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Macroeconomics
A Category Archive (123 entries)
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November 13, 2008
Macroeconomics
Bryan Caplan
Here's James Hamilton at his most dismissive:Some of my colleagues still talk of the possibility of a liquidity trap, in which the central bank supposedly has no power even to cause inflation. Their theory is that interest rates fall so... MORE
November 12, 2008
Labor Market
Arnold Kling
The main theme of this lecture is economic policy and labor market adjustment. My conjecture is that in our post-industrial economy, conventional Keynesian policies do not operate as they do in an industrial economy. Another issue is that the natural... MORE
November 11, 2008
Finance: stocks, options, etc.
Arnold Kling
Megan McArdle writes Money is weird. Finance is weird. There is no other industry that is, first, so tightly coupled, and second, severely affects every other industry in the country. She Is trying to ward off cognitive dissonance over the... MORE
Macroeconomics
Arnold Kling
So far, I have focused on unemployment as a problem of adjustment. In this essay, I review the history of the Dotcom recession, and I focus on the index of aggregate hours worked as an indicator of macroeconomic performance. According... MORE
Labor Market
Arnold Kling
This lecture covers an important issue: why do firms adjust by cutting workers rather than by cutting wages?... MORE
November 10, 2008
Labor Market
Arnold Kling
In this lecture, I get to the punch line and offer my explanation of unemployment. Markets are constantly in adjustment, with the number of people in different occupations changing. Usually, the task of adjustment and adaptation goes remarkably smoothly. Occasionally,... MORE
November 9, 2008
Macroeconomics
Arnold Kling
I continue to focus on the issue of unemployment. In this lecture, I want to emphasize two things. One is the problems with popular intuition that jobs are scarce. The other is the wide variety of jobs, and hence labor... MORE
November 8, 2008
Macroeconomics
Arnold Kling
These lectures will cover macroeconomics as I think it should be taught, not the way it is normally taught. The focus is not on model-building. The focus is on the two most troubling questions in macro. 1.How is it that... MORE
November 3, 2008
Economic Education
Arnold Kling
Tyler Cowen writes, The consulting incomes of finance economists will fall and fewer talented people will go into finance. Speaking fees will fall since fewer economists will give talks at hedge funds. The relative status of macroeconomists will rise and... MORE
October 28, 2008
Macroeconomics
Bryan Caplan
A while back, I argued that we're not in a liquidity trap. But then Greg Mankiw pointed out that the two series on his webpage had different endpoints, leaving the matter again in doubt. Now Jeff Hummel says that excess... MORE
October 24, 2008
Macroeconomics
Bryan Caplan
Mankiw shows two diagrams that many will misinterpret as evidence that we're in a Keynesian liquidity trap. What's a liquidity trap? Roughly speaking, it's a situation where monetary policy has no effect on aggregate demand because interest rates are too... MORE
October 23, 2008
Macroeconomics
Arnold Kling
It comes from Olivier Blanchard. a largely shared vision both of fluctuations and of methodology has emerged. Not everything is fine. Like all revolutions, this one has come with the destruction of some knowledge, and suffers from extremism, herding, and... MORE
September 29, 2008
Macroeconomics
Arnold Kling
Ordinarily, I don't care much for the Journal of Economic Literature, the American Economic Association's periodical selection of survey articles and book reviews. But the September 2008 issue is excellent. If any diligent commenters can find links to any of... MORE
September 27, 2008
Macroeconomics
Arnold Kling
1. Tyler Cowen asks Will the commercial paper market dry up? The Fed had to deal with this in 1970, when the Penn Central Railroad went bankrupt. In this narrative, "the Fed's index finger started to bleed" from dialing up... MORE
Economic Education
Arnold Kling
What macroeconomic theory says that we run the risk of a Depression if we don't have a bailout? Try to come up with an argument that is either already in a textbook or that you would put in a textbook.... MORE
September 13, 2008
Macroeconomics
Arnold Kling
At lunch, Nick Schulz asked me what Robert Hall is known for. I said that Hall changed my view of macroeconomics. Even today, Hall's work influences how I think about global warming. So pull up a chair, grab a cup... MORE
August 24, 2008
Macroeconomics
Arnold Kling
