BRYAN CAPLAN
May 7, 2013
Keynesian Bets: What's Out There
May 6, 2013
Keynesian Bets Bleg
May 6, 2013
The Pyramid of Macroeconomic Insight and Virtue
May 2, 2013
A Natalist Provision
May 1, 2013
I Was a Teenage Misanthrope
DAVID HENDERSON
May 5, 2013
John Thacker on Vaccinations and the Sequester
May 3, 2013
Chef Rudy's Virtues Project
May 2, 2013
My take on Reinhart and Rogoff
May 1, 2013
Medicare Kills a Program
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This just gets right back to the ZMP debate, right?
It's a real rigidity story, as I read it. But PSST is confusing to describe in terms of rigidities.
Nominal price rigidity is not the only mechanism that slows the adjustment of the real economy. Figuring out exactly how things have changed will take varying amounts of time and effort for the divers actors in the economy, due to both information availability and Bayesian-like mental model adjustment processes. There are many other real-world "frictions". PSST and ABCT both consider these effects and reject the idea of instant, cost-free adjustments (not only of prices). This makes these theories more realistic even if it distances them from Perfect Competition, General Equilibrium, or Hydraulic Keynesianism.
I'm going second Adam on this. ZMP explains why they are currently unemployed, PSST explains why they eventually get hired again.