1 / 19

Comments on O’Rourke

Comments on O’Rourke. Andrew K. Rose UC Berkeley, NBER, CEPR and EIEF. Some Tensions Exist: Let’s Eat the Cake and Have it Too. Is Loose Monetary Policy “better policy response” or “beggar thy neighbour”? Special Role of American Dollar “days of dollar supremacy numbered” or is there

nubia
Télécharger la présentation

Comments on O’Rourke

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Comments on O’Rourke Andrew K. Rose UC Berkeley, NBER, CEPR and EIEF

  2. Some Tensions Exist:Let’s Eat the Cake and Have it Too • Is Loose Monetary Policy • “better policy response” or • “beggar thy neighbour”? • Special Role of American Dollar • “days of dollar supremacy numbered” or is there • “no alternative”?

  3. 1. O’Rourke data on Industrial Production Now and Then: Terrifying!

  4. Dating the Recessions • O’Rourke uses June 1929, April 2008 • But NBER has peaks at August 1929 (2 months later) and December 2007 (4 months earlier) • CEPR uses January 2008 (3 months earlier) • Does Changing Dates by 6 months Matter? • Quick Check on American Data shows …

  5. Using NBER Dates: Scary but …

  6. 2. Is Decline in Industrial Production Serious, Permanent? • Many Countries • Serious decline in (trade and) IP • Dramatic bounce-back of late in at least some • Especially Small Open Economies Most Affected by Trade

  7. Singapore Manufacturing

  8. Relevant?Industrial Production and GDP • Industrial Production a Small Part of GDP • OECD: Most value-added and employment is services • USA 2009Q1: GDP = $14,097.2 billion • Equivalent IP ≈ $5035.7 billion (35%!) • Unusually cyclic compared to services, direct government (especially investment, inventories, durable goods) • But IP is still obviously relevant …

  9. And IP Shows Up in GDP:2009q2 Singapore Real GDP +20.4%(!)

  10. 3. Why Has Trade Collapsed? • Fall in International Trade has been: • Very Fast • Very Large • Essentially Simultaneous across Countries • 10/’08 – 3/’09 OECD average was -21%! • “Great Synchronization” of Trade Collapse

  11. “Great Synchronization”High fraction of countries now experiencing negative export value growth

  12. But: No Big Signs of Protectionism • So the decline in trade simply cannot have been “unnatural” – must be some “natural” reason(s)!

  13. Policy Implication • Fears about Protectionism are forward-looking • Warranted and Reasonable, but • Not (yet) Realized • Reasonable if protection driven by macroeconomy

  14. Causes of Collapse of Trade • Trade always responds disproportionately to recessions (goods respond more than services) • Contracts faster than GDP, bounces back faster too • Shrinking Trade Credit may play special role in ‘08 • Probably Key: More Trade in Intermediates • Trade recorded gross, not value-added; trade may fall a lot without value-added changing much • Elasticity of Trade wrt Income rising; now ≈ 4 (Freund) • So 5% decline in global growth → 20% decline in trade • Elasticity used to be <2 (Irwin)

  15. Should We Care?Minnesota on Great Depression • Cole and Ohanian agree with O’Rourke: trade effect on GD is trivial • (So is everything else … though any policy response slowed recovery … of course …) • Still, perhaps trade (and protection) a side-show … except insofar as it affects real activity …

  16. 4. Great Depression: a Once-Off? • One observation can estimate one coefficient with zero degrees of freedom • World Quite Different Now • Legacy of WWI; Gold Standard; Communism; Fascism; Empires; Stabilizers (automatic, discretionary) … • More Trade Institutions (in part, because of GD) • WTO • Regional Trade Arrangements • Recognized Importance of Trade (e.g., G-20) • Previous Recessions Haven’t Lead to Protection • 1975, 1982 recessions; Asian crisis; …

  17. International Monetary System:Closer to Bretton Woods Reversed:No “Golden Fetters” preclude growth

  18. Vox-Ops • Must Guard Against Exaggeration • Necessary for Policy-Makers • Reform is Difficult • But Care Required for Academic Audiences • Vox has a LONG memory Case for the “Tale of Two Depressions” Unclear

More Related