Approximately all of it (at the time, and in dollars) and examples of what it can be used for. As the chart states: "All this money flows in and out of, and between, households, corporations, and governments. This process is complicated". Basically, there is a circular flow to all of this money, so there is double counting. But it is a great snapshot to look at whenever one is bored.
August 23, 2013
August 16, 2013
So…That Immigration Bill
If anyone reads this regularly, they know I’ve done a few posts about the economics of migration (here, here, and here). That’s because freer migration is the single best thing for the world economy. Since that statement isn’t at all controversial, and Latinos voted against Republicans in droves in the last election, it was natural that a bipartisan immigration bill passed the senate. The bill, while still flawed, was progress in the right direction. However, it died in the House, where Republicans refused to let it come up for a vote.
So what would the immigration bill have done for the economy? It would have been a net benefit. The CBO found that, over the next 20 years, passage of the immigration bill would increase GDP by 5.4%, and reduce federal debt by $300 billion. Average wages would be 0.5% higher[1]; the rate of return on capital investment would be higher. Immigrants added to the population would “participate in the labor force at a higher rate”, or because they would be both less skilled and work at lower wages, on average (the bill would also allow for more skilled immigrants), they would be employed at a higher rate[2]. Overall, the bill would increase the productivity of capital and labor, meaning it would be profitable to employ more of both. Illegal immigrants who would obtain legal status would see a wage increase of 12%, and increased productivity. It would lead to a higher return on savings, which, combined with increased wages would lead to a higher savings rate.
So what would the immigration bill have done for the economy? It would have been a net benefit. The CBO found that, over the next 20 years, passage of the immigration bill would increase GDP by 5.4%, and reduce federal debt by $300 billion. Average wages would be 0.5% higher[1]; the rate of return on capital investment would be higher. Immigrants added to the population would “participate in the labor force at a higher rate”, or because they would be both less skilled and work at lower wages, on average (the bill would also allow for more skilled immigrants), they would be employed at a higher rate[2]. Overall, the bill would increase the productivity of capital and labor, meaning it would be profitable to employ more of both. Illegal immigrants who would obtain legal status would see a wage increase of 12%, and increased productivity. It would lead to a higher return on savings, which, combined with increased wages would lead to a higher savings rate.
August 15, 2013
Economist Quotes
"What are you? Blind? In which case maybe. I mostly support projects working to restore sight and prevent eye disease. Or 'expanding the market' as you might call it."
- Banksy
August 4, 2013
July Jobs Report
162,000 jobs were added in July. It's neither relatively good nor bad. The previous two months were revised down by 26,000 jobs total.
It's a mixed signal, and there have been a lot of mixed signals in the economy lately. The good part is that the innovative Fed policy we currently have automatically adjusts to economic conditions. If the economy slows down it means monetary stimulus will last longer. And the mixed signals in the economy have already triggered some subtle but telling word changes in Fed policy statements, which point to the need for continued stimulus.
It's a mixed signal, and there have been a lot of mixed signals in the economy lately. The good part is that the innovative Fed policy we currently have automatically adjusts to economic conditions. If the economy slows down it means monetary stimulus will last longer. And the mixed signals in the economy have already triggered some subtle but telling word changes in Fed policy statements, which point to the need for continued stimulus.
August 1, 2013
The Walmart Living Wage Bill is a Bad Idea
The bill that recently passed the D.C. City Council yet to be signed by the mayor, requiring Walmart to pay a “living wage” of $12.50 an hour is a bad idea[1]. At worst it will harm the poor and unskilled, at best it is a very inefficient way to benefit a small number of them.
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