John Cox

Blogs · @wyome

Tagged economics · everything

Marginal REVOLUTION

Japanese claims about China — Marginal Revolution

This piece identifies local government financing platforms as China's primary financial vulnerability rather than residential real estate bubbles, explaining that these vehicles emerged after 1990s tax centralization left localities dependent on Beijing and were weaponized during the 2008 stimulus when local governments had to fund a third of spending themselves. By mid-2010, 8,221 such platforms had accumulated ¥7.7 trillion in loans, with 20-25 percent flagged as problematic by regulators, and the author raises the speculative possibility that defaults could trigger yuan depreciation.

Permalink economics

Marginal REVOLUTION

Marginal Revolution: Japanese claims about China

This piece argues that China's most pressing financial vulnerability is not its residential property bubble but rather the debt accumulated through local government "loan platforms"—financial vehicles created after tax centralization left local governments revenue-starved and forced to borrow commercially to fund infrastructure mandates. By mid-2010, these 8,221 platforms had accumulated 7.7 trillion yuan in loans, with 20-25 percent classified as problematic by regulators, creating systemic risk that could potentially trigger yuan depreciation if defaults cascaded. The author treats the scenario as speculative but worth serious consideration rather than dismissal.

Permalink real estateeconomics

caseymulligan.blogspot.com

Supply and Demand (in that order): Keynesian Flavors

The author examines how a proposed 2011 payroll tax cut for employees would affect employment under different economic theories. Under sticky-wage Keynesianism, which holds that wages don't fall enough to clear labor markets, an employee tax cut would be less effective than an employer cut at stimulating hiring, particularly for low-wage workers who face minimum wage constraints. Under sticky-price Keynesianism, payroll tax cuts of any kind would minimally boost employment since the real problem is insufficient consumer demand, not labor costs—and might even increase measured unemployment.

Permalink economicstaxation

www.calculatedriskblog.com

Calculated Risk: U.S. Births decline in 2009

U.S. births fell to 4.136 million in 2009 from 4.247 million in 2008, representing a 4.2% decline from the 2007 peak and the second consecutive year of decrease. The post attributes the decline to economic stress from the Great Recession, noting that families facing financial hardship tend to delay childbearing, and draws a historical parallel to the 1920s when births began falling years before the Great Depression. While acknowledging that demographic factors also influence birth rates, the author argues that economic distress is a significant driver of fertility decline and expects continued drops through 2010, though not as severe as those experienced during the Depression era.

Permalink economics2020s