Tyler Cowen writes, The fundamental problem in the American economy is that, for years, people treated rising asset prices as a substitute for personal savings. I think that there are a lot of macroeconomists who instinctively would prefer more U.S.... MORE
August 4, 2008
Macroeconomics
Arnold Kling
In a meandering interview, Russ Roberts and Robert Barro talk about disasters. Barro wonders why, given history, we would presume that the probability of an economic disaster is low. I guess short-term history for the United States, meaning the last... MORE
July 15, 2008
Macroeconomics
Arnold Kling
I have two essays out today. The first one is called The Depressive Realism Economy. It now appears that we were living in a dream world a few years ago, with oil prices unsustainably low and house price inflation unsustainably... MORE
July 7, 2008
Macroeconomics
Arnold Kling
He writes, governments are clawing to stretch out unsustainable booms, further pushing up commodity prices, and raising the risk of a once-in-a-lifetime economic and financial mess. All this need not end horribly, but policy makers in most regions have to... MORE
June 10, 2008
Macroeconomics
Bryan Caplan
You might think this passage would be from Econ Journal Watch's "Inspecting the Mechanism" column, but you'd be wrong:A recent experience says it all. I was asked to discuss three papers presented at a session of the American Economic Association... MORE
June 2, 2008
Macroeconomics
Bryan Caplan
When I was a strongly Austrian-influence undergraduate, I scoffed at people who downplayed inflation by saying, "Well, if you ignore food and fuel..." It seemed like a sleazy effort to cover up a government-created problem by refusing to count a... MORE
May 20, 2008
Economic Education
Arnold Kling
My earlier post suggesting a macro-less economics major drew some interesting comments. I agree with those who say that a student should choose courses on the basis of the professor rather than the topic--that was exactly the advice I gave... MORE
April 25, 2008
Macroeconomics
Arnold Kling
Robert Hall writes, One of the most important facts about the modern recession is at all sectors of the labor market slacken at the same time. . .Each of the seven major sectors—even including government—were recruiting to fill far fewer... MORE
April 21, 2008
Macroeconomics
Arnold Kling
On an earlier thread, a commenter wrote: 1) What happens to the value of the dollar when new forms of money, like credit cards, are introduced? I expect you'd say that the value of the dollar would fall, but this... MORE
April 17, 2008
Austrian Economics
Arnold Kling
A commenter on an earlier post points me to Steven Horwitz: As excess supplies of money work their way through the market, they cause differential effects on prices. Some go up by a lot, some only by a little. These... MORE
April 15, 2008
Macroeconomics
Arnold Kling
Without irony, Greg Mankiw points to both John Makin, arguing in the Wall Street Journal for loose money, and Martin Feldstein, arguing the next day for tight money. Meanwhile, today's Washington Post has a story with a typical headline: Economy's... MORE
March 26, 2008
Macroeconomics
Arnold Kling
Several days ago, Greg Mankiw linked to a list of top economists according to some objective criteria related to published work. I was familiar with most of the top 150, at least to the point of being able to identify... MORE
March 4, 2008
Macroeconomics
Bryan Caplan
James Hamilton is one of the few macroeconomists whose short-run forecasts never sound like quackery. His latest analysis is full of insight:Some analysts are saying that Fed Chair Ben Bernanke is walking a tightrope-- if he does not drop interest... MORE
January 24, 2008
Macroeconomics
Arnold Kling
I spell out my current thinking on macroeconomics. Over the past twenty years, Keynesian forecasters, such as Morgan Stanley's Stephen Roach, have predicted many phantom recessions--slumps that never took place. In order to remain attractive, the picture of Keynesian economics... MORE
January 23, 2008
Macroeconomics
Arnold Kling
Don Boudreaux writes, Government cannot create genuine spending power; the most it can do is to transfer it from Smith to Jones. If the Treasury sends a stimulus check to Jones, the money comes from taxes, from borrowing, or is... MORE
January 22, 2008
Macroeconomics
Arnold Kling
Peter Orszag does his job, offering the mainstream view on economic stimulus. When the constraint on short-term growth is aggregate demand, as appears to be the case today, both monetary and fiscal policy can help by boosting spending. i. On... MORE
January 16, 2008
Macroeconomics
Arnold Kling
Alex Tabarrok writes, Forget the talk of recession. The world is about to enter a new era in which miracle drugs will conquer cancer and other killer diseases and technological and scientific advances will trigger unprecedented economic growth and global... MORE
