En économie, la doctrine Trump est chaotique, incohérente, incompréhensible — mais elle existe. Si le président n’a pas encore transformé l’économie mondiale, il change le modèle américain. Une conversation entre économistes @ojblanchard1 @IMateosylago. legrandcontinent.eu/fr/2025/…

When the government has a majority, and the budget is largely determined by the ministry of finance, experts play a major role. When the political situation is such that the Assemblee is at the center, it is not clear what the role of experts becomes. And it raises the issue of what can be done to improve the quality of the Assemblee debate (short of econ courses for the deputes)

Posting about hank or nk models on X seems to have the same effect on economists as cat videos on instagram. Explodes clics

The new proposed tax on “Unproductive Wealth”, voted by the Assemblée Nationale, listing life insurance, crypto assets, gold, jewelry (Assurances-vie, Crypto-actifs, Or, Bijoux), seems unusually stupid. The funds collected by Assurances-Vie do not lay stagnant. They finance public and private debt. They are part of the intermediation system, the same way banks or investment funds are. I surely do not like crypto assets, and think they should be heavily regulated. But in their own way, they do the same. Stablecoins lead to an increased demand for public debt. Other coins lead to a demand for other assets. Why decide, except on some questionable moral grounds, that jewels are unproductive wealth. Aren’t they made by jewellers, who earn a living doing so? What about paintings? And, go and get people to declare the family jewels, the wedding ring, and pay the tax.

Is the (tight) victory of Rob Jetten in the Netherlands a signal that (1) a centrist program can still win against the far right, or (2) being charismatic and young can carry the day? (Probably a mix of the two, but still lessons to be drawn)

This model has done more to stimulate research and discussions of crucial issues of macro than hundreds of books. (Same is true of Aghion Howitt 1992 paper for which they go the Nobel) Simple, toy, models can make a gigantic difference, stimulating both further theoretical and empirical research, and organizing precise discussions.

striking

If we think that what happened in 2008-09 was partly due to the lack of knowledge by regulators of the financial system at a granular level, (who owed exactly what to whom, and whom owed what to another whom, etc…), can AI monitor the system and detect risk better than we do today? (if you have seen work on this specific issue, please give me refs)

With the increasing importance of increasing returns to scale technologies, the rush to be first is stronger and stronger. And with it, fast technological progress, but likely high bankruptcy rate at the end (think Chinese EVs as well). Interesting short and long run macro implications. (graph from Apollo)

Back from a conference in China. One impression about China-Europe relations. A desire to work together, but a lack of trust. China sees Europe as caving to the US at crunch time. Europe sees China as supporting Russia, an existential foe of Europe. This affects other, including economic, relations.

"Il y a des très riches qui paient moins que ce qu'ils devraient payer. C'est politiquement inacceptable. Il faut trouver le moyen le plus efficace de les faire payer plus, et alors la #TaxeZucman me parait être la moins mauvaise des solutions." @ojblanchard1, invité #cdanslair

"Une taxe sur les #holdings est mieux que rien, mais moins bien que la #TaxeZucman. Est-ce qu'il y a des très riches qui partiront? C'est possible, mais on ne peut pas ne rien faire!" @ojblanchard1, ancien #économiste en chef du #FMI, était l'invité de #cdanslair #Budget #Lecornu

#Retraites : "Attendre deux ans n'est pas en soi très grave, c'est le contexte qui fait qu'on peut s'en préoccuper car il faut diminuer le #déficit. Les #investisseurs peuvent y voir le signal que le #gouvernement ne pourra pas faire grand-chose." @ojblanchard1, invité #cdanslair

On the AI stock market boom. Fundamentals or bubbles? A few points of arithmetic. If a firm’s profits are expected to increase forever at a rate higher than the required rate of return, then the value of the firm is infinite. If a firm’s profit distribution implies a positive probability that the firm’s profits will increase forever at a rate higher than the required rate of return, then the value of the firm is still infinite. Forever is unlikely… But very far away still implies potentially extremely high rational valuations. A point of accounting A few firms will be winners and dominate the market. The others will disappear. It is not right to price each of them as if they were going to the winner. A few points of psychology More and more young (and some not so young) investors do not think in terms of fundamentals, i.e in terms of present discounted values. They base their decisions on past returns. What has gone up (Bitcoin) will go up. Who cares about fundamentals? This however is a perfect environment for the emergence of bubbles. Bottom line. My own assessment (and I shall be accused of being wishy-washy): Some valuations could well be reflecting fundamentals, very high expected present discounted values. Many others probably have a large bubble component.

a post scriptum, to clarify and to be fair. These are points that Philippe has made in his past work. My comments were more aimed at today's Philippe and his statements that, if Europe does not innovate, it will die on the vine.

With all my admiration for Philippe Aghion’s work on the importance of innovation (what he has done with Peter Howitt in the 1990s and what he does these days with his collaborators at the College de France is essential theoretical and empirical work), a caveat. An economy can grow without being at the frontier. Indeed, most economies in the world are not at the frontier. And most have experienced substantial growth. More important than being at the frontier, is to be able to use these new technologies in the rest of the economy. This puts the focus on other aspects, the organization of the labor market, bankruptcy codes, a new type of education, etc. Less exciting project than new AI centers, but probably more important. An analogy. It is nice to be ahead during a bicycle race. But it is easier to be just behind, protected from the wind by the racer who is ahead. One ends up second, but still with an impressive time. If Europe can be first, then all means let us try. If not, let’s make sure we are a close second.