Alan Stockman, the Marie C. and Joseph C. Wilson Professor of Economics at the University of Rochester, died January 14 after a long battle with cancer. He was 58.

A talented teacher, inspiring mentor, and respected scholar, Professor Stockman made major contributions to the fields of international finance and macroeconomics, publishing seminal papers on exchange rates and international business cycles. He is remembered by colleagues as a man whose infectious enthusiasm for economics was characteristic of his general approach to life.

"He had a passion for ideas and a childlike pleasure in all things," said Steven Landsburg, professor of economics at the University, who was a close friend of Professor Stockman since their days as doctoral candidates at the University of Chicago. "He had a sparkling, bubbling enthusiasm" that came through whether he was discussing economic theory, playing a guitar, or participating in one of the department's musical skits, Landsburg recalled.

"He was willing to talk to colleagues anytime and anyplace, whether it be about economics or anything else. He had a wonderful clarity of thought and an ability to analyze problems," adds Michael Wolkoff, deputy chair of the Department of Economics. "He was a very warm, generous person. He truly had many friends in the department and the profession."

I used Stockman's intro textbook most of the way through my grad school years as both TA and instructor and for a year or two when I first started teaching full time.  I still have a copy and refer to it occasionally for an example or exercise.  I corresponded with him on one occasion about the book and received a gracious reply.  Over the years, I heard only wonderful things about him.  He will be missed.

SYDNEY (Reuters) - Australia's central bank raised its key cash rate by 25 basis points to 3.25 percent on Tuesday, as surprising economic strength allowed it to withdraw some of the exceptional stimulus doled out during the global credit crisis.

Information received since the Federal Open Market Committee met in August suggests that economic activity has picked up following its severe downturn.  Conditions in financial markets have improved further, and activity in the housing sector has increased.  Household spending seems to be stabilizing, but remains constrained by ongoing job losses, sluggish income growth, lower housing wealth, and tight credit.  Businesses are still cutting back on fixed investment and staffing, though at a slower pace; they continue to make progress in bringing inventory stocks into better alignment with sales.  Although economic activity is likely to remain weak for a time, the Committee anticipates that policy actions to stabilize financial markets and institutions, fiscal and monetary stimulus, and market forces will support a strengthening of economic growth and a gradual return to higher levels of resource utilization in a context of price stability.

With substantial resource slack likely to continue to dampen cost pressures and with longer-term inflation expectations stable, the Committee expects that inflation will remain subdued for some time.

In these circumstances, the Federal Reserve will continue to employ a wide range of tools to promote economic recovery and to preserve price stability.  The Committee will maintain the target range for the federal funds rate at 0 to 1/4 percent and continues to anticipate that economic conditions are likely to warrant exceptionally low levels of the federal funds rate for an extended period.  To provide support to mortgage lending and housing markets and to improve overall conditions in private credit markets, the Federal Reserve will purchase a total of $1.25 trillion of agency mortgage-backed securities and up to $200 billion of agency debt.  The Committee will gradually slow the pace of these purchases in order to promote a smooth transition in markets and anticipates that they will be executed by the end of the first quarter of 2010.  As previously announced, the Federal Reserve's purchases of $300 billion of Treasury securities will be completed by the end of October 2009.  The Committee will continue to evaluate the timing and overall amounts of its purchases of securities in light of the evolving economic outlook and conditions in financial markets.  The Federal Reserve is monitoring the size and composition of its balance sheet and will make adjustments to its credit and liquidity programs as warranted.

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; Elizabeth A. Duke; Charles L. Evans; Donald L. Kohn; Jeffrey M. Lacker; Dennis P. Lockhart; Daniel K. Tarullo; Kevin M. Warsh; and Janet L. Yellen.

The latest stimulus showdown in the Senate: should money from the $787 billion package pay for signs that say a project is being funded with stimulus money?

No way, said New Hampshire Republican Sen. Judd Gregg, who today tried to ban funding for the signs, which are prominently displayed at the highway projects around the country. "Considering the questionable effectiveness of the stimulus bill, it is completely unreasonable that signs are being constructed at a price tag of hundreds to thousands of dollars apiece for lawmakers to pat themselves on the back about this legislation," he said in a statement. And offered an amendment to the transportation spending bill that would ban funding for the signs.

Democrats said the signs were absolutely fine. California Sen.Barbara Boxer said on the Senate floor that it didn't matter whether lawmakers voted for or against the stimulus plan, they should still fund efforts to tell people what it was doing.

...

At stake: jobs for sign makers, jobs for others if the money were to be used differently, and control over how the stimulus package is perceived. Since the plan was enacted, Democrats and Republicans have fought over how fast the money is being spent, and whether it has delivered results.

The signs present risks to both parties, though. If voters decide the spending was a waste, the signs will remind them of the Democratic program. If the stimulus is ultimately seen as helping the economy, the signs remind voters that Republicans largely opposed it.

Let's not delude ourselves.  It's all about how the stimulus package is perceived.  I seriously doubt the senators cared a whit about jobs for sign makers when debating this proposal.  But the proposal failed.  The signs will stay.  Which, if you take the writer's interpretation, suggests that the Democrats are more confident that people will see it their way.

OAK BLUFFS, Massachusetts (Reuters) - U.S. President Barack Obama will nominate Ben Bernanke to a second term as chairman of the Federal Reserve on Tuesday as the economy shows signs of recovery, a senior administration official said on Monday.

Bernanke, whose appointment as head of the U.S. central bank must be confirmed by the Senate, has led the Fed and the U.S. economy through its most tumultuous period since the Great Depression of the 1930s. Obama's Democrats control the Senate.

Read the whole article.

Give the president credit for understanding the importance of removing any uncertainty about the outcome of his decision.  I believe it was the right decision.