Issue Brief posted July 27, 2015
An Economic Crisis Is the Heart of Puerto Rico’s Financial Crisis
Puerto Rico faces a severe fiscal crisis, but this is merely a symptom of Puerto Rico’s primary disease: a lack of economic growth. Over the past decade, as Puerto Rico’s debt has expanded rapidly, the economy has contracted more than 10 percent. If the economy were growing, Puerto Rico would be much better positioned to address its fiscal crisis and might have averted it…
Issue Brief posted July 1, 2015
Puerto Rico Needs Economic Freedom, Not Bailouts
Puerto Rico is in a debt crisis, and Governor Alejandro García Padilla (D) has announced that “the debt is not payable” given the commonwealth’s large deficits and collapsing economy. Presenting a government-commissioned report, economist Anne Krueger explained that the origin of Puerto Rico’s debt is decades of stimulus spending and economic stagnation:
Issue Brief posted May 7, 2015
Can Changing Your Address Change Your Fortune?
Two economic research papers published this month show that where children live can have an impact on their prospects for success later in life. Parents already know that—and it is why houses in good neighborhoods often cost three or four times as much as houses in bad neighborhoods.
The new studies have garnered outsized attention, but the results are neither as…
Backgrounder posted March 11, 2015
Stagnant Wages: Fact or Fiction?
Recent data show that wages have been growing recently at rates comparable to their long-term trends. Measuring average wages accurately is more difficult than it sounds, so this paper looks at six metrics of wage and compensation to present a complete picture.
Since the beginning of 2013, wages have grown about 0.9 percent per year. Since 2006 (and thus including the…
Issue Brief posted February 24, 2015
Who Is Working Less?
Labor force participation in the past few years has been lower than at any time since the 1970s. Heritage Foundation research using Current Population Survey (CPS) data finds that labor force participation decreased more among low-income households than among high-income households. Our finding contradicts results found by Stanford University economist Robert Hall using a…
Backgrounder posted December 30, 2014
Accurate Budget Scores Require Dynamic Analysis
As the new Congress considers changes to the Joint Committee on Taxation (JCT) and Congressional Budget Office (CBO), it should promote improvement in the methods used for evaluating macroeconomic policy. Currently, the JCT and the CBO often use “static” scoring methods, which make very strong assumptions about equilibrium responses to policy changes, often assuming no…
Backgrounder posted September 12, 2014
Understanding Thomas Piketty and His Critics
Thomas Piketty’s Capital in the Twenty-First Century is a treatise on how wealth inequality evolves in capitalistic economies. It is the most talked-about and most critiqued economics book of 2014 because Piketty’s timing was perfect: He released the English edition when income inequality was being actively debated in the United States. President Barack Obama brought…
Backgrounder posted August 7, 2014
The Export-Import Bank: What the Scholarship Says
Much of the published support for the Export-Import Bank of the United States (Ex-Im Bank) is based on inaccurate views of the function of the bank or on mischaracterizations of the economics of providing export subsidies, which is the bank’s actual function. Export subsidies were extensively studied in a lengthy scholarly literature on “strategic trade policy,” which…