January 11, 2008
Macroeconomics
Bryan Caplan
Tax cuts are a popular cure for unemployment, but there are strong reasons to doubt that they are a good way to achieve this goal. As I explained a while back:Where does the money come from? If the central bank... MORE
January 2, 2008
Macroeconomics
Bryan Caplan
A lot, but Tyler's written a very fine postcard version:The Austrian story is that "the government distorted price signals to the market." Are those two accounts really so different? Do we need metaphysics to resolve that question? Take the classic... MORE
December 23, 2007
Macroeconomics
Arnold Kling
Tyler Cowen asks, when inflation comes, why doesn't the expectation of that inflation lead to proportional increases in nominal interest rates, thus keeping the real rate constant? The question seems ill-posed.... MORE
November 21, 2007
Macroeconomics
Arnold Kling
Probably. Politically, I'm in a different place, obviously, and I'm not heavily invested in macro as a subject. But how else would you label someone who believes the following: 1. Textbook macro is misguided. 2. The most useful insights in... MORE
October 16, 2007
Macroeconomics
Bryan Caplan
In Stumbling on Happiness, Daniel Gilbert skewers the belief that money buys happiness - then defends this error as a Noble Lie:If no one wants to be rich, then we have a significant economic problem, because flourishing economies require that... MORE
September 21, 2007
Macroeconomics
Arnold Kling
Olivier Blanchard and Jordi Gali write, Since the 1970s, and at least until recently, macroeconomists have viewed changes in the price of oil as as an important source of economic fluctuations, as well as a paradigm of a global shock,... MORE
September 2, 2007
Macroeconomics
Arnold Kling
At Econbrowser, James Hamilton has many interesting posts from the annual Fed conference at Jackson Hole, where the housing kerfluffle drew a lot of attention. In one post, he writes, But if it were the case that all these institutional... MORE
February 16, 2007
Macroeconomics
Bryan Caplan
Mankiw, Reis, and Wolfers have a neat empirical paper on beliefs -and disagreement - about inflation: In most standard macroeconomic models, people share a common information set and form expectations rationally. There is typically little room for people to disagree.... MORE
January 22, 2007
Macroeconomics
Bryan Caplan
I made a wager this weekend while I was at a Liberty Fund conference in Chicago. Fellow participant Jeremy Rabkin of Cornell made quite a few predictions about the non-future of the EU that struck me as overconfident. When he... MORE
January 19, 2007
Macroeconomics
Arnold Kling
While I was considering an offer to teach intermediate macro, I thought about how I would do it. I would teach it in history-of-thought terms, showing how ideas grew out of the context of their times. 1. 1920's Hyperinflations--the first... MORE
January 9, 2007
Macroeconomics
Bryan Caplan
I'm too young to remember, but my memory still instantly links Ford with his risible "Whip Inflation Now" (WIN) buttons. The same memory inspires James Hamilton to write an inspired account of the famed Burns-Nixon Political Business Cycle (PBC). I... MORE
January 5, 2007
Macroeconomics
Arnold Kling
Here is the complete list. The ever-creative Nobel Laureate George Akerlof writes, —a realistic norm regarding consumption behavior will make consumption directly dependent on current income, in violation of the neutrality of consumption given wealth; —a realistic norm will make... MORE
November 17, 2006
Macroeconomics
Bryan Caplan
Here's what my teacher Ben Bernanke told Milton Friedman on his 90th birthday: Let me end my talk by abusing slightly my status as an official representative of the Federal Reserve. I would like to say to Milton and Anna:... MORE
October 9, 2006
Macroeconomics
Arnold Kling
I once joked that Edmund Phelps would have won the Nobel Prize if he were Scandinavian (I probably made that joke when Finn Kydland was annointed). Today, Phelps won it, anyway. Phelps was mentioned in econlog blog posts for his... MORE
August 7, 2006
Macroeconomics
Arnold Kling
Apparently, the echo chamber of left-wing macro pundits has pronounced a recession to be imminent. For example, Nouriel Roubini writes, Given the recent flow of dismal economic indicators, I now believe that the odds of a U.S. recession by year... MORE
August 2, 2006
Macroeconomics
Arnold Kling
Greg Mankiw talks about analysis by Ray Fair which says that Bush Administration economic policy kept the recession that he inherited from being much worse. Fair assesses the impact of monetary and fiscal policy during the recovery from the recent... MORE
June 20, 2006
Macroeconomics
Arnold Kling
