New work on fiscal adjustments

Alberto Alesina and Silvia Ardagna offer a new look at fiscal adjustment --- namely, raising taxes or cutting spending in order to achieve it --- and GDP effects among OECD countries. This is related to the question about the size of fiscal multipliers, but the samples are likely to be quite different. You'd never in your right mind conduct fiscal adjustment to lower a deficit during a contraction ... or would you?

In the paper, which is forthcoming in Tax Policy and the Economy, Alesina and Ardagna find that cutting spending is less harmful than raising taxes, and reflexively, tax cuts are better for GDP than spending increases. I don't think they are able to measure the (perceived) degree of permanence of these policies, which presumably would matter for life-cycle consumers.

Top college professor

A few days ago the Journal reported on the Cherry Teaching Award, which has nothing to do with fruit and everything to do with teaching. The article discusses the tension between teaching and research or other service at the collegiate level.

It also profiles 3 candidates for the Cherry award this year. Elliott West is 64, Edward Burger is 45, and Roger Rosenblatt is 69. See a pattern?

Way to go!

CBO Director Doug Elmendorf is profiled in the Times. "A good CBO director is respected but not loved by Congress."

Sahm et al. on the 2008 tax rebate

Claudia Sahm, Matthew Shapiro, and Joel Slemrod argue that micro-level survey results suggest people spent a third of their tax rebate checks. Their bottom line: "Absent the rebate, the sharp decline in spending that is evident in aggregate data beginning in the third quarter of 2008 would have started in the second quarter, prior to the financial crisis of the fall."

This stands in stark contrast to the perspective offered a year ago by John Taylor, who pointed out the complete lack of evidence in aggregate data of any consumption effect.

This reminds me of the back-and-forth over the Administration's "jobs created or saved" measure derived from surveys, criticized recently by Ed Lazear. If something doesn't show up in macroeconomic data, maybe it isn't there and maybe it is. What's the counterfactual? If it's a survey of intentions or actual outcomes, are the data good?

Unemployment and family economics

The Times and the Wall St. Journal have one article each on how higher unemployment is affecting family economics.

The Times article discusses the psychological stress felt by families with unemployed fathers especially, with mothers who may also be unemployed. But the thinking is that it's harder on dads to be unemployed, while moms seem to have an easier time dealing with the fluidity.

The Journal article discusses evidence of more moms going back to work now that dads' employment is considerably lower.

Feldstein on incentives in health insurance reform

Martin Feldstein weighs in on the potential for shenanigans by profit-maximizing individuals faced with the proposed new health insurance system. He thinks they're likely, because the penalties are so low relative to the gains of not purchasing health insurance, which presumably would no longer be penalized by denied coverage (for pre-existing conditions).

Economists are paranoid, aren't we? But you can't argue with the numbers.

High infant mortality and premature births in the U.S.

The headline to this Times story from Tuesday concerning a recent CDC report on U.S. infant mortality in comparative perspective summarizes the main finding: because 1 in 8 U.S. births were preterm, compared to 1 in 18 in Ireland or Finland, and preterm babies have higher mortality rates, the excess rate of premature births accounts for a third of the U.S. infant mortality rate.

The report points out that preterm babies in the U.S. actually have lower mortality rates than they do elsewhere. But the problem is that preterm mortality is enough higher than full-term mortality for the difference in the carrying-to-term propensity to more than offset this advantage.

The Times article discusses some reasons why rates of being born premature are higher in the U.S., which is apparently the crucial issue. The lead author of the CDC study was quoted as saying, “Fifteen or 20 years ago, if a woman had high blood pressure or diabetes, she would be put in the hospital, and they would try to wait it out. It was called expectant management. Now I think there’s more of a tendency to take the baby out early if there’s any question at all.”

This sounds like poor adult (mother's) health driving poor child health. There were other potential reasons cited too, however.