(Bloomberg) -- From tax cuts to immigration control, many of Donald Trump’s policies seem designed to please solid-red states. Tariffs, opposed by many free-trade Republicans, don’t fit that mold – and as it turns out, that’s no surprise.
Trade policy is often made with swing states in mind, as the lead study in this week’s economic research roundup finds. We also take a look at a study on job-market disadvantage among America’s incarcerated, another that uses nighttime lights as a gauge of whether global economic data give an accurate read, and a final piece on how U.S. consumption responds to fiscal policies. Check out this column each week for the latest economic research from around the world.
Ever feel like American politicians spend their time catering to Ohio and Florida? Economists Xiangjun Ma and John McLaren set out to test that theory. They found that America’s tariff structure is biased toward industries in swing states. So much so that they “are set as if voters living outside of swing states count 77 percent as much as voters in swing states,” based on the duo’s analysis. “Tentatively, the results suggest that such effects are far more important for understanding trade policy than lobbying.” The researchers focused on import tariffs because they’re cleanly measured in a consistent way across industries.
Work and opportunity before and after incarceration
Published March 2018
Available on the Brookings Institution website
It’s well-established that the formerly incarcerated fare badly in the U.S. labor market, but this Brookings Institution study unveils a new facet to that story: they perform even worse before they go to jail. That doesn't necessarily mean that jail time has no effect on earnings, since the imprisoned could have been increasing their work experience and earnings as they aged, otherwise. What it does underline is that people who end up in jail confront a bad labor market from the outset, likely tied to the fact that they face stark disadvantage. Boys born into families in the bottom 10 percent of the income distribution are about 20 times more likely to be in prison in their 30s compared to boys born in the top 10 percent. Another key data point here? “Roughly one third of all not-working 30-year-old men are either in prison, in jail, or are unemployed former prisoners,” Adam Looney and Nicholas Turner write.
All of the lights
Statistics might lie, but satellites don’t. Maxim Pinkovskiy and Xavier Sala-i-Martin use nighttime light data to check whether purchasing power parity-adjusted estimates of GDP around the world are actually better than exchange-rate adjusted growth rates, focusing on the years between 1999 and 2010. They find that not only are they better, but PPP’s have been improving with time.
Let’s get fiscal
Regional Consumption Responses and the Aggregate Fiscal Multiplier
Published March 2018
Available on the St. Louis Fed website
In the depths of the recession, the U.S. government rolled out the American Recovery and Reinvestment Act to help get the economy on a sounder footing. A decade later, Federal Reserve Bank of St. Louis researchers are putting numbers on how much it actually served to boost spending. By their estimates, a $1 increase in county-level government spending increased local retail spending by 11 cents and auto spending by 7 cents, for an 18 cent total boost. The researchers used regional differences in consumer spending data to arrive at their result.
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