US ECONOMICS
ITA. TRADEOLOGY. October 6, 2016. Deepening and Institutionalizing U.S. – Brazil IT and Defense Trade
Ken Hyatt is the Acting Under Secretary of International Trade Administration
Jason Andringa, President & CEO at Vermeer Corporation
It makes perfect sense that the Department of Commerce’s third annual Health IT Trade Mission took place in Sao Paulo, the business and financial capital of Brazil. Through my participation in this trade mission, I have had productive discussions with leaders of several key organizations actively engaged in our bilateral commercial relationship, including the Brazil-U.S. Business Council (BUSBC), the American Chamber of Commerce in Brazil (AmCham), and the Federation of Industries of the State of São Paulo (FIESP).
A constant theme in all of my meetings was the advancements in the digital economy, the increasing use of e-commerce, and the opportunities that these sectors present for the Brazilian economy. The digital economy is already critical to both the United States and Brazil, making up 5.4 percent and 2.4 percent of GDP, respectively. There has been remarkable growth of e-commerce in Brazil recently, growing by more than 20 percent over the past few years. In fact, the digital health sector alone is expected to exceed $40 billion by 2020.
This is precisely why ITA’s Foreign Commercial Service presence in Brazil includes a digital trade officer to help U.S. firms participate and reap the benefits of the digital economy; the core service we provide through our Digital Attache program.
That said, there are many barriers to U.S.-Brazil digital trade. That is why our countries are working together to exchange best practices related to developing, measuring, regulating, and fostering the digital economy to help ensure that this sector becomes a major growth driver for our two countries. To that end, our public and private sectors must promote three major points: the benefits of a free and open Internet, flexible regulatory regimes, and open innovation ecosystems.
Other priority topics we discussed included infrastructure, healthcare, energy, and services, as well as cross-cutting issues like trade facilitation (e.g., single-window), regulatory coherence, and standards. Outside of this current trade mission, our two countries have been working on addressing these issues over the past few years via two high-profile, dynamic cooperative mechanisms: the U.S.-Brazil CEO Forum and the U.S.-Brazil Commercial Dialogue. These two vehicles have been critical in the advancement of key priorities and issues affecting both American and Brazilian companies.
The other priority topic during my time in Brazil was our defense partnership. I am proud to have led our interagency delegation that included the Departments of Commerce, Defense, and State, to launch the first ever Defense Industry Dialogue (DID). The DID integrates industry into the bilateral defense relationship with Brazil, and creates a platform for discussing concrete commercial issues such as supply chain integration, technology transfer and export compliance, as well as manufacturing standards.
During the DID, U.S. Ambassador to Brazil Liliana Ayalde highlighted the defense industry as a key driver of economic growth in both countries, and called on all participants to seize the moment to focus on a concrete agenda in pursuit of tangible results. And with the participation of more than 180 participants from 70 defense firms, senior government officials, and military leaders from both countries, the commitment to pursuing that concrete agenda was more than evident. That is why I signed a four-way Letter of Intent to institutionalize government support for the dialogue moving forward. The DID marks an important milestone for U.S.-Brazil relations and I am thrilled to be a part of it.
Whether we are talking about digital, defense, or any other sector, it should be absolutely clear that the United States is committed to a strong and dynamic relationship with Brazil, and I am committed to continue strengthening this relationship through greater trade and investment.
FED. October 14, 2016. Speech by Chair Yellen on macroeconomic research after the crisis. At "The Elusive 'Great' Recovery: Causes and Implications for Future Business Cycle Dynamics" 60th annual economic conference sponsored by the Federal Reserve Bank of Boston, Boston, Massachusetts
Macroeconomic Research After the Crisis
Extreme economic events have often challenged existing views of how the economy works and exposed shortcomings in the collective knowledge of economists. To give two well-known examples, both the Great Depression and the stagflation of the 1970s motivated new ways of thinking about economic phenomena. More recently, the financial crisis and its aftermath might well prove to be a similar sort of turning point. Today I would like to reflect on some ways in which the events of the past few years have revealed limits in economists' understanding of the economy and suggest several important questions I hope the profession will try to answer. Some of these questions are not new, though recent events have made them more urgent. Appropriately, some are addressed by the papers prepared for this conference. Pursuing answers to these questions is vital to the work of Federal Reserve and other economic policymakers, and the Fed is likewise engaged in ongoing research to seek answers.
The Influence of Demand on Aggregate Supply
The first question I would like to pose concerns the distinction between aggregate supply and aggregate demand: Are there circumstances in which changes in aggregate demand can have an appreciable, persistent effect on aggregate supply?
Prior to the Great Recession, most economists would probably have answered this question with a qualified "no." They would have broadly agreed with Robert Solow that economic output over the longer term is primarily driven by supply--the amount of output of goods and services the economy is capable of producing, given its labor and capital resources and existing technologies. Aggregate demand, in contrast, was seen as explaining shorter-term fluctuations around the mostly exogenous supply-determined longer-run trend.1 This conclusion deserves to be reconsidered in light of the failure of the level of economic activity to return to its pre-recession trend in most advanced economies. This post-crisis experience suggests that changes in aggregate demand may have an appreciable, persistent effect on aggregate supply--that is, on potential output.2
The idea that persistent shortfalls in aggregate demand could adversely affect the supply side of the economy--an effect commonly referred to as hysteresis--is not new; for example, the possibility was discussed back in the mid-1980s with regard to the performance of European labor markets.3 But interest in the topic has increased in light of the persistent slowdown in economic growth seen in many developed economies since the crisis. Several recent studies present cross-country evidence indicating that severe and persistent recessions have historically had these sorts of long-term effects, even for downturns that appear to have resulted largely or entirely from a shock to aggregate demand.4 With regard to the U.S. experience, one study estimates that the level of potential output is now 7 percent below what would have been expected based on its pre-crisis trajectory, and it argues that much of this supply-side damage is attributable to several developments that likely occurred as a result of the deep recession and slow recovery.5 In particular, the study finds that in the wake of the crisis, the United States experienced a modest reduction in labor supply as a result of reduced immigration and a fall in labor force participation beyond what can be explained by cyclical conditions and demographic factors, as well as a marked slowdown in the estimated trend growth rate of labor productivity. The latter likely reflects an unusually slow pace of business capital accumulation since the crisis and, more conjecturally, the sharp decline in spending on research and development and the very slow pace of new firm formation in recent years.6
If we assume that hysteresis is in fact present to some degree after deep recessions, the natural next question is to ask whether it might be possible to reverse these adverse supply-side effects by temporarily running a "high-pressure economy," with robust aggregate demand and a tight labor market. One can certainly identify plausible ways in which this might occur. Increased business sales would almost certainly raise the productive capacity of the economy by encouraging additional capital spending, especially if accompanied by reduced uncertainty about future prospects. In addition, a tight labor market might draw in potential workers who would otherwise sit on the sidelines and encourage job-to-job transitions that could also lead to more-efficient--and, hence, more-productive--job matches.7 Finally, albeit more speculatively, strong demand could potentially yield significant productivity gains by, among other things, prompting higher levels of research and development spending and increasing the incentives to start new, innovative businesses.
