Econlib

Econlib releases three to four new articles and columns about economics every month. These fresh pieces are publicly accessible on the first Monday of each month. All the articles and columns featured on Econlib are specially created for the Library of Economics and Liberty by esteemed professors, researchers, and journalists from around the globe. Every article and column is available online for free, allowing anyone to read them. Many of these writings spark discussions and debates in our blog, EconLog. If you have any questions regarding reprints or translations, please feel free to reach out to us.

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Rebranding the Trade Deficit

1 week ago | econlib.org | Kevin Corcoran |Bryan Cutsinger |Pierre Lemieux

It’s time for another round in the ongoing saga of “Kevin complains that economists are terrible at naming ideas.” Here, I propose that economists should consider rebranding “the trade deficit.”The reason people so badly misunderstand the term is right there in the name – deficit. Deficits sound bad. In most usages, deficits imply something along the lines of living beyond one’s means and accumulating debt. That would certainly be true if my household budget was in a deficit.
Inflation Targets: Cutsinger's solution

1 week ago | econlib.org | Bryan Cutsinger |Pierre Lemieux |Scott Sumner

Question: Some economists have argued that the Fed should raise its inflation target from 2 percent to 3 or even 4 percent. Why might the effect of a higher inflation target on the quantity of real money balances demanded be larger in the long run than in the short run? Solution:Economists often treat price theory and monetary theory as conceptually distinct. Milton Friedman, for example, called this the major division in economics.
Incoherence, Grand Plans, and Politicians' Self-Interest

1 week ago | econlib.org | Pierre Lemieux |Scott Sumner |Justin Callais

What motivates President Donald Trump’s chaotic, stop-and-go, incoherent tariff moves? On April 9, a few days after his “reciprocal tariffs” had come into force and after worrying cracks appeared in financial markets including the market for Treasurys, he announced a 90-day pause for most “reciprocal tariffs” over 10%. He explained that people were “getting … a little bit afraid.” “I thought that people were jumping a little bit out of line.
An Economic Argument for Mercy

1 week ago | econlib.org | Jon Murphy |Pierre Lemieux |Scott Sumner

Mercy has long been a hallmark of a just legal system. Judges are often given considerable leeway in determining punishment for a crime (except in cases like mandatory minimums or “three-strike” legislation) for exactly this reason. Extenuating circumstances can result in a lower punishment for some criminals than others who commit certain crimes, and so on. Some claim that mercy is a weakness, however. They want no mercy, at least for certain crimes.
The Trade Derangement Syndrome

1 week ago | econlib.org | Pierre Lemieux

Politicians’ incoherence is on the rise. The current war of the American government against international trade follows offers many examples. President Donald Trump has stated that the high tariffs he imposed on imported goods were both temporary and permanent (“Are Trump’s Tariffs Negotiable or Here to Stay?
The Ugliness of the Great Protectionist State

2 weeks ago | econlib.org | Pierre Lemieux

Economists sometimes say something banal that doesn’t seem to require much economic education or business experience but only a bit of reflection about individual incentives. Let me do it. What will happen if foreign companies or foreign plants of American companies cannot sell their goods in America without being constantly hit by whimsical American tariffs and threats thereof, up one month, down the next month, and up again? They will move their production facilities to America?
A Silver Lining, but...

2 weeks ago | econlib.org | Pierre Lemieux

The customs tariffs imposed on imported goods by President Donald Trump on April 2 will, according to some estimates, bring the average US tariff higher than after the infamous Smoot-Hawley tariffs of 1930 (see “President Trump’s Mindless Tariffs Will Cause Economic Havoc,” The Economist, April 3, 2025).
What Would True Reciprocity Mean?

3 weeks ago | econlib.org | David Henderson |Kevin Corcoran |Pierre Lemieux

President Trump has now unveiled his outline of the higher tariffs he proposes. They are much higher and, therefore, much more destructive of people’s wealth, than I or, apparently, many others had expected. Trump claims to be doing this in the interest of reciprocity. In his Rose Garden speech, he noted, correctly, that you should judge countries’ openness to trade not just based on their explicit tariff rates but also based on their other barriers to trade.
Relative, compared to whom?

3 weeks ago | econlib.org | Kevin Corcoran |Pierre Lemieux |Scott Sumner

It’s often said that after people are wealthy enough to meet their basic needs, they are more concerned about their relative rather than absolute level of well-being. If Smith sees his real income increase by 10% this year, but everyone else around Smith has their real income increase by 20%, Smith doesn’t feel glad that his standard of living has gotten objectively better. Instead, Smith feels despondent that he’s falling behind compared to others.
To Lie or Not To Lie: Moral and Economic Reasons

3 weeks ago | econlib.org | Pierre Lemieux |Scott Sumner |David Henderson

The student of economics and especially of public choice theory should expect politicians to lie—and he is certainly not disappointed in America these days. Politicians are ordinary individuals. An ordinary individual is tempted to lie when he considers it is in his interest to do so. I take lying to mean intentionally conveying a statement that one knows to be false. A milder form of lying would be conveying a statement that one suspects would be revealed false if a low-cost verification were done.