By historical standards, the current recovery from the recession that began in 2007 has been disappointing. This is part 3 of a three-part series with John Taylor of Stanford University's Hoover Institution and Department of Economics.
Taylor puts the recovery in historical perspective and explores possible explanations for why the recovery has been so mediocre.
In Part 1 (http://www.youtube.com/watch?v=1eCYq2vD5GY) of this discussion of the recovery, Taylor quantified how unusual this recovery is by historical standards. In Part 2 (http://www.youtube.com/watch?v=ooUbohNneCQ), Taylor looked at a number of standard explanations for the sluggish recovery.
Here in part 3, Taylor argues that the slow pace of the recovery is due to poor policy decisions made by the Bush and Obama administrations that have increased the amount of uncertainty facing investors, consumers, and employers. Examples include the rising debt forecast, the fiscal cliff, expiring tax provisions, and quantitative easing. Taylor argues that the uncertainty surrounding these policies in the future along with increased regulation have held back the recovery.
LINKS TO DATA & PAPERS REFERENCED -
1. Debt as a Percentage of GDP Chart:
Historical debt data - http://www.cbo.gov/publication/21728.
Future debt projections - http://www.cbo.gov/publication/20776 and http://www.cbo.gov/publication/43288
2. Number of Provisions Expiring in the US Tax Code Chart:
List of Expiring Tax Provisions - Prepared by the Staff of the Joint Committee on Taxation, various issues - https://www.jct.gov/publications.html?func=startdown&id=4383.
3. 'Measuring Economic Policy Uncertainty' by Scott Baker, Nicholas Bloom and Steven Davis:
4. An Era of Deregulation (?) Chart:
Federal Register Historical Statistics (https://www.federalregister.gov/learn/tutorials)
Notes: Dates based on calendar year; Excludes preliminary/unrevised pages, blank/skipped pages, and proposed rules pages
5. Number of Federal Workers Employed in Regulatory Activities Chart:
Susan Dudley & Melinda Warren "Fiscal Stalemate Reflected in Regulators' Budget: An Analysis of the U.S. Budget for Fiscal Years 2011 and 2012," TSA adjustment obtained from DHS Budget in Brief. http://wc.wustl.edu/files/wc/2012_Regulators_Budget_2.pdf and http://www.dhs.gov/xlibrary/assets/mgmt/dhs-budget-in-brief-fy2013.pdf.
6. 'Dodd-Frank Progress Report' by Davis Polk:
According to Davis Polk (a firm monitoring Dodd-Frank progress) - "Dodd-Frank Progress Report, November 2012"
7. Reserve Balances Chart:
H.4.1 Federal Reserve statistical release (reserve balances with Federal Reserve Banks). One can also get data from FRED http://research.stlouisfed.org/fred2/series/WRESBAL?rid=20
8. 'The 2009 Stimulus Package: Two Years Later' by John B. Taylor: http://media.hoover.org/sites/default/files/documents/2009-Stimulus-two-years...
9. 'An Empirical Analysis of the Revival of Fiscal Activism in the 2000s' by John B. Taylor - http://www.stanford.edu/~johntayl/JEL_Taylor_Final%20Pages.pdf
10. Economic Benefits of the '09 Stimulus Package Chart:
Chicago Booth IGM Forum on the Economic Stimulus, 2/15/12 - http://www.igmchicago.org/igm-economic-experts-panel/poll-results?SurveyID=SV.... IGM Economic Experts Panel - www.igmchicago.org/igm-economic-experts-panel
11. U.S. Misery Index Chart:
Bureau of Labor Statistics - Unemployment Rate (http://www.bls.gov/webapps/legacy/cpsatab1.htm); CPI-U (ftp://ftp.bls.gov/pub/special.requests/cpi/cpiai.txt)