Hysteresis effects--and the possibility they might be reversed--could have important implications for the conduct of monetary and fiscal policy. For example, hysteresis would seem to make it even more important for policymakers to act quickly and aggressively in response to a recession, because doing so would help to reduce the depth and persistence of the downturn, thereby limiting the supply-side damage that might otherwise ensue. In addition, if strong economic conditions can partially reverse supply-side damage after it has occurred, then policymakers may want to aim at being more accommodative during recoveries than would be called for under the traditional view that supply is largely independent of demand.
More research is needed, however, to better understand the influence of movements in aggregate demand on aggregate supply.8 From a policy perspective, we of course need to bear in mind that an accommodative monetary stance, if maintained too long, could have costs that exceed the benefits by increasing the risk of financial instability or undermining price stability. More generally, the benefits and potential costs of pursuing such a strategy remain hard to quantify, and other policies might be better suited to address damage to the supply side of the economy.
Heterogeneity
My second question asks whether individual differences within broad groups of actors in the economy can influence aggregate economic outcomes--in particular, what effect does such heterogeneity have on aggregate demand?
Many macroeconomists work with models where groups of individual actors, such as households or firms, are treated as a single "representative" agent whose behavior stands in for that of the group as a whole. For example, rather than explicitly modeling and then adding up the separate actions of a large number of different households, a macro model might instead assume that the behavior of a single "average" household can describe the aggregate behavior of all households.
Prior to the financial crisis, these so-called representative-agent models were the dominant paradigm for analyzing many macroeconomic questions. However, a disaggregated approach seems needed to understand some key aspects of the Great Recession. To give one example, consider the effects of negative housing equity on consumption. Although households typically reduce their spending in response to wealth declines, the many households whose equity positions in their homes were actually driven negative by the reduction in house prices may have curtailed their spending even more sharply because of a markedly reduced ability to borrow. Such a development, in turn, would shift the relationship between housing equity (which remained solidly positive in the aggregate) and consumer spending for the economy as a whole. Such a shift in an aggregate relationship would be difficult to understand or predict without using disaggregated data and models.
More generally, studying the effects of household and firm heterogeneity might help us better account for the severity of the recession and the slow recovery. At the household level, recent research finds that heterogeneity can amplify the effects of adverse shocks, a result that is largely driven by households with very little net worth that sharply increase their savings in a recession.9 At the firm level, there is evidence that financial constraints had a particularly large adverse effect on employment at small firms and the start-up of new firms, factors that may be part of the explanation for the Great Recession's long duration and the subsequent slow recovery.10 More generally, if larger firms seeking to expand have better access to credit than smaller ones, overall growth in investment and employment could depend in part on the distribution of sales across different types of businesses. Modeling any of these issues quantitatively will likely require the use of a heterogeneous-agent framework.
Economists' understanding of how changes in fiscal and monetary policy affect the economy might also benefit from the recognition that households and firms are heterogeneous. For example, in simple textbook models of the monetary transmission mechanism, central banks operate largely through the effect of real interest rates on consumption and investment. Once heterogeneity is taken into account, other important channels emerge. For example, spending by many households and firms appears to be quite sensitive to changes in labor income, business sales, or the value of collateral that in turn affects their access to credit--conditions that monetary policy affects only indirectly. Studying monetary models with heterogeneous agents more closely could help us shed new light on these aspects of the monetary transmission mechanism.
While the economics profession has long been aware that these issues matter, their effects had been incorporated into macro models only to a very limited extent prior to the financial crisis.11 I am glad to now see a greater emphasis on the possible macroeconomic consequences of heterogeneity, including in work by economists at the Federal Reserve.12 Nevertheless, the various linkages between heterogeneity and aggregate demand are not yet well understood, either empirically or theoretically. More broadly, even though the tools of monetary policy are generally not well suited to achieve distributional objectives, it is important for policymakers to understand and monitor the effects of macroeconomic developments on different groups within society.
Financial Linkages to the Real Economy
My third question concerns a key issue for monetary policy and macroeconomics that is less directly addressed by this conference: How does the financial sector interact with the broader economy?
In light of the housing bubble and subsequent events, policymakers clearly need to better understand what kinds of developments contribute to financial crises. What is the relationship between the buildup of excessive leverage and the value of real estate and other types of collateral, and what factors impede or facilitate the deleveraging process that follows? Does the economic fallout from a financial crisis depend on the particulars of the crisis, such as whether it involves widespread damage to household balance sheets? How does the nature and degree of the interconnections between financial firms affect the propagation and amplification of stress through the financial system and overall economy? Finally--and most importantly--what can monetary policy and financial oversight do to reduce the frequency and severity of future crises?
Although the scope of these questions extends beyond the themes of this conference, it does include issues that are closely related. Consider the influence of balance sheet conditions and noninterest credit terms on spending and overall activity--an area where it is important to take account of differences across individual households and firms, as I just noted. Research on this topic has, of course, been ongoing for some time, and it has expanded greatly in the wake of the financial crisis.13 But I believe we have a lot more to learn about the ways in which changes in underwriting standards and other determinants of credit availability interact with interest rates to affect such things as consumer spending, housing demand and home prices, business investment (especially for small firms), and the formation of new firms.14 For example, is the persistent increase in the personal saving rate that we have observed since the collapse of the housing bubble primarily a result of a sustained shift toward more prudent underwriting standards by lenders? Is it something that will ultimately prove transitory once householdsfinish repairing their balance sheets or become more confident about their future prospects for employment and income?15 The answer to thislatter question could have significant implications for the longer-run normal, or neutral, level of interest rates and thus for the conduct of monetary policy.