Bryan writes, People adjust their borrowing to interest rates all the time. But cash balances? That's hard to believe. Who cares? In practice, the Fed has its famous three tools--the discount rate, the reserve requirement(s), and open market operations. In... MORE
Macroeconomics
Bryan Caplan
In our continuing dialogue, Arnold observes that: The Fed supplies bank reserves. Mechanically, it goes into the "repo" market, which is the market for loans collateralized by Treasury securities. When the Fed wants to expand the money supply, it goes... MORE
Macroeconomics
Arnold Kling
He's right that with zero interest elasticity, the Fed could still expand the money supply. Just think of the old helicopter drop. However, I do not think that Bryan's personal money demand function is the ultimate determinant of interest elasticity.... MORE
Macroeconomics
Bryan Caplan
Arnold writes: The textbook answer, which Bryan gave but rejected, is that interest rates go up, the demand for money falls, and the fall in the demand for money acts like an increase in the supply of money--nominal GDP goes... MORE
June 19, 2006
Macroeconomics
Arnold Kling
I can't believe what I've been seeing in the thread that Bryan started here and updated most recently here. So far, if this were a question on an intermediate macro test, nobody gets full credit.... MORE
Macroeconomics
Bryan Caplan
Two weeks ago I emailed Mankiw a question about fiscal policy, referencing one of my previous posts. Mankiw replied (June 7). Then Brad DeLong responded to Mankiw (on June 15, updated June 17). DeLong's post in turn apparently provoked a... MORE
June 7, 2006
Macroeconomics
Bryan Caplan
The noble Mankiw has a thoughtful reply to a question from me about the effect of fiscal and monetary policy on nominal GDP. (The question is based on one of my old posts): How far off is the vertical LM... MORE
May 16, 2006
Economic Methods
Arnold Kling
Greg Mankiw has written an outstanding new essay that reviews the history of thought in macroeconomics. I don't know where he is planning to give this paper, but I wish I could be a discussant. Here is a brief excerpt.... MORE
April 27, 2006
Macroeconomics
Arnold Kling
Greg Mankiw summarizes textbook macroeconomics in seven equations. I am not sure what I believe about macroeconomics these days. But let me Fisk the model from the perspective of what I believed when I was a Keynesian.... MORE
January 27, 2006
Macroeconomics
Arnold Kling
From my latest essay. In 1968, Milton Friedman was on the fringe of respectability. His Presidential Address to the American Economic Association in 1967 could not have been more defiant of the conventional wisdom. At that time, economists thought that... MORE
December 30, 2005
Macroeconomics
Bryan Caplan
Arnold's right that high labor productivity growth over the past five years is a big story. But this fact is even more impressive because labor productivity is normally procyclical. That means that during recessions, labor productivity typically falls (or at... MORE
November 23, 2005
Macroeconomics
Bryan Caplan
Schumpeter famously praised the "creative destruction" of the market: The opening up of new markets, foreign or domestic, and the organizational development from the craft shop and factory to such concerns as U.S. Steel illustrate the same process of industrial... MORE
October 24, 2005
Macroeconomics
Bryan Caplan
My teacher Ben Bernanke has been nominated as Greenspan's replacement. While some libertarians think he's the Antichrist, in reality he's about the best that libertarians could reasonably hope for. As I wrote a few months back: I was a student... MORE
October 7, 2005
Macroeconomics
Arnold Kling
Tyler Cowen has some tough macroeconomics questions, including Which aspect of the macroeconomy does real business cycle theory find most difficult to explain? I would say that the apparent success of Keynesian stabilization policy in the United States since 1945... MORE
September 30, 2005
Macroeconomics
Bryan Caplan
How would you respond to someone who said the following? GDP by definition is consumption plus investment plus government spending - C+I+G. Therefore increasing government spending increases GDP. The right answer, of course, is that higher G only increases GDP... MORE
September 29, 2005
Macroeconomics
Bryan Caplan
When Tom Nugent of National Review Online tells us: Will private borrowers be crowded out [by increased government deficits]? Impossible. The causation is “loans create deposits,” as taught on day one of every traditional money and banking class. The act... MORE
August 28, 2005
Macroeconomics
Arnold Kling
At Jackson Hole, Alan Greenspan said, The rising prices of stocks, bonds and, more recently, of homes, have engendered a large increase in the market value of claims which, when converted to cash, are a source of purchasing power. Financial... MORE
June 27, 2005
