Paul Krugman: Missing Deflation: "Keynesians have, over all, had a very good track record in this economic crisis?. One area where things haven?t worked out as expected, however, is on the deflation front?. One possibility was that there wasn?t as much slack in the economy as we thought, that a lot of the problem was structural?. Another possibility? was that downward nominal wage rigidity could explain why the fairly rapid falls in inflation seen in previous slumps weren?t happening?. [N]ow we have two new analyses, by Hobijn and Daly at a Boston Fed conference, and in the IMF?s new World Economic Outlook, both of which strongly suggest that the issue isn?t structural unemployment, it?s low responsiveness of inflation to unemployment when inflation is low to begin with?. This does say that there is little risk of accelerating inflation. Indeed, Hobijn and Daly suggest that there?s a 'pent-up demand for wage cuts' that will probably push inflation lower even if the economy is recovering. Central banks and other policy makers will be making a terrible mistake if they look at low, stable inflation and pat themselves on the back for a job well done. Low, stable inflation, it turns out, is entirely consistent with catastrophic economic mismanagement. Notice how Keynesians responded to the partial failure of a prediction: by asking what they got wrong, and how their model of the world needed to be adjusted. This, of course, shows what fools we are: everyone on the other side of these debates knows that you respond to mistakes by never acknowledging them, and doubling down on whatever you originally claimed."
Tim Taylor: The Stock of Federal Investment: "The total stock of physical capital from federal investment is worth $3.2 trillion in 2013, according to the budget estimates, which look both at investment and at depreciation over time. About 30% of that is defense-related. About 20% is direct federal spending on projects like water and power. The remaining half or so is capital financed by federal grants, and about two-thirds of that ($1.1 trillion) is related to transportation. The total stock of research and development capital from federal investment is $1.6 trillion in 2013. One way to divide that up is that about 40% is related to national defense, and 60% is not. Another way to divide it up is that about half is basic research, and the other half is applied research. The total stock of education and training from federal investment is estimated at $2.2 trillion in 2013, with about three-quarters of that being K-12 education, and the rest being higher education. I'm sure that the calculations behind these estimates can be critiqued on many grounds, but just taking them at face value, it's thought-provoking that the stock of physical capital investment is less than the sum of the education and R&D capital."
Bernanke: Low-Income Communities Struggle Despite Recovery | Alan Blinder: A Good Grade for a Responsible Budget | Robin Harding: Boston Fed: Labour force participation | Eric Rosengren: Fed Mandate Argues for Aggressive Stimulus | Ezra Klein: From ?Mad Men? to a Mad Congress | Austin Frakt: Penn LDI : The economics of community rating and the individual mandate | Enrico Moretti: Unemployment benefits should encourage geographic mobility | Brad Plumer: Here?s why 10.4 million American workers are still in poverty | Greg Anrig: Beyond the Education Wars: Evidence That Collaboration Builds Effective Schools | David Hilfiker: Flowers for Algernon | James Fallows: Ten Years Ago: The Mohammed al-Dura Case | Buiter?s manifesto on a new eurozone world order, post-Cyprus: Citi chief economist Willem Buiter sketches the new face of creditor rights in the eurozone, reveals the hole in the heart of the EU's crisis resolution plans, and forecasts more debt restructuring in Cyprus | Stephen Gandel: The 10 stages of Jamie Dimon's blubbering London Whale grief |
Source: http://delong.typepad.com/sdj/2013/04/noted-for-april-14-2013.html
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