Inflation Dynamics
My fourth question goes to the heart of monetary policy: What determines inflation?
From my perspective, the standard framework for thinking about inflation dynamics used by central bank economists and others prior to the financial crisis remains conceptually useful today. A simple description of this framework might go something like this:16 Inflation is characterized by an underlying trend that has been essentially constant since the mid-1990s; previously, this trend seemed to drift over time, influenced by actual past inflation or other economic conditions. Theory and evidence suggest that this trend is strongly influenced by inflation expectations that, in turn, depend on monetary policy. In particular, the remarkable stability of various measures of expected inflation in recent years presumably represents the fruits of the Federal Reserve's sustained efforts since the early 1980s to bring down and then stabilize inflation at a low level. The anchoring of inflation expectations that has resulted from this policy does not, however, prevent actual inflation from fluctuating from year to year in response to the temporary influence of movements in energy prices and other disturbances. In addition, inflation will tend to run above or below its underlying trend to the extent that resource utilization--which may serve as an indicator of firms' marginal costs--is persistently high or low.17
While this general framework for thinking about the inflation process remains useful, questions about some of its quantitative features have arisen in the wake of the Great Recession and the subsequent slow recovery. For example, the influence of labor market conditions on inflation in recent years seems to be weaker than had been commonly thought prior to the financial crisis. Although inflation fell during the recession, the decline was quite modest given how high unemployment rose; likewise, wages and prices rose comparatively little as the labor market gradually recovered. Whether this reduction in sensitivity was somehow caused by the recession or instead pre-dated it and was merely revealed under extreme conditions is unclear.18 Either way, the underlying cause is unknown. Does the reduced sensitivity reflect structural changes, such as globalization or a greater role for intangible capital in production that have reduced the importance of cyclical swings in domestic activity for firms' marginal costs and pricing power? Or does it perhaps reflect the well-documented reluctance--or, alternatively, limited ability--of firms to cut the nominal wages of their employees, which could help to explain the relatively moderate movements in inflation we saw during and after the recession?19
Another gap in our knowledge about the nature of the inflation process concerns expectations. Although many theoretical models suggest that actual inflation should be most closely related to short-run inflation expectations, as an empirical matter, measures of long-run expectations appear to explain the data better.20 Yet another unresolved issue concerns whose expectations--those of consumers, firms, or investors--are most relevant for wage and price setting, a point on which theory provides no clear-cut guidance. More generally, the precise manner in which expectations influence inflation deserves further study.21
Perhaps most importantly, we need to know more about the manner in which inflation expectations are formed and how monetary policy influences them. Ultimately, both actual and expected inflation are tied to the central bank's inflation target, whether that target is explicit or implicit.22 But how does this anchoring process occur? Does a central bank have to keep actual inflation near the target rate for many years before inflation expectations completely conform? Can policymakers instead materially influence inflation expectations directly and quickly by simply announcing their intention to pursue a particular inflation goal in the future? Or does the truth lie somewhere in between, with a change in expectations requiring some combination of clear communications about policymakers' inflation goal, concrete policy actions to demonstrate their commitment to that goal, and at least some success in moving actual inflation toward its desired level in order to demonstrate the feasibility of the strategy? Although historical experience suggests that changing the public's inflation expectations would be neither quick nor easy, it is not clear which of these possibilities is correct.23
With nominal short-term interest rates at or close to their effective lower bound in many countries, the broader question of how expectations are formed has taken on heightened importance. Under such circumstances, many central banks have sought additional ways to stimulate their economies, including adopting policies that are directly aimed at influencing expectations of future interest rates and inflation. The unusually explicit and extended guidance about the likely future path of the federal funds rate that was provided by the FOMC from 2011 through 2014 is an example of such a policy, as is the Bank of Japan's upward revision to its official inflation objective in 2013. Moreover, these and other expectational strategies may be needed again in the future, given the likelihood that the global economy may continue to experience historically low interest rates, thereby making it unlikely that reductions in short-term interest rates alone would be an adequate response to a future recession.24
For all of these reasons, I hope that researchers will strive to improve our understanding of inflation dynamics and its interactions with monetary policy.
International Linkages
Before closing, let me mention one additional area where more study is needed--the effects of changes in U.S. monetary policy on financial and economic conditions in the rest of the world and the ways in which those foreign effects can feed back to influence conditions here at home. Of course, cross-country monetary policy spillovers have been the subject of scholarly debate since the Great Depression, and much of the formal analysis of this topic dates back to the early 1960s.25 But this issue has received renewed interest with the advent of unconventional monetary policies after the Great Recession and, more recently, the divergence of monetary policies among major advanced-economy central banks.
Broadly speaking, monetary policy actions in one country spill over to other economies through three main channels: changes in exchange rates; changes in domestic demand, which alter the economy's imports; and changes in domestic financial conditions--such as interest rates and asset prices--that, through portfolio balance and other channels, affect financial conditions abroad. Research by Federal Reserve staff suggests that, all told, U.S. monetary policy spillovers to other economies are positive--that is, policies designed to provide stimulus to the U.S. economy also boost activity abroad, as negative effects of dollar depreciation are offset by positive effects of higher U.S. imports and easier foreign financial conditions.26 However, this issue is far from settled, as are a host of other related questions, including the following: Do U.S. monetary policy actions affect advanced and emerging market countries differently? Do conventional and unconventional monetary policies spill over to other countries differently? And to what extent are U.S. interest rates and financial conditions influenced by easing measures abroad?
Conclusion
In closing, I would like to commend the Federal Reserve Bank of Boston for organizing this conference and fostering research and debate on questions vital to our understanding of the economy. Answering these questions will help the Federal Reserve's efforts to promote a healthy economy, and I am grateful for the opportunity to speak to you today and be part of this important discussion.
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1. See Solow (1997).
