Assorted links

1. An old but still interesting Bertola and Drazen paper on fiscal policy (pdf): “We propose and solve an optimizing model which explains counterintuitive effects of fiscal policy in terms of expectations. If government spending follows an upward-trending stochastic process which the public believes may fall sharply when it reaches specific “target points,” then optimizing consumption behavior and simple budget constraint arithmetic imply a nonlinear relationship between private consumption and government spending. This theoretical relation is consistent with the experience of several countries.”

2. Should Greece default now or later?

3. Bahrain and Saudi Arabia to move toward a closer union.

4. 2005 me on the end of the euro; “It would be ironic if the strongest argument against the Euro was simply the eventual need to dissolve it.”