ARNOLD KLING
February 4, 2012
Corporatism
February 4, 2012
No Scott, the future is Portugal
February 4, 2012
Good Sentences
February 3, 2012
The Wisdom of Robin Hanson, #n
February 3, 2012
My PSST Papers
BRYAN CAPLAN
February 5, 2012
Naming the Puppy: Firing Aversion and the Labor Market
February 3, 2012
My Two Favorite Graphs From Coming Apart
February 2, 2012
"How Deserving Are the Poor?": My Opening Statement
February 1, 2012
What's So Special About Huemer's New Book?
February 1, 2012
A Freedman's Moral Intuition
DAVID HENDERSON
February 5, 2012
Five Myths About Free Markets
February 5, 2012
French versus American Parenting
February 3, 2012
My University of Rochester Talk
February 2, 2012
Rena Henderson on the Komen Controversy
February 1, 2012
My Hoover Talk Today: Live Stream
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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.