2. Or, as Summers (2014) asked in a pithy inversion of Say's law, is it true that "lack of demand creates lack of supply?" (p. 37).
3. As Blanchard and Summers (1986) discuss, the question at the time was whether the long-run equilibrium, or "natural," rate of unemployment in European economies had been permanently raised by previous periods of high actual unemployment.
4. For example, see Cerra and Saxena (2008); Howard, Martin, and Wilson (2011); Martin, Nunyan, and Wilson (2014); and Blanchard, Cerutti, and Summers (2015).
5. See Reifschneider, Wascher, and Wilcox (2015).
6. Fernald (2015), however, argues that much of the apparent slowdown in U.S. potential GDP growth began prior to the 2007-09 recession.
7. See Okun (1973) for an early discussion of the benefits of a high-pressure economy. Importantly, not all of these benefits might show up as measured output, but they would nonetheless be welfare improving--for example, higher job satisfaction from better matches between workers and employers, as noted by Akerlof, Rose, and Yellen (1988).
8. For example, the experience of the 1990s might seem to provide a natural case study of whether reverse hysteresis is possible. Unfortunately, most studies of the labor market during this period do not directly speak to this issue, although Holzer, Raphael, and Stoll (2006) investigate changes in employers' willingness to hire less-skilled workers during these years, while Katz and Krueger (1999) and my own study with Blinder (2001) explore the somewhat related question of how the U.S. economy was able to simultaneously experience rapid growth, low unemployment, and low inflation in the late 1990s.
9. See Krueger, Mitman, and Perri (2016).
10. On the role of financing constraints for firm employment, see Siemer (2014); Chodorow-Reich (2014); and Duygan-Bump, Levkov, and Montoriol-Garriga (2015). A general-equilibrium model with heterogeneity among firms and credit frictions is studied in Khan and Thomas (2013). For the role of entry and exit in macroeconomic dynamics, see Clementi and Palazzo (2016) as well as Gourio, Messer, and Siemer (2016).
11. For early quantitative work on the relationship between income and wealth heterogeneity and the macroeconomy, see Krusell and Smith (1998).
12. Guvenen (2011) reviews several issues related to macroeconomics with heterogeneity. For an overview of the interactions between distribution and aggregate outcomes, see the work by Quadrini and Rios-Rull (2015). For recent work on the effects of monetary policy in models with heterogeneous agents, see Kaplan, Moll, and Violante (2016); Gornemann, Kuester, and Nakajima (2016); Auclert (2016); and Sterk and Tenreyro (2016).
13. For an example of early research on this topic, see Bernanke and Gertler (1989). Other important pre-crisis studies include the development of the financial accelerator model by Bernanke and others (1999a) and work by Kashyap and Stein (2000) and Peek, Rosengren, and Tootell (2003) on the bank balance sheet channel and the effects of bank loan supply shocks. For a more recent summary of the role of banks in the monetary transmission mechanism, see Peek and Rosengren (2013). Chaney, Sraer, and Thesmer (2012) provide evidence for the collateral channel of real estate for corporate investment, while Mian, Rao, and Sufi (2013) examine the influence of household balance sheets on consumption.
14. More empirical work would be useful to disentangle the spending effects that result from changes in credit conditions from those that result from movements in interest rates, as estimates of the latter likely often inadvertently incorporate the former. Most empirical models of the overall economy do not explicitly control for the influence of noninterest credit factors on consumption and investment; as a result, estimated interest rate effects will partially reflect the influence of these factors to the extent these factors are correlated with interest rates. There are many reasons to suspect that this is the case. Movements in interest rates influence a firm's cash flow and the value of its collateral, all else being equal. Higher interest rates also adversely affect consumer spending and especially residential investment, both by forcing households to devote a greater portion of their income to debt service and by making it more difficult to qualify for a loan because of maximum payment-to-income rules. Evidence for these effects is provided by Gertler and Karadi (2015), who show that relatively small changes in short-term interest rates are correlated with large movements in credit costs. Such correlations and interactions may explain why some types of spending appear to be more correlated with movements in nominal interest rates than with real interest rates; see Fair (2004, ch. 3) for evidence on this point. Finally, the relative contributions of relaxed lending standards, low interest rates, and other factors to housing bubbles, both in the United States and abroad, remains an open and unsettled topic; Agnello and Shucknecht (2011) present cross-country evidence that monetary policy plays an important role, while Dokko and others (2011) argue that monetary policy was a minor influence in the most recent episode.
15. See Mian, Rao, and Sufi (2013) for an assessment of the role of leverage and housing wealth shocks in driving consumption during the Great Recession. Work by Justiniano, Primiceri, and Tambalotti (2015) suggests that debt overhang alone cannot explain the slow recovery from the Great Recession.
16. See Yellen (2015) for a more extensive discussion.
17. In the economic literature, this general description of the inflation process is referred to as the expectations-augmented Phillips curve. In its simplest form, the Phillips curve relates inflation to expected inflation and the intensity of resource utilization in the economy. In practice, however, empirical specifications also typically include measures of supply shocks, such as changes in the relative prices of energy or imported goods, as additional determinants. Two well-known variants of the Phillips curve are the traditional "accelerationist" specification and the so-called New Keynesian Phillips curve; the former approximates inflation expectations using a moving average of past inflation, while the latter assumes that inflation expectations are "rational" and consistent with the predictions of a structural model of the entire economy. Some adherents of either type of Phillips curve argue that their preferred model can explain the behavior of inflation during and after the financial crisis. For example, Gordon (2013) presents evidence in favor of an accelerationist model, while Del Negro, Giannoni, and Schorfheide (2015) make this claim for a New Keynesian model.
18. See Blanchard (2016) for evidence on how the responsiveness of inflation to resource utilization has changed over time. Interestingly, research suggests that this sensitivity began declining well before the crisis.
19. For an early discussion of the potential macroeconomic effects of downward nominal wage rigidity, see Akerlof, Dickens, and Perry (1996). More recently, Daly and Hobijn (2014) develop a model in which the reluctance or inability of firms to cut nominal wages (or both) creates important nonlinearities in the relationship between labor utilization and wage inflation. Finally, Fallick, Lettau, and Wascher (2015) review the evidence for downward nominal wage rigidity in recent years and explore the ways in which it has interacted with labor market stress over time.
