Bill Craighead, assistant professor of economics, is the co-author of “Current Account Reversals and Structural Change in Developing and Industrialized Countries,” published in the February issue of The Journal of International Trade and Economic Development.
The paper compares the experience of high-income and developing countries in adjusting current account deficits, which measure how much they are relying on external borrowing. In both types of country, construction is the most sensitive sector to the current account. On average, adjustments in developing countries are more severe, but that is mainly due to the effects of currency crises. When you take those out, they look more similar. Employment effects in developing countries are less relative to the changes in output, which may reflect differing labor market institutions.
Craighead credits Lisa Lee ’13 for providing her “outstanding research assistance” while writing the paper. Lee worked on the research in 2011 while participating in the Quantitative Analysis Center’s summer program.
Bill Craighead, assistant professor of economics, is the author of a paper titled “Monetary Rules and Sectoral Unemployment in Open Economies” published in the June 2014 issue of the Journal of Macroeconomics.
Search theory has given us a more realistic mechanism to study unemployment in macroeconomic models. In this paper, Craighead integrated search theory into an “open economy” macroeconomic model – i.e., a model of an economy that interacts with the rest of the world. One important question in open economy models is what measure of inflation should monetary policy respond to – consumer prices, which include imported goods, or producer prices (the prices of domestically-produced output). In this model, Craighead shows that monetary policies that focus on producer prices do a better job of stabilizing unemployment.
Bill Craighead, assistant professor of economics, is the co-author of a paper titled, “As the Current Account Turns: Disaggregating the Effects of Current Account Reversals in Industrial Countries,” published in the December issue of The World Economy
. An abstract is available online here
In the paper, Craighead examines “current account reversals” which occur when a country significantly reduces its international borrowing and its trade deficit.
“While there has been quite a bit of study of these episodes in economics, most of it has looked at the impact on the overall economy. What we did was look at how these episodes influence different parts of the economy and, therefore, how the composition of output and employment changes. We found that the most sensitive parts of the economy tend to be investment-related (e.g., construction), while, on the other hand, sectors related to natural resources tend to do relatively well,” he explained.
In an op-ed published in The Hartford Courant on June 24, Bill Craighead, assistant professor of economics, proposes a policy solution to avoid economic disaster as the U.S. confronts the so-called “fiscal cliff” at the beginning of 2013. As Craighead explains in the piece, the cliff refers to the simultaneous expiration of Bush-era income tax cuts and Social Security payroll tax cuts, as well as automatic cuts in government spending mandated following last year’s debt ceiling stand-off.
Craighead proposes that, “The tax increases could be made to occur at a more appropriate time by instituting triggering criteria that would delay them until the state of the economy has improved and then phase them in. For example, the tax changes could be set to begin once the unemployment rate has fallen to a more reasonable level, like 5.5 percent, and remained there for six months. At that point, the increases could occur in three or four steps, with each one occurring as long as the unemployment rate has remained below a specified level for six months.”
He concludes, “By sparing the economy a big blow next year, while putting government debt on a reasonable long-run path, [this plan] would buy some time to work out bigger issues after the next election.”
The Department of Economics welcomes William “Bill” Craighead, assistant professor.
Craighead is an expert on international economics, open-economy macroeconomics and economic history.
“I’m currently researching how exchange rate policy affects employment in different sectors of the economy,” he says.
In addition to his research, he is teaching an upper-level elective, International Trade, and a core course called Macroeconomic Analysis.
“This is a particularly exciting time to be studying macroeconomics,” he says. “While the economic slump has unfortunately brought a great deal of hardship to many people, it has raised a number of issues that I can discuss with the students in class.”
Craighead earned a B.A. in economics and social thought from Carleton College in Northfield, Minn.; and a M.A. and Ph.D in economics
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