Nominal News (Pawel Langer)

Here is a list of individuals that have a newsletter on substack talking about academic economic and finance research! If you want great, longer form content - this one is for you: go.bsky.app/LVtV86W

The US Federal Reserve is making interest rate decisions this week - given the upcoming inflation trajectory, it looks like it should be a hike, but they might wait it out I don't think there's anything to wait out given high September inflation Follow me for coverage of the decision on Wednesday!

I went ahead and put a list of predominantly academic economics substack newsletters and individuals (which I will update regularly). If you're not on Substack or Notes - perhaps this might encourage you to join! www.nominalnews.com/p/econstack

I've been thinking whether these approaches would be good - a government body, in this case the city, provides multiple investment benefits, including money and tax breaks, and in exchange receives an equity stake. It'll be interesting to see how this works but it looks quite promising.

Real wages are falling and transfers have been cut - the negative impact of current government policies on workers is quite large.

Here is why Wall Street loves reward credit cards - they make a lot of money on them!

Oof - seems like some of the math results discovered by genAI might not hold up.

One more point regarding the Nobel - did the committee intentionally pick Woodford and Hall to troll the new Fed Chair Kevin Warsh? (Both prizes focus on taking into account the future and the importance of forward guidance)

With my Nominal News newsletter, I aim to bring you the latest economic research and apply it. I've extensively discussed using the New Keynesian model to understand what is happening in the US economy, especially on the topic of inflation. Today this model won the Nobel prize!

Btw, it was obvious from the start that Bessent’s bond intervention wouldn’t work. As I wrote, research showed that the size was way too small. Unfortunately for Bessent, economics was right yet again.

I think we're bumping into a real issue with genAI in which it may slow (or even halt) innovation. An indie game developer showed a demo of their game Needle in a Haystack. You would typically do that to gauge interest and whether you should commit more time. It got lots of hype.

Here is a Schrodinger's chart - some will say that wage growth has been very good in the US since 1967 by looking at the trend. At the same time, they do not talk about that real output per capita jumped by almost 200%, while wages grew by 47%.

One of the worst economic misunderstandings is believing work requirements get people to work. This policy gets rolled out all the time as it sounds good. But the fact is that it accomplishes nothing of what SHS says - all it does is it kicks off the most vulnerable by adding bureaucracy.

Unfortunately, this is likely driven by the misunderstanding of what college does. The college wage premium remains large and colleges do increase skills. Colleges aren't just signalling and what one acquires there cannot easily be replaced with AI.

The US job market appears to have slightly turned the corner. Of course, it'll be dependent on the situation, but switching jobs right now might be less risky. With rising rates, this strong job market won't last too long however.

And the UK doing the same - this is predominantly a transfer to homeowners. If that's something you want, then go ahead with this policy. But I don't think that's the desired goal.

As is often the case, this policy sounds like it help first time homebuyers, but it will predominantly serve as a benefit to home sellers.

A summary of the research on AI and junior employees - businesses will need to adapt how they train their staff.

I've seen far more economists cover Mamdani’s grocery stores (which do not exist yet) than these gas stations (which do exist). In terms of ‘unfair subsidy’, I think one of these is a much bigger issue.

If you want to get a sense where interest rates are heading, here is my conditional forecast from my write-up - it depends on what the government does.

Took a bit, but here's my coverage of the Federal Reserve decision. It appear the Fed is taking seriously the unanchoring of inflation expectations, even though Warsh is incorrect in what is driving elevated inflation.

“Inflation remains elevated relative to the Committee's 2 percent goal, in part reflecting supply shocks that have driven price increases in certain sectors, including energy” - this was deleted from the statement. This is very hawkish. Inflation is not just energy shocks.

Here is the statement announcing the interest rate hike, and the changes to the prior statement in July:

It's an interest rate hike!

Work requirements are a cruel policy First- gut state capacity Second- impose work requirements Lastly- its impossible verify requirement because there’s no state capacity If you want to remove assistance such as SNAP, be open about it. Don’t pass things like work requirements.