20. Specifically, survey measures of long-run inflation expectations are broadly correlated with estimates of inflation's longer-term trend. See Clark and Davig (2008); see also Faust and Wright (2013, who make a related point in the context of inflation forecasting.
21. As Mavroeidis, Plagborg-Moller, and Stock (2014) conclude from their exhaustive survey, empirical estimates of the New Keynesian inflation equation are "unable to pin down the role of expectations in the inflation process sufficiently accurately for the results to be useful for policy analysis" (p. 172).
22. For a discussion of the theoretical and empirical influence of monetary policy on inflation in the context of a formal inflation-targeting regime, see Bernanke and others (1999b).
23. See Kiley (2008) for a discussion of the relationship between U.S. monetary policy and survey measures of long-run inflation expectations; his results suggest that it took many years for the Federal Reserve to succeed in anchoring long-run expectations at a low level. In a similar vein, Bernanke and others (1999b) conclude that inflation expectations "respond only after a lag following declines in [actual] inflation" (p. 298) based on their study of the effects of adopting inflation targeting in different countries.
24. I discussed this likelihood in a recent speech (Yellen, 2016).
25. See Mundell (1963) and Fleming (1962).
26. See Ammer, De Pooter, Erceg, and Kamin (2016). Other recent research on this topic includes Fukuda, Kimura, Sudo, and Ugai (2013); Georgiadis (2015); Glick and Leduc (2015); and Ilzetski and Jin (2013).
U.S. Department of the Treasury. 10/14/2016. Treasury Releases Report on Foreign Exchange Policies of Major Trading Partners of The United States
WASHINGTON – The U.S. Department of the Treasury today released a Report on the Foreign Exchange Policies of Major Trading Partners of the United States. This Report reviews developments in international economic and exchange rate policies and is submitted to Congress pursuant to the Omnibus Trade and Competitiveness Act of 1988, 22 U.S.C. § 5305 and Section 701 of the Trade Facilitation and Trade Enforcement Act of 2015.
This Report is the second to implement the intensified evaluation provisions of the Trade Facilitation and Trade Enforcement Act of 2015, also known as the Customs Bill. The 2015 Act requires that Treasury undertake an enhanced analysis of exchange rates and externally-oriented policies for each major trading partner that has: (1) a significant bilateral trade surplus with the United States, (2) a material current account surplus, and (3) engaged in persistent one-sided intervention in the foreign exchange market. The provisions of the 2015 Act provide the United States with valuable reporting and monitoring tools, as well as measures to address unfair currency practices.
The Report highlights that U.S. domestic demand remains solid, consumer sentiment is around pre-recession norms, and the period of inventory adjustment appears to be drawing to a close. The current outlook suggests that real GDP will expand at a solid pace through the end of 2016, led by healthy growth of consumer spending, further recovery in the housing sector, and a small boost from government spending. Growth is projected to pick up in 2017.
As noted in the April 2016 Report, Treasury has created a “Monitoring List” of major trading partners that merit attention based on an analysis of the three criteria. Specifically, an economy is added to the Monitoring List when it meets two of the three criteria. Once added, an economy will remain on the Monitoring List for at least two consecutive reports to help ensure that any improvements in performance versus the criteria are durable, not due to temporary one-off factors. Six major trading partners of the United States are included on the Monitoring List in this Report: China, Japan, Korea, Taiwan, Germany, and Switzerland. No economy currently meets all three criteria. Accordingly, Treasury is not undertaking enhanced analysis for any country.
With regard to the six economies on the Monitoring List:
China has a significant bilateral trade surplus with the United States. The country’s current account surplus fell to 2.4 percent of GDP for the last four quarters through June 2016, moving below the established threshold for that criterion. China’s intervention in foreign exchange markets has sought to prevent a rapid RMB depreciation that would have had negative consequences for the Chinese and global economies. More transparency over exchange rate management and goals, and strong adherence to G-20 commitments to refrain from competitive devaluation and not to target exchange rates for competitive purposes, will enhance the credibility of China’s exchange rate regime. It is important for China to continue market-oriented exchange rate reform, allowing for two-way flexibility of the RMB.
Japan has a significant bilateral trade surplus with the United States, and its current account surplus for the last four quarters through June 2016 reached the highest level since 2011. Japan has not intervened in the foreign exchange market in over four years, notwithstanding the appreciation of the yen in the last year. Treasury reiterates the importance of all countries adhering to their G-20 and G-7 commitments regarding exchange rate policies.
Korea has a significant bilateral trade surplus with the United States and a current account surplus well above the material threshold. Treasury estimates that over the 12 months ending June 2016, the Korean authorities intervened to resist depreciation of the won, representing a shift from several years of asymmetric intervention to resist appreciation. Treasury has urged Korea to limit its foreign exchange intervention to only circumstances of disorderly market conditions. In addition, Treasury continues to encourage the Korean authorities to increase the transparency of their foreign exchange operations and to take further steps to support domestic demand, including more robust use of fiscal policy tools.
Taiwan has a current account surplus well above the material threshold and, per Treasury estimates, has engaged in persistent net foreign currency purchases in the 12 months through June 2016. Such interventions limit currency appreciation that would generally reduce Taiwan’s very large and growing current account surplus.
Germany has both a significant bilateral trade surplus with the United States and a current account surplus well above the material threshold. Germany’s current account surplus in dollars is the largest in the world. In Treasury’s view, Germany continues to have substantial fiscal policy space to provide additional support to demand. It could also take steps to encourage private investment, which would support demand.
Switzerland has been added to this Report as its trade with the United States is now sufficiently large to be included as a major trading partner. The country has a current account surplus well above the material threshold and, per Treasury estimates, has engaged in significant foreign currency purchases over the last year. However, Switzerland’s bilateral trade surplus with the United States was below the threshold, and thus Switzerland did not meet all three criteria for enhanced analysis. Moreover, Switzerland’s economic policy situation is distinctive given its relatively small stock of domestic assets, which limits monetary policy options to address persistent deflation in the context of significant safe haven capital inflows.
