We tend in modern economies to take progress for granted and debate only its pace. This is not true with respect to air travel times. A look at airline time tables reveals that an 8:26am. flight from Boston to Washington National took 103 minutes. An 8:15 a.m. flight in 1982 took 82 minutes. The difference is similar, if not greater, on other routes. For example, flights from Boston to Charlotte typically took 125 minutes in the early 1980s compared with 160-plus today.

Why has this happened? The distances have not changed. Nor have we lost knowledge of aeronautical engineering. Perhaps fuel efficiency has something to do with it, but real fuel prices are actually lower today than they were in 1981. Almost certainly, the problem is increased congestion of finite facilities, airspace and air traffic control capacity. Read more

Fed chair Janet Yellen on Wednesday

Fed chair Janet Yellen on Wednesday  © Getty Images

While I do not believe the Federal Reserve made a serious mistake on Wednesday in raising rates, I believe that the “preemption of inflation based on the Phillips curve” paradigm within which it is operating is highly problematic. Much better would be a “shoot only when you see the whites of the eyes of inflation” paradigm of the kind I have advocated for the last several years.

Such a paradigm would be more credible, more likely to result in the Fed’s satisfying its dual mandate, reduce the risk of recession and increase the economy’s resilience when recession comes.

Many of my friends have recently issued a statement asserting that the Fed should change its inflation target. I suspect, for reasons I will write about in the next few days, that moving away from inflation targeting to something like nominal gross domestic product level targeting would be a better idea. But I believe this issue is logically subsequent to the question of how policy should be made in the near term with the given 2 per cent inflation target. Read more

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Last week I was questioned by Rebecca Blumenstein on American universities at the New York Times Higher Education Conference. The video is here and a brief excerpt is here.

After Ms Blumenstein asked me to reflect on my turbulent Harvard presidency, our conversation focused on how elite universities are meeting the challenges of the Trump era. I’m afraid I am quite negative on several counts. Read more

At the risk of beating a dead horse, here are some thoughts on the Trump administration’s 3 per cent growth forecast. Zero interest rates seemed inconceivable 15 years ago and yet they happened. Almost no one forecast the productivity boom that took place in the US between 1995 and 2005 or the magnitude of the 2008 financial crisis. So, any statement that a given forecast is inconceivable is unwarranted.

It is, though, reasonable to use history to try to gauge the likelihood of possible outcomes. I do not see how any examination of US history could possibly support the Trump forecast as a reasonable expectation. Read more

The events of the last week have crowded out reflection on economic policy. But things have been happening. Wilbur Ross, the US commerce secretary, described the trade deal reached with China earlier this month as “pretty much a Herculean accomplishment….This is more than has been done in the history of US-China relations on trade.” Read more

President Donald Trump

President Donald Trump  © Getty Images

Details of President Donald Trump’s first budget have now been released. Much can and will be said about the dire social consequences about what is in it and the wildly optimistic economic assumptions it embodies. My observation is that there appears to be a logical error of the kind that would justify failing a student in an introductory economics course.

Apparently, the budget forecasts that US growth will rise to 3.0 per cent by 2021 because of the Trump administration’s policies — largely its tax cuts and perhaps also its regulatory policies. Fair enough if you believe in tooth-fairies and ludicrous supply-side economics. Read more

An employee leaving Bear Stearns in the 2008 crisis

An employee leaving Bear Stearns in the 2008 crisis  © Getty Images

Several weeks ago I gave a talk based on my Brookings paper with Natasha Sarin at the Atlanta Fed’s annual research conference. Here are the video and slides. I continue to be puzzled by gap between what is widely believed and my reading of market evidence. Read more

Donald Trump and Steven Mnuchin

Donald Trump and Steven Mnuchin  © Getty Images

Last week, I suggested that I felt sorry for Steven Mnuchin, the US Treasury secretary. He found himself forced by circumstance and his president to say and do things that undermined his and Treasury’s credibility.

I wish there was an external force that could be blamed for the secretary’s comments on Monday but they look from the outside like unforced errors. Read more

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I had a keynote conversation last week with my friend Markus Brunnermaier on fintech and the future of finance at a conference he held at Princeton. Here is the video. Markus got me to think about a number of different aspects of fintech that I hadn’t fully considered before. Some of the main points I tried to make were: Read more

Treasury secretary Steven Mnuchin

Treasury secretary Steven Mnuchin  © Getty Images

President Donald Trump’s tax proposals were rolled out on Wednesday by the Treasury secretary Steven Mnuchin and National Economic Council director Gary Cohn. For reasons of long-run budget health, fairness, and economic impact I think they are extraordinarly ill-advised. I am certain that the substantive concerns I have will be extensively addressed in the debates to come.

As I read about the proposals and thought back over the tax discussions of the last year, I found myself feeling sympathetic to Mr Mnuchin. Some of the most difficult moments for any cabinet officer come when the president fails to respect his department’s desire to do serious policy work, when political circumstance forces the repudiation of his major past statements and when out of loyalty he has to support absurd propositions. All three of these things happened to the Treasury secretary this week. Read more