Do the media focus on the negative? If so, why? We study this in the context of stock market reporting and identify and quantify an overlooked bias.

Don't blame the plumbing of Treasury markets, blame Congress and the White House. Not the unwinding of the basis trade in US Treasury markets, but the response to a large, macro shock. March 2020 was the first sign of cracks in the global safe asset supplier armor. April 7 and

Trump pivoted, but we’re not going back to where we were before. We have learned a few things: 1) Trump will respond to a certain level of pain in markets. 2) The Treasury market is perhaps the most important player in markets right now. 3) There can be exemptions. (1/3)

BREAKING: Commerce Secretary Lutnick on the "tariff exemptions" announced this weekend: "They are exempt from reciprocal tariffs, but they are INCLUDED in the semiconductor tariffs which are coming in a month or two." So basically, they are not tariff exempt just recategorized?

New paper: with LLMs and firm-level text, we track in real time how American and global companies are reacting to tariffs, export controls, and financial sanctions. 🇺🇸🌏 In Q1 2025, even before "Liberation Day", we see a sharp surge in reported economic pressure. 🧵(1/x)

New paper with Martin Wolf on Fiscal Stagnation. Key insights: 1) High public debt may push the economy into fiscal stagnation, i.e. a persistent state of low growth and high fiscal distortions. 2) Pro-growth policies are crucial to exit stagnation, but they require credibility.

New paper on recent US tariffs with Matt Rognlie and Adrien Auclert Our focus: effects of temporary increases in tariffs (“tariff shocks") Three Qs: 1 Will tariffs lead to a recession? 2 Will they reduce the trade deficit? 3 Why are they not appreciating USD? (as in std theory) 🧵

The natural interest rate (r*) is the real rate that would prevail in the long run. The standard view in macro is that r* depends exclusively on structural factors such as productivity growth or demographics. A short 🧵 a new paper 1/n (n=6) papers.ssrn.com/sol3/papers.cf…

"The Elastic Markets Hypothesis" new paper w Felix Gerding. Using country index additions/subtractions, we find multipliers (of flows on stock market prices) are not as high or permanent as recent lit. Stock market demand may be inelastic in short-run but is elastic in long-run🧵

Ein paar Bemerkungen zum so genannten EU-US Zolldeal: (1/10) Ein trauriger Tag für den Freihandel: 15% Zoll auf EU-Waren in den USA ist besser als 20 oder 30%, keine Frage. Aber der „Deal“ ist teuer erkauft. Vielleicht zu teuer.

Higher‐order moment conditions can identify non‐Gaussian SVARs—but do they increase efficiency in a recursive SVAR? 👉We show that bivariate coskewness and cokurtosis conditions lead to efficiency gains, while non-bivariate conditions are redundant.

“The simple test is whether an economist's views tend to diverge from those of his ideological allies when the ideology clashes with the economics. If they do he is a real economist. If they do not, he is only an economist in working hours.” daviddfriedman.substack.com/p/economic-met…

incredible things happening in the townsquare today

New paper: “Beyond the Taylor Rule” joint with Emi Nakamura and Venance Riblier. Emi presented this paper at the Jackson Hole Symposium. We investigate how descriptive and how prescriptive the Taylor rule is. 1/ eml.berkeley.edu/~jsteinsson/pa…

Let me explain why I believe modern economics is such a powerful tool for understanding the world. I’ll do this by discussing a great paper by Simone Cerreia-Vioglio, Lars Peter Hansen, Fabio Maccheroni, and Massimo Marinacci, “Making Decisions Under Model Misspecification,”

Central bankers face a 'balancing act' as they weigh a rate cut in December, New York Fed president John Williams told the FT. on.ft.com/49JGD8R

Tariff shocks work through weaker aggregate demand (adverse uncertainty and wealth effects). This effect might even be stronger than the direct cost-push effects with inflation falling.👇

Here's a possible explanation. Higher exports from China crowd out production of high-tech goods and innovation in the rest of the world. Over the medium term, GDP in the rest of the world drops because of lower productivity growth.