Treasury will closely monitor and assess the economic trends and foreign exchange policies of the economies on the Monitoring List.
Based on the analysis in this Report, Treasury has also concluded that no major trading partner of the United States met the standard of manipulating the rate of exchange between its currency and the United States dollar for purposes of preventing effective balance of payments adjustments or gaining unfair competitive advantage in international trade during the period covered in the Report.
The Administration will continue to take effective actions to help ensure a level playing field for our workers and companies. The President has been clear that no economy should grow its exports based on a persistently undervalued exchange rate, and Treasury has been working aggressively to address exchange rate issues bilaterally, including through the U.S.-China Strategic and Economic Dialogue, and multilaterally, including through the G-7, G-20, and the International Monetary Fund (IMF).
As noted in the April Report, this strategy has produced results. The United States has secured important commitments in recent years regarding exchange rate policy from G-7 and G-20 members. In particular, the G-7 has committed to orient fiscal and monetary policies towards domestic objectives using domestic instruments and to not target exchange rates. The G-20 has committed to refrain from competitive devaluations and not target exchange rates for competitive purposes. This year, G-20 members also agreed to consult closely on exchange markets.
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UNICA. 14/10/2016. SETOR. ATUALIZAÇÃO DA SAFRA 2016/2017 - 2ª QUINZENA DE SETEMBRO
O volume processado de cana-de-açúcar pelas unidades produtoras da região Centro-Sul somou 42,26 milhões de toneladas na 2ª quinzena de setembro de 2016. Com esse resultado, a produção quinzenal de açúcar totalizou 2,95 milhões de toneladas e o volume fabricado de etanol atingiu 1,81 bilhão de litros, dos quais 809,39 milhões de etanol anidro e 997,63 milhões de etanol hidratado.
A maior proporção de matéria-prima direcionada à fabricação de açúcar na segunda quinzena de setembro (50,16% do mix) foi influenciada pela queda da participação das destilarias autônomas (empresas que não produzem açúcar) na moagem total da quinzena. A participação destas destilarias caiu para 15,9% da moagem na última metade de setembro, contra 17,2% registrados nos quinze primeiros dias do mês e 18,2% verificados na segunda quinzena de setembro de 2015.
Desde o início de abril até 1º de outubro, o volume processado totalizou 473,55 milhões de toneladas de cana, com uma produção de 27,76 milhões de toneladas de açúcar e 19,87 bilhões de litros de etanol (8,26 bilhões de anidro e 11,61 bilhões de hidratado).
Em relação à produtividade agrícola, dados apurados pelo Centro de Tecnologia Canavieira (CTC) em uma amostra de 159 empresas indicam que o rendimento médio da área colhida em setembro atingiu 71,8 toneladas por hectare, com queda de 9,8% em relação ao índice apurado no mesmo mês de 2015. Entre os Estados, a quebra de produtividade agrícola em setembro da atual safra variou entre 7,1% no Mato Grosso do Sul a 15,5% em Goiás.
Até o final da segunda quinzena de setembro 13 unidades produtoras haviam encerrado a safra 2016/2017. Deste total, 6 empresas estão localizadas no Estado de Goiás, onde a disponibilidade de cana foi a mais afetada pela queda do rendimento agrícola. As demais estão assim distribuídas: 1 no Mato Grosso, 1 no Rio de Janeiro, 1 em São Paulo, 2 no Espírito Santo e 2 em Minas Gerais.
As 13 unidades com safra encerrada até 1º de outubro de 2016 apresentaram uma redução de 24,8% na moagem quando comparada ao resultado observado no ciclo 2015/2016, quando processaram 10,50 milhões de toneladas de cana (cerca de 1,7% do total de 617,71 milhões de toneladas moídas no Centro-Sul).
A qualidade da matéria-prima registada na segunda quinzena de setembro foi de 146,06 kg de Açúcares Totais Recuperáveis (ATR) por tonelada de cana, contra 145,57 kg de ATR por tonelada verificados em igual data do ano anterior. No acumulado desde o início da safra, a qualidade alcançou 132,93 kg de ATR por tonelada, com pequeno incremento em relação ao índice registrado no mesmo período de 2015.
As vendas de etanol pelas unidades produtoras da região Centro-Sul somaram 2,32 bilhões de litros em setembro, sendo 105,81 milhões de litros destinados à exportação e 2,21 bilhões de litros ao mercado doméstico. No mercado interno, o volume mensal comercializado de etanol anidro totalizou 831,90 milhões de litros, enquanto as vendas de hidratado atingiram 1,38 bilhão de litros, com cifra próxima daquela observada nos últimos quatro meses.
DOCUMENTO: http://www.unica.com.br/noticia/32762527920315981183/atualizacao-da-safra-2016-por-cento2F2017-2-por-centoC2-por-centoAA-quinzena-de-setembro/
EMBRAER. REUTERS. 14/10/2016. Embraer entrega 38% mais jatos comerciais no 3º trimestre de 2016
São José dos Campos - SP, 14 de outubro de 2016 – A Embraer (NYSE: ERJ; BM&FBOVESPA: EMBR3) entregou 29 jatos para o mercado de aviação comercial ao longo do terceiro trimestre de 2016 (3T16), 38% a mais que no mesmo período de 2015. A companhia entregou 12 jatos executivos de grande porte, 33% a mais que o mesmo período do ano passado. No entanto, o número de entregas totais para o mercado de aviação executiva caiu cerca de 17% em relação ao 3T15. Em 30 de setembro, a carteira de pedidos firmes a entregar (backlog) totalizava USD 21,4 bilhões.
DOCUMENTO: http://www.embraer.com.br/Documents/noticias/054%20Entregas%20da%20Embraer%20no%203T16-Ins-VPF-P-16.pdf
PETROBRÁS. 14/10/2016. Adotamos nova política de preços de diesel e gasolina
A nova política terá como base dois fatores: a paridade com o mercado internacional - também conhecido como PPI e que inclui custos como frete de navios, custos internos de transporte e taxas portuárias – mais uma margem que será praticada para remunerar riscos inerentes à operação, como, por exemplo, volatilidade da taxa de câmbio e dos preços sobre estadias em portos e lucro, além de tributos. A diretoria executiva definiu que não praticaremos preços abaixo desta paridade internacional.
