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

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

The Adult Recession: Age-Adjusted Unemployment at Post-War Highs

Since the Great Depression, the worst episode of unemployment came in the second half of 1982 and the first half of 1983. Over that time, the unemployment rate stayed above ten percent from September through June -- reaching 10.8 percent of the labor force in November and December of 1982. A naive examination of the raw unemployment rates would suggest that the downturn of the early 1980s resulted in a labor market even weaker than what we have experienced as a result of the collapse of the housing bubble. However, the demographics of the labor force have changed significantly over the last quarter century. After adjusting for the aging of the population since the early 1980s, the current labor-market downturn has resulted in both a higher unemployment rate and a longer period when the rate of unemployment remained over 10 percent

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

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

Social Security and the Age of Retirement

Unlike a century ago, people expect their children to live past the age of retirement. This fact has important implications for how workers save for retirement, but has no specific implications for the retirement portion of Social Security. In addition, the increase in life expectancy is not nearly as important as it might first appear. A significant part of the increase in life is between birth and age 20. Including declines in child and teen mortality exaggerate the increase in retirement length. Furthermore, much of the gains in life expectancy come during working years -- between age 20 and retirement. This means that workers are not only experiencing longer retirements, but longer working lives as well. Finally, each succeeding generation has been vastly more productive than prior generations -- a trend that will continue. Thus, not only have workers on average more years of work over their lifetime, they are better able to save for their retirements

Projecting a Range of Possible Results in the December 2015 Elections for National Assembly in Venezuela

This paper finds that a wide range of outcomes are possible in the December 6 National Assembly elections, based on current polling data; and that there is potential for significant disparity between the popular vote and the distribution of seats among the opposing parties and coalitions.The paper simulates, based on the 2010 election results, the 2015 election under various assumptions regarding the government's share of the vote and the degree to which the opposition is fractured among different coalitions. The projections look at the percent increase in votes the opposition would need in order to secure a simple majority, three-fifths, and two-thirds majority in the Assembly.These results are potentially important because of widespread misunderstanding of the Venezuelan electoral system, and the emphasis on national polls which may differ considerably from the election results for a legislative body under the current voting system. The paper also shows how the current system of disproportional representation for sparsely populated states -- similar to a combination of the U.S. Senate and House into a single chamber -- will favor the government

The Adult Recession: Age-Adjusted Unemployment at Post-War Highs

Since the Great Depression, the worst episode of unemployment came in the second half of 1982 and the first half of 1983. Over that time, the unemployment rate stayed above ten percent from September through June—reaching 10.8 percent of the labor force in November and December of 1982. A naïve examination of the raw unemployment rates would suggest that the downturn of the early 1980s resulted in a labor market even weaker than what we have experienced as a result of the collapse of the housing bubble. However, the demographics of the labor force have changed significantly over the last quarter century. After adjusting for the aging of the population since the early 1980s, the current labor-market downturn has resulted in both a higher unemployment rate and a longer period when the rate of unemployment remained over 10 percent.unemployment, unemployment rate

Social Security and the Age of Retirement

Unlike a century ago, people expect their children to live past the age of retirement. This fact has important implications for how workers save for retirement, but has no specific implications for the retirement portion of Social Security. In addition, the increase in life expectancy is not nearly as important as it might first appear. A significant part of the increase in life is between birth and age 20. Including declines in child and teen mortality exaggerate the increase in retirement length. Furthermore, much of the gains in life expectancy come during working years—between age 20 and retirement. This means that workers are not only experiencing longer retirements, but longer working lives as well. Finally, each succeeding generation has been vastly more productive than prior generations—a trend that will continue. Thus, not only have workers on average more years of work over their lifetime, they are better able to save for their retirements.social security, retirement, retirement age