BentleyFacultyAMA212 karma2021-04-07 21:13:08 UTC
Good question. The Fed has pursued an expansionary policy (note: they don't actually print any currency--it's all electronic) to increase aggregate demand in response to the COVID shock. It has helped a lot--the COVID downturn would have been worse without the Fed's response. Employment and income didn't fall by as much as they would've otherwise. It's likely that as the economy begins to really bounce back (consider the very good March employment report--916,000 jobs), that inflation will pick up. How much is open to question. The Fed is fine with let inflation go above its 2% average target, but will not repeat past errors of letting inflation get too high (I think that they'd start to get nervous if inflation stays at or above 3% for any length of time. Below that, I think they'd be ok). So: some inflation is coming, but it won't get out of hand. Deflation was a risk early in the pandemic, but that is highly unlikely to happen. Overall, the US economy is likely to soon be a driver of the world economy.
Dave Gulley, economics.
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BentleyFacultyAMA128 karma2021-04-07 21:21:35 UTC
I assume your question is referring to the recent congressional FTC inquiries into insulin price hikes. Notably, Eli Lilly, Novo Nordisk, and Sanofi raised prices nearly simultaneously. This comes after a few states, such as Colorado, Illinois, and New Mexico, have passed laws forcing insurers to cap out-of-pocket monthly insulin costs. The most effective measures at cost control for pharmaceuticals have involved cooperation between the government and companies through rebates and other programs. Many companies have argued that their efforts have narrowed actual net pricing, while increasing wholesale prices. All in all, it likely isn't going to be as much of an issue with product supply as it is with production and the overall supply chain efficiency.
-- Chris Skipwith, Natural & Applied Sciences
BentleyFacultyAMA115 karma2021-04-07 21:26:26 UTC
State-owned enterprises (SOEs) are a difficult issue facing the United States trading situation. One of the things which makes it hard to counter is that information about their true cost structure is murky. Tariffs are designed to counteract government interventions which unfairly lower a company/industries' costs. But these costs are difficult to estimate for SOEs as they do not disclose the same level of information as private companies. There have not been any substantive reforms of Chinese government assistance to SOEs since the tariffs were instituted. The tariffs are most likely going to stay in place until there is some resolution either through bilateral negotiations or through the WTO (if that gets a full panel of judges again). The United States is not going to drop these tariffs unless there is some quid pro quo from the Chinese government regarding assistance being provided to SOEs.
Michael Quinn, Economics Department
BentleyFacultyAMA105 karma2021-04-07 21:31:20 UTC
A boycott of the Olympic Games would indeed be mostly symbolic, but it might have somme effect, as it will affect the reputation of the Chinese government hosting the event. Most likely a suite of measures and sanctions and a concerted effort with other countries and blocs - over a longer period of time - would be helpful. Indeed, it is a delicate balance of interests, however, it appears more countries are stepping up to address the treatment of Uyghurs and other minorities in China
--Johannes Eijmberts (GLS)
BentleyFacultyAMA103 karma2021-04-07 21:43:18 UTC
In general, there has been an increase in concentration in many US industries--large companies get larger by buying other large companies. However, as long as these large companies face competition, then the harm might be minimized. Indeed, larger companies often have lower cost structures, and competition helps to force prices down (think cell phone minutes/data). And, even if the US is filled with just large firms, as long as foreign firms are able to compete (low or no tariffs, etc), then the concentration may not be a big problem.
The administration has appointed a number of lawyers and others who are skeptical of large firms in general and of large tech firms in particular, so there could well be increased anti trust activity. The government has a mixed record of success in anti trust cases.
Dave Gulley, economics
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