A principal diferença em relação ao que ocorre hoje é o prazo para os ajustes em relação ao mercado internacional. A nova política prevê avaliações para revisões de preços pelo menos uma vez por mês. É importante ressaltar que, como o valor desses combustíveis acompanhará a tendência do mercado internacional, poderá haver manutenção, redução ou aumento nos preços praticados nas refinarias.
A necessidade de ajustes nos valores dos combustíveis nas refinarias será tomada pelo Grupo Executivo de Mercados e Preços, formado pelo presidente da empresa, o diretor de Refino e Gás Natural e o diretor Financeiro e de Relacionamento com Investidores.
A primeira avaliação feita pelo grupo executivo indicou a necessidade de reduzir o diesel em 2,7% e a gasolina em 3,2% na refinaria. Esses preços entrarão em vigor para vendas realizadas a partir de zero hora de sábado, 15/10.
Para permitir maior flexibilidade na gestão comercial de derivados e estimular aumentos de vendas, também avaliaremos conceder descontos pontuais para o diesel e a gasolina em mercados específicos. Em hipótese alguma, esses descontos ficarão abaixo dos custos da empresa.
A decisão do comitê executivo levou em conta o crescente volume de importações, o que reduz a participação da Petrobras, e também a sazonalidade do mercado mundial de petróleo. O aumento das compras externas vem sendo observado especialmente no caso do diesel, onde a entrada de produtos já responde por 14% da demanda do país. No caso da gasolina, as importações cresceram 28% ao mês entre março e setembro desse ano.
Como a lei brasileira garante liberdade de preços no mercado de combustíveis e derivados, as revisões feitas pela Petrobras nas refinarias podem ou não se refletir no preço final ao consumidor. Isso dependerá de repasses feitos por outros integrantes da cadeia de petróleo, especialmente distribuidoras e postos de combustíveis. Se o ajuste feito hoje for integralmente repassado, o diesel pode cair 1,8% ou cerca de R$ 0,05 por litro, e a gasolina 1,4% ou R$ 0,05 por litro.
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DÓLAR/ANÁLISE
BACEN. PORTAL G1. 14/10/2016. Dólar fecha em alta nesta sexta, mas termina a semana em baixa. A moeda norte-americana subiu 0,72%, a R$ 3,2045. Na semana, o dólar caiu 0,38%.
Do G1, em São Paulo
O dólar fechou em queda nesta sexta-feira (14), com investidores aproveitando as baixas cotações para comprar a moeda. O dia foi marcado ainda por expectativas sobre a perspectiva de corte de juros na próxima semana pelo Banco Central.
A moeda norte-americana subiu 0,72%, a R$ 3,2045. Na semana, o dólar caiu 0,38%.
Acompanhe a cotação ao longo do dia:
- Às 9h50, queda de 0,28%, a R$ 3,1726
- Às 10h30, queda de 0,1%, a R$ 3,1784
- Às 11h09, alta de 0,01%, a R$ 3,1821
- Às 12h20, alta de 0,37%, a R$ 3,1933
- Às 13h39, alta de 0,48%, a R$ 3,1969
- Às 15h, alta de 0,51%, a R$ 3,198
- Às 16h30, alta de 0,69%, a R$ 3,2036
- Na mínima da sessão, a moeda marcou R$ 3,1645.
"Empresas estão aproveitando os preços baixos e comprando para honrar compromissos no exterior", comentou à Reuters o gerente de câmbio da corretora Fair, Mário Battistel.
O mercado também reage ao corte do preço dos combustíveis pela Petrobras, que fez com que aumentassem as apostas de um corte de 0,50 ponto percentual na Selic no encontro do BC da próxima semana, segundo a agência.
"Mesmo com um corte maior do juro, a taxa brasileira seguirá muito elevada. E a evolução na questão fiscal somada à leitura de que um corte de juros decorrerá de melhoras na economia brasileira proporciona maior confiança para o investidor trazer recursos para o Brasil, derrubando o preço a moeda", afirmou um operador sênior de uma corretora nacional.
Cenário externo
No exterior, o dólar caia em relação a moedas de países emergentes, depois que dados sobre a economia chinesa aliviaram um pouco as preocupações com o país. O índice de preços ao produtor na China registrou a primeira alta desde 2012, ainda segundo a Reuters.
O mercado ainda reagiu a declarações de Janet Yellen, chefe do banco central dos Estados Unidos, o Federal Reserve (Fed). Ela disse que política de alta pressão pode ser necessária para total recuperação da economia norte-americana da crise e que mais estudos são necessários sobre como as condições do mercado de trabalho afetam inflação.
Mais cedo, o presidente do Fed de Boston, Eric Rosengren, disse que os investidores provavelmente estão certos em precificar como "muito altas" as chances que de uma elevação dos juros nos EUA em dezembro.
"De manhã, o presidente do Fed de Boston defendeu alta dos juros em dezembro. Agora, a Yellen sinaliza que não sabe se é bom momento de decidir isso", comentou à Reuters o diretor de mesa de câmbio da Multi-Money, Durval Correa.
Rosengren disse que os investidores provavelmente estão certos em precificar como "muito altas" as chances que de uma elevação dos juros nos EUA em dezembro.
Investidores seguem atentos a pistas sobre o rumo dos juros nos EUA porque taxas mais altas no país atrairiam para lá recursos aplicados atualmente em outros mercados, motivando assim uma tendência de alta do dólar em relação a moedas como o real.
O Banco Central vendeu nesta manhã todo o lote de 5 mil contratos de swap cambial reverso - equivalente à compra futura de dólares.
BOVESPA/ANÁLISE
BOVESPA. PORTAL G1. 14/10/2016. Bovespa fecha em alta de 1% com melhora externa e Petrobras. Ibovespa avançou 1,06%, aos 61.767 pontos; Petrobras sobe mais de 3%. Bolsa renova máximas desde setembro de 2014.
Do G1, em São Paulo
A Bolsa de Valores de São Paulo (Bovespa) fechou em alta nesta sexta-feira (14), impulsionada pelo melhora do humor no exterior após novos dados da China e com Petrobras entre os destaques de alta após a companhia anunciar nova política de preços com primeira redução no diesel e gasolina desde 2009.
