Cumberland Advisors | Oct 01, 2017 07:25AM ET
The 59th annual meeting of the National Association of Business Economics took place earlier last week in Cleveland with a stellar lineup of presentations on the state of the US and world economies. Chair Yellen headlined the meeting with a tour de force discussion of why the Fed can’t figure out why inflation fails to respond to policy initiatives as it did in the past. Her discussion was academic– accompanied by detailed mathematical appendices – and thorough, covering all possible avenues being explored to try to understand inflation dynamics.
The discussion was candid and totally transparent and helps to put additional color on the wide range of policy rate assumptions we noted in our earlier commentary this week, all assumed to be largely consistent with the FOMC’s median forecasts for slow growth, a strong labor market, and inflation stubbornly below the FOMC’s target. Yellen delivered the kind of professional presentation to a knowledgeable audience that one could not envision a non-economist chair of the Fed presenting.
Martin Feldstein took the group on an impressive and informative deep dive into the prospects for corporate tax reform. He laid out the arguments for reform, including changes that would encourage repatriation of earnings abroad. But he did even more, because he not only examined the first-round effects of the various targets for reform but then carefully explored the second- and third-round knock-on effects. Briefly, his bottom line was cautiously optimistic, but he thought that the maximum that could be achieved this round was a reduction in the corporate tax rate to about 25%. His conclusion about feasibility, rooted in the likely difficulty of getting fiscal conservatives to significantly increase the deficit, is interesting given the ambitious initial proposal by the administration to cut the corporate rate even more.
But Chair Yellen’s and Professor Feldstein’s presentations were not the only reasons to attend the meetings(not to mention the reception held at the Rock and Roll Hall of Fame). Below are some highlights in no particular order
All in all, the meeting was chock-full of useful and relevant information for business economists and policy makers alike.
by Cumberland Advisors
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