I was taking a rare vacation trip (most travel is work related for me), when my wife and I decided to enter the haunted house at Tivoli<\/a> for kicks (last visit, it\u2019d been closed to renovate the wax museum to something new). Well, it wasn\u2019t frightening at all \u2013 but that got me thinking: What would be frightening? Here\u2019s my answer:<\/p>\n \u201cEconomic Policy in a second Trump term\u201d<\/p>\n Consider some policy proposals:<\/p>\n \u201cIt is literally impossible for tariffs to fully replace income taxes. Tariff rates would have to be implausibly high on such a small base of imports to replace the income tax, and as tax rates rose, the base itself would shrink as imports fall, making Trump\u2019s $2 trillion goal unattainable.\u201d<\/p>\n<\/blockquote>\n And I haven\u2019t even considered\u2026<\/p>\n Nice discussion here<\/a> about how Trump\u2019s policies would make the inflation\/output tradeoff a true nightmare.<\/p>\n Just a reminder, here\u2019s the US trade balance defined using NIPA data.<\/p>\n Figure 1:<\/strong>\u00a0US Net Exports to GDP (blue), s.a. NBER defined peak-to-trough recession dates shaded gray. Source: BEA 2024Q1 2nd release, and author\u2019s calculations.<\/em><\/p>\n And in terms of policy uncertainty (which conservatives used to decry as slowing investment and growth):<\/p>\n\n
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