fund's (IMF's) economic growth projections for Latin America and the Caribbean through 2014. It finds that for some countries – most notably Venezuela and Argentina – the IMF’s projections inexplicably portend a prolonged negative impact of the current world recession, even as countries harder-hit by the downturn, such as Mexico, recover. In other cases, such as Haiti, the IMF projects a surprisingly big growth spurt.IMF

The Consequences of Increased Population Growth for Climate Change

This paper examines the impact of population growth on global climate change. The author employs the Global Change Assessment Model (GCAM) to estimate the effects of population growth on the change global average temperature by 2100. Observing that a larger population supports a larger economy, which translates in close proportion into additional releases of carbon dioxide (CO2), the paper notes that global temperature should in any year be nearly linear in relation to the rate of growth when the rate of population growth is constant.The paper finds that that an additional 1 percentage point of population growth through the end of the century would coincide with about an additional 2 degrees Fahrenheit in average global temperatures. Over time, the temperature change is greater and becomes increasingly sensitive to population growth

The Wealth of Households: An Analysis of the 2013 Survey of Consumer Finances

This paper presents data on the wealth of households by age cohort based on new data from the 2013 Survey of Consumer Finances (SCF). It shows that the upward redistribution of wealth continued between 2010 and 2013. As a result, most households had less wealth in 2013 than they did in 2010 and much less than in 1989, the first year examined. This is in spite of the fact that households were much less likely to have traditionally-defined benefit pensions than in prior decades

Latin American Growth in the 21st Century: The "Commodities Boom" That Wasn't

Latin America's economic growth rebound in the 2000s is often attributed to a "commodities boom," which implies that the region's growth was stimulated by sizable increases in the price of commodity exports. This paper looks at whether the data support such a conclusion. It finds that there is no statistically significant relationship between the increase in the terms of trade (TOT) for Latin American countries and their GDP growth. There is, however, a positive relationship between the TOT increase and an improvement in the current account balance. It may be that this allowed countries to avoid balance of payments crises or constraints

Missing the Story: The OECD's Analysis of Inequality

The OECD recently published a lengthy volume examining the causes of rising inequality in most wealthy countries over the last three decades. This paper examines that study, finding that the OECD misses most of the story of inequality because its primary focus is the ratio of the annual wage of the 90th percentile worker to the 10th percentile worker, while most of the benefits of rising inequality were concentrated much further up the income ladder. In contrast to the OECD, this paper finds that the impact of technology is negligible and actually trivially negative over the period examined. It also finds many errors in the use of data in the OECD's study, most importantly by exaggerating the number of independent observations when many of the data points are simply extrapolations. This causes the OECD to exaggerate the statistical significance of its findings. Finally, this paper suggests that the growth of the financial sector may have been an important factor contributing to the growth in inequality over the past 30 years

The Impact of the Housing Crash on Family Wealth

This paper extrapolates from data from the 2004 Survey of Consumer Finance to project household wealth, by wealth quintile, in 2009 under three alternative scenarios. The first scenario assumes that real house prices fall no further than their level as of March 2008. The second scenario assumes that real house prices fall an additional 10 percent as a 2009 average. The third scenario assumes that real house prices fall an additional 20 percent for a 2009 average. The projections show that the vast majority of families will see a substantial reduction in wealth by 2009 in any of these scenarios and that the cohorts just approaching retirement will have very little to support themselves in retirement other than their Social Security. The projections also show that a large number of families will have little or no equity in their homes in 2009