April 24, 2021 — A generation of great international economists is passing from the scene. Richard Cooper died on December 23. An American, he was teaching his classes at Harvard until the very end. Robert Mundell, passed away on April 4. Originally Canadian, he was a winner of the Nobel Prize in economics. And John Williamson, on April 11. Originally British, he had been the first scholar hired by the Peterson Institute for International Economics.
March 27, 2021 — It has been a year since the US and the world went into recession. Because of its origins in the sudden pandemic, it was possible to reliably discern the advent of the recession before it was reflected in any of the standard economic statistics, which is rare. (I hope it shocks no one to learn that economists can’t normally predict recessions.)
By the end of the second quarter of 2020, US GDP had fallen 11 %. This record plunge took the US economy from a level that is estimated to have been 1.0% above potential output at the end of 2019, to a level 10 % below potential in mid-2020. Potential output is the level of GDP that is produced when unemployment is at its so-called natural rate, the capital stock is operating at the capacity for which it was designed, buildings have their normal occupancy rates, etc.
February 8, 2021 — In early November 1983, President Ronald Reagan was meeting with his entire cabinet, as Secretary of State George Shultz walked him through each step of an upcoming visit to Japan and Korea. I was there as the “plus one” staff aide to Martin Feldstein, Reagan’s top economic adviser.
On the occasion of Shultz’s passing, February 6, at age 100, I offer two remembered anecdotes from this meeting.
Reagan and Whales
Reagan said very little during the lengthy briefing and it wasn’t clear whether he was taking it all in. At one point, Shultz was talking about the disagreement between the US and Japan over whaling.