O Ibovespa, principal índice de ações da bolsa, avançou 1,06%, aos 61.767 pontos - maior patamar desde 3 de setembro de 2014 (61.837 pontos).
O volume financeiro do pregão foi de R$ 9,06 bilhões, segundo a agência Reuters, em linha com a média diária para o mês até a quinta-feira.
Na semana, o índice avançou 1,08%. No mês de outubro, a bolsa acumula alta de 5,8%. No ano, há valorização de 42,5%.
Petrobras sobe mais de 3%
As ações preferenciais (que dão preferência na distribuição de dividendos) avançaram 3,17% e as ordinárias (que dão direito a voto em assembleias da empresa) da Petrobras subiram 2,29%. Os papéis preferenciais da petroleira fecharam em R$ 16,26, maior patamar desde 24 de outubro de 2014.
A companhia decidiu reduzir o preço do diesel em 2,7% e da gasolina em 3,2% na refinaria. Esses preços entrarão em vigor a partir da zero hora de sábado (15). Segundo a petroleira, se a redução aplicada na refinaria for integralmente repassada ao consumidor final, na bomba dos postos, o diesel pode cair 1,8%, ou R$ 0,05 por litro. Já a gasolina pode cair 1,4%, ou R$ 0,05 por litro. A última redução dos preços dos combustíveis foi em junho de 2009.
A Petrobras anunciou que fará reuniões mensais para avaliar os preços dos combustíveis e decidir se vai aumentar, reduzir ou manter os preços.
Vale PN avançou 1,85% e Vale ON subiu 1,52%, recuperando parte das perdas da véspera. O alívio nas preocupações com a economia da China ajudaram a sustentar os papéis da mineradora.
Braskem e CSN lideraram as altas do dia, com valorização de mais de 3%.
A Oi ON recuou 1,1%, enquanto OI PN perdeu 0,35%, após notícia de que a Anatel afirmou que o grupo de telecomunicações em recuperação judicial deve à autarquia mais de R$ 20 bilhões em multas e outras obrigações.
Cenário externo
Segundo a Reuters, as preocupações com a economia chinesa levantadas na véspera após dados do comércio exterior diminuíram nesta sessão, após a divulgação dos dados mostrando que os preços ao produtor na China subiram inesperadamente em setembro pela primeira vez em quase cinco anos e que a alta dos preços ao consumidor acelerou no mês passado.
"Sinais de estabilização importantes vindos da China, após dados fracos de exportações e importações. Num mundo que cresce pouco, e cujo equilíbrio parece cada vez mais instável, é algo a se comemorar", escreveram analistas da corretora Guide Investimentos em nota a clientes.
BOVESPA. PORTAL UOL. 14/10/2016. Bovespa fecha a semana com alta de 1,08%; Petrobras salta mais de 3% no dia
Do UOL, em São Paulo
O Ibovespa, principal índice da Bolsa brasileira, fechou esta sexta-feira (14) em alta de 1,06%, a 61.767,22 pontos. É a segunda alta seguida.
Com isso, a Bovespa fecha a semana com valorização de 1,08%. No mês, acumula alta de 5,83% e, no ano, ganhos de 42,49%.
Na véspera, a Bolsa havia subido 0,16%.
O resultado de hoje foi puxado, principalmente, pelo desempenho positivo das ações da Petrobras, que subiram mais de 3%. O avanço das ações da Vale e dos bancos Bradesco, Itaú Unibanco e Banco do Brasil também influenciou a alta da Bolsa. As cinco empresas têm grande peso sobre o Ibovespa.
Bolsa muda de horário
O horário de negociação de ações na Bovespa muda a partir de segunda-feira (17), ganhando uma hora a mais. A sessão passa a funcionar das 10h às 18h (antes, era até as 17h). O horário estendido, segundo a Bolsa, vale até o fim do horário de verão --em 19 de fevereiro de 2017.
Dólar fecha a R$ 3,204
No mercado de câmbio, o dólar comercial abriu em queda, mas passou a subir no início da tarde e fechou em alta de 0,72%, a R$ 3,204 na venda.
Apesar da alta de hoje, a moeda norte-americana encerra a semana com queda de 0,38%. No mês, acumula desvalorização de 1,45% e, no ano, queda de 18,83%.
Na véspera, o dólar havia fechado em queda de 0,57%, ao menor valor de fechamento desde 11 de agosto.
Petrobras
As ações preferenciais da Petrobras (PETR4), que dão prioridade na distribuição de dividendos, tiveram ganhos de 3,17%, a R$ 16,26.
As ações ordinárias da Petrobras (PETR3), com direito a voto em assembleia, registraram alta de 2,29%, a R$ 17,90.
A Petrobras informou hoje que decidiu diminuir os preços dos combustíveis para que fiquem mais alinhados com os preços no exterior. A gasolina ficará 3,2% mais barata, em média, e o óleo diesel, 2,7%, nas refinarias.
Vale
As ações ordinárias da Vale (VALE3) valorizaram-se 1,52%, a R$ 18,02.
As ações preferenciais da Vale (VALE5) ganharam 1,85%, a R$ 16,52.
Os papéis da mineradora foram influenciados pelo alívio nas preocupações com a economia chinesa.
Bancos
As ações do Banco do Brasil (BBAS3) subiram 2,61%, a R$ 25,96.
As ações do Itaú Unibanco (ITUB4) avançaram 1,9%, a R$ 39,13.
As ações do Bradesco (BBDC4) tiveram ganho de 0,81%, a R$ 31,04.
Bolsas internacionais
As principais Bolsas de Valores da Europa fecharam em alta:
- Itália: +1,98%
- Espanha: +1,85%
- Alemanha: +1,6%
- França: +1,49%
- Portugal: +1,39%
- Inglaterra: +0,51%
A maioria das Bolsas da Ásia e do Pacífico também registrou alta:
- Hong Kong: +0,88%
- Japão: +0,49%
- Coreia do Sul: +0,36%
- Cingapura: +0,35%
- China: +0,08%
- Austrália: -0,03%
- Taiwan: -0,59%
(Com Reuters)
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LGCJ.:
