Econintersect: Every day our editors collect the most interesting things they find from around the internet and present a summary "reading list" which will include very brief summaries of why each item has gotten our attention. Suggestions from readers for "reading list" items are gratefully reviewed, although sometimes space limits the number accepted.
Confidence Abounds (John Hussman, Advisor Perspectives) Something to read while you wait for your first quarter investments report.
The Big Bang Theory (Mohamed El-Erian, Jared Bernstein, Lawrence Kotlikoff, Robert Reich, Menzie Chinn, Jeffery Frankel and Dean Baker, Politico) Seven economists, including four who have contributed to Global Economic Intersection) explain how they are reacting to the idea that the U.S. economy is about to leap forward. Read Menzie Chinn's further analysis of his part at GEI Analysis.
Budget Deficits: Rhetoric and Reality (Robert Eisner, The Journal of Economic Perspectives, Vol. 3, No. 2 (Spring, 1989), pp. 73-93) In the 1980s Robert Eisner was examining the flow of accounts data for measuring economic activity and was teaching many lessons that have still not been learned. The following two graphs from this 1989 paper would be news to many economists and almost all (if not every last one) politicians serving in Congress.
Time for a Quiz:
1. When the year n-1 had a smaller deficit or a larger surplus than year n-2, which direction did GDP move in year n? Which direction did unemployment move?
2. Eisner's work and the analysis by Kimballl and Wang seem to disagree. Which one is wrong? Explain your answer.
Please leave answers in comments or, if you prefer anonymity, send them to JohnLounsbury@econintersect.com and they will be posted as anonymous. The Econintersect answers will be posted as a comment on this article ina day or so and a further discussion of all answers will be posted in another article next week if there are any answers worth discussing.
Economists agree: Raising the minimum wage reduces poverty (Mike Konczal, The Washington Post) Mike Konczal has contributed to Global Economic Intersection. Research shows that raising the minimum wage increases incomes in the lowest 30%, which means that the median income level will not be changed. However, presumably, average income income will be increased, unless upper incomes are reduced to pay more to the poor.
The Rise and Fall of the Minimum Wage (Bill Marsh, The New York Times) The graph below shows a history that can be compared to the more familiar graph of income of the 1% over the same time period. It is part of an infographic at The New York Times.
Click on graph to view full infographic at the NYT.
Doug Kass: 15 Surprises for 2014 (Part 1) (Doug Kass, The Street.com) A video at The Street.com has the first five predictions which are also covered in the Part 1 article, along with a review of Kass' 2013 predictions. Also available: Part 2 (no video) and Part 3 (another video).
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