J. Bradford DeLong's Blog, page 2219
August 27, 2010
Robert Waldmann on Weimar Economics
Hoisted from Comments: RJW http://delong.typepad.com/sdj/2010/08/stephen-williamson-commits-himself-to-cargo-cult-macroeconomics.html?cid=6a00e551f0800388340134867e98ec970c#comment-6a00e551f0800388340134867e98ec970c writes:
I'm not a fan of new monetary economics, but it isn't isomorphic to cargo cults. In new monetary models there are typically two steady state equilibria one in which money is valuable and one in which it is worthless. I am not really expert so I wrote "typically" to...
August 26, 2010
links for 2010-08-26
Monetary policy: "You guys in the US are so screwed" | The Economist
We're Still In A Paradox Of Thrift World - NYTimes.com
Cowen and Drezner Join the Sixth International (Repentant Libertarians Cadre) — Crooked Timber
FT.com / Comment / Opinion ...
What the Fed Could Do
Alan Blinder:
The Fed Is Running Low on Ammo: You may have noticed that the complexion of the U.S. economy has turned a bit sallow of late.... Chairman Ben Bernanke has told the world that the Fed is not out of ammunition. It still has easing options, should it need to deploy them. The good news is that he's right. The bad news is that the Fed has already spent its most powerful ammunition; only the weak stuff is left.... Let's examine....
From exit to re-entry. The first easing...
Stephen Williamson Commits Himself to Cargo-Cult Macroeconomics
The cargo cults of the South Pacific noted a strong correlation during World War II between (a) the existence of airstrips, and (b) cargo airplanes landing and disgorging huge amounts of consumer goods. They thought it was worth trying to see whether this relationship was causal: would building airstrips cause cargo planes to appear and land? They experimented... and found that causation ran the other way: it was the expectation on the part of the Seabees of the United Nations forces...
August 25, 2010
Jed Harris Nails It
I guess Kocherlakota (and Williamson) made a wonderful discovery -- the fed can keep the inflation rate constant by just holding the fed funds rate constant, since the rate of real interest is constant. It's a mathematical certainty! And makes the job so much simpler... wonder why we never thought of it...
Paul Volcker's life in 1979-1982 would have been so much easier if only he had had access to Kocherlakota's and Williamson's brains--NOT!!!
links for 2010-08-25
Worthwhile Canadian Initiative: Why "everyone" should be forced to take Intro Economics
Worthwhile Canadian Initiative: Monetary policy as asset prices
Why Android won't worry RIM and Apple • The Register
Nick Rowe Loses It - NYTimes.com
...
Narayana Kocherlakota Confuses "Must Lead to" with "Is the Result of"
Admittedly, this is a hard thing to do--the kind of thing that requires a highly trained incapacity--but Narayana has managed to do it when he writes:
over the long run, a low fed funds rate must lead to consistent—but low—levels of deflation...
The claim is completely correct--but only when you replace "must lead to" with "is the result of."
It is the kind of thing that listening to Frank Fisher and Andreu Mas-Colell on stability of general equilibrium permanently...
Articles for Section 4 Student Oral Presentations
Articles for section 4 presentations:
“Thrifty families accused of prolonging the recession,” by Gráinne Gilmore. The Times December 23, 2009. http://business.timesonline.co.uk/tol/business/economics/article6965784.ece and “Can Consumers Spend Asia Out of Recession? Many Asian countries are handing out cash and vouchers to get people spending again. But real economic recovery may take a lot more,” by Frederik Balfour , Business Week (March 15, 2009).
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