The Trade Deficit: The Biggest Obstacle to Full Employment

"This analysis has four parts. The first discusses the basics of national income accounting and explains how trade deficits amount to a loss of demand that must be offset from other sources if the economy is to sustain a full-employment level of output. The second part outlines the origins of our large recent trade deficits. The United States has run trade deficits for most of the last four decades, but they became qualitatively larger in the late 1990s, in line with a rising value of the dollar. The third section discusses how lowering the value of the dollar relative to other currencies could make U.S. goods and services more competitive internationally. The fourth section addresses some of the implications of a lower-valued dollar and balanced trade. It has often been claimed that the United States must run a trade deficit because of the dollar’s status as a reserve currency. As will be shown, this claim misunderstands both the nature of reserve currencies and the workings of the international finance system."

http://www.pathtofullemployment.org/wp-content/uploads/2014/04/BAKER.pdf

Minimum wages: the effects on employment and labour-force turnover

"Economic research finds little evidence in support of the hypothesis that an increase in minimum wages significantly affects employment – either positively or negatively. This column discusses a study of the impact of minimum-wage changes on turnover rates. Minimum-wage increases are associated with a lower probability that a job will end, and with a lower probability that an unemployed person will find work. The former effect is established only for newly hired workers. Increases in the minimum wages are also associated with more stable jobs for all low educated workers. Thus, the trade-off between fewer jobs with higher wages and more job stability versus easier access to jobs should be taken into account in the minimum-wage policy debates."

http://www.voxeu.org/article/minimum-wages-and-jobs-new-evidence

Wiadomość nr 300 opublikowana na Grupie.

Why is the Recovery so Agonizingly Slow?

"Recessions that are driven by a collapse of the financial sector, balance sheet recessions as they are known, are one of the most difficult types of recessions to recover from. That is because the collapse of the financial sector does great damage to the balance sheets of individual households. In the most recent recession, the typical household lost a considerable amount of home equity when the price bubble popped, stock values declined causing losses of retirement, education, and other types of saving, and widespread unemployment and underemployment caused households to use their accumulated saving just to survive month to month."

http://www.thefiscaltimes.com/Columns/2014/01/14/Why-Recovery-so-Agonizingly-Slow