According to the incoming chair of US President Donald Trump’s Council of Economic Advisers, America runs large trade deficits and struggles to compete in manufacturing because foreign demand for US financial assets has made the dollar too strong. It is not a persuasive argument.
NEW YORK – A prominent economist once told me that macroeconomic policy debates are all about the prime mover to which other variables respond. The implication, he explained, is that “You can invert policy prescriptions simply by claiming a different forcing variable.” A paper by Stephen Miran, published just before he was nominated to chair US President Donald Trump’s Council of Economic Advisers, does precisely this. Since his views likely reflect those of the administration, they surely warrant close attention.
NEW YORK – A prominent economist once told me that macroeconomic policy debates are all about the prime mover to which other variables respond. The implication, he explained, is that “You can invert policy prescriptions simply by claiming a different forcing variable.” A paper by Stephen Miran, published just before he was nominated to chair US President Donald Trump’s Council of Economic Advisers, does precisely this. Since his views likely reflect those of the administration, they surely warrant close attention.