J. Bradford DeLong's Blog, page 2261

DeLong Smackdown Watch: Xavier Gabaix Explains "Tail Risk"

The tail risk that Xavier Gabaix sees is the risk that the government will adopt Pain Caucus policies:

Economics: It is a rational (but problematic) reaction to "tail risk. A rejoinder | The Economist: I GREATLY enjoy DeLong’s writings, and find them abundant in information and insights, if not in interpretive charity. His reaction suggests I should clarify my compact post. Of course macroeconomic tail risk includes a potential financial crisis—who wouldn’t think that? I had in mind the...

The New York Times as Aggregator

It picks this up:

Bloggingheads: Don't Sweat the Debt? Michael Kinsley and Brad DeLong.

I cannot help but note that the New York Times adds only four words to the party, and those four words are misleading.

Neither of us is saying "don't sweat the debt." Both of us believe that we need to sweat the debt very much--but the debt we need so sweat is the long-term debt, and the way we need to sweat it is by holding Congress's feet to the fire on PAYGO.

Macreconomics Risks Watch: Jan Hatzius's Hair Is on Fire

Neal emails:

Goldman Sachs is worried:

Friday’s jobs numbers were disturbing. At best, they show an economy that is growing only quickly enough to keep the unemployment rate flat near 10%. At worst, they suggest that the labor market is once again turning down. Both the manufacturing workweek (the only part of the employment report included in the index of leading indicators) and the employment/population ratio (the broadest job market measure in the household survey...

The Know-Nothing Caucus of Economists

Paul Krugman:

Lincoln, McClellan, And Stimulus: There’s now a lot of talk about the fact that U.S. corporations are sitting on a lot of cash, but not spending it. I don’t find that particularly puzzling: with huge excess capacity, why invest in building even more capacity. But almost everyone seems to agree that if we could somehow get businesses to spend some of that cash, it would create jobs.

Which then raises the question: how can you believe that, and not also believe that if...

links for 2010-07-06

Ryan Grim: Mayberry Machiavellis: Obama Political Team Handcuffing Recovery







John Quiggin: Zombie Economics: How Dead Ideas Still Walk among Us…







Twitter / mattyglesias: Wish I'd thought of Sebast ...

MY: "Wish I'd thought of Sebastian Mallaby schtick of being a lonely voice standing up for put-upon but super-wealthy hedge funds"





Ezra Klein: Is...

The Precautionary Demand for Ice on the Fourth of July

Twitter / delong: The Precautionary Demand f ...:

The Precautionary Demand for Ice: I bought 40 lbs at 11 am even though BBQ@5: high rate of depreciation, but what if store out @4?

Twitter / delong: The Precautionary Demand f ...:

The Precautionary Demand for Ice: sure enough @4 Safeway out of ice: worth it to hold ice in my portfolio for 5hrs in spite of -50% return

Mark Thoma Takes Us to Gunnar Myrdal: Fiscal Policy in the Business Cycle

Mark Thoma:

Economist's View: Gunnar Myrdal: Fiscal Policy in the Business Cycle: This discussion of fiscal policy by Gunnar Myrdal appeared in the March, 1939 edition of The American Economic Review's Papers and Proceedings. Much of it could have been written yesterday....

Fiscal Policy in the Business Cycle, by Gunnar Myrdal, The American Economic Review, Vol. 29, No. 1, Supplement, Papers and Proceedings of the Fifty-first Annual Meeting of the American Economic...

Department of "Huh?": In Which We Ask "Can David Brooks Succeed by Submitting Raw First Drafts? Or WIll He Forget His Argument Three Paragraphs from the End?"

David Brooks advises Obama:

David Brooks: You are practical.... Too much debt could lead to national catastrophe. Too much austerity could lead to stagnation. Well, there’s a few short-term things you can do. First, extend unemployment insurance; that’s a foolish place to begin budget-balancing. Second, you need to mitigate the pain caused by the state governments that are slashing spending. You need a program modeled on Race to the Top. You will provide federal money now to states that...

Ed Glaeser for Another Stimulus

He writes:

To Spend or Not to Spend: Austerity may be the right program for smaller countries facing lenders that may lose confidence in their debt...

I would put it much more strongly than that: austerity is definitely the right program for smaller countries with open economies facing lenders that may lose confidence in their debt...

On the other hand, I would put this more strongly too:

Stimulus may be the right policy for larger countries that are trusted to repay and that...

We Are Live at the Week: "A (Keynesian) Voice Crying in the Wilderness, Saying..."

Keynes & Co. have lost the stimulus argument - The Week: My friends Kevin O'Rourke and Barry Eichengreen in the office next door were chief among those economists warning at the start of 2009 that the shock to the world economy inflicted by the financial crisis was greater than the shock that had caused the Great Depression. They were right.

The good news is we have avoided another Great Depression. But it seems ill-advised for Barack Obama to stand up on a Friday morning in early July and...