Macroeconomics
Arnold Kling
Perhaps Jan Loeys and others at J.P. Morgan have the solution to some macroeconomics puzzles. The real driver of this saving glut in recent years has been the corporate sector. Between 2000 and 2004, the switch from corporate dis-saving to... MORE
June 23, 2005
Macroeconomics
Bryan Caplan
Since the 1970's, one of the main controversies in macroeconomics has been whether nominal variables affect real variables. A classic example: Does the inflation rate (a nominal variable) affect employment (a real variable)? The answer that emerged from this debate... MORE
June 10, 2005
Macroeconomics
Bryan Caplan
Where did Ludwig von Mises say the following? [T]he U.S. government has a technology, called a printing press... that allows it to produce as many U.S. dollars as it wishes at essentially no cost. By increasing the number of U.S.... MORE
June 1, 2005
Macroeconomics
Arnold Kling
Tyler Cowen writes, I will be teaching Ph.d. macro this fall. Here is a draft of my reading list. Comments are open and further suggestions are welcome I think that macro tends to get too buried in theory. I like... MORE
April 19, 2005
Macroeconomics
Arnold Kling
I was asked to do a WSJ Econoblog on the state of the economy. I do not have strongly-held views on macroeconomics, so there was not much disagreement between me and my "opponent," John Irons. Guess which one of us... MORE
March 20, 2005
Macroeconomics
Arnold Kling
Robert Hall writes Unemployment rises not because of a bulge of layoffs but because workers entering job search—from previous jobs, from school, and from home activities—experience unusual difficulty in finding jobs. Among other things, this means that stories on layoffs,... MORE
February 23, 2005
Macroeconomics
Arnold Kling
There are a lot of great economics blogs that are not on our blogroll. For example, there is David Altig's Macroblog, which I had not heard of until today, when Altig was paired with Alex Tabarrok (of Marginal Revolution in... MORE
January 3, 2005
Macroeconomics
Arnold Kling
Robert J. Samuelson writes, First, the economy is bound to lose the stimulus of rising consumer debt. ...Second, the benefits from defeating double-digit inflation are fading. His argument is that without the boost to consumer demand from increased borrowing and... MORE
October 11, 2004
Macroeconomics
Arnold Kling
This year's Nobel Prize in economics was awarded to Finn E. Kydland and Edward C. Prescott for their work on time inconsistency of economic policy and real business cycles. The press release describes these discoveries as If economic policymakers lack... MORE
August 10, 2004
Macroeconomics
Michael Munger
by Michael Munger Guest Blogger John Maynard Keynes observed, only partly tongue in cheek, that the solution to unemployment is jobs, any jobs: If the Treasury were to fill old bottles with bank notes, bury them at suitable depths in... MORE
July 16, 2004
Monetary Policy
Arnold Kling
Brad DeLong argues, There is a 5m-worker gap between household-survey employment today and what it would be if the employment-to-population ratio were at its average level for 2000. This suggests that we are extraordinarily far from anything that could be... MORE
July 6, 2004
Macroeconomics
Arnold Kling
During an election year, a President is assumed to control the economy. For example, Paul Krugman writes, For three years many economists have argued that the most effective job-creating policies would be increased aid to state and local governments, extended... MORE
June 9, 2004
Supply-side Economics
Arnold Kling
I decided to put my thoughts into a longer essay. When Ronald Reagan defeated Carter's re-election bid, "incomes policies" were a proven failure. Notwithstanding Milton Friedman's comments quoted above, by 1980 it took a lot less courage to stand by... MORE
April 11, 2004
Macroeconomics
Arnold Kling
How many jobs can a President create? Former Clinton Administration economist Jeffrey Frankel says that "The answers don't fit into a stump speech." He writes, [The Democratic Presidential candidate's] proposals are good economics, and they come by their populist ring... MORE
April 2, 2004
Labor Market
Arnold Kling
In my favorite musical, The Music Man, there is climactic scene in which the mayor calls for Professor Harold Hill to be tarred and feathered. "Where's the band?" the mayor shouts rhetorically. "Where's the Band?" Whereupon the boys in the... MORE
March 24, 2004
Macroeconomics
Arnold Kling
A while back, Paul Krugman published a graph that appeared to show that the employment forecasts of the Bush Administration were implausible. Drawing the same graph, but using an earlier start date, James K. Galbraith refutes that analysis. As Galbraith... MORE
March 11, 2004
Macroeconomics
Arnold Kling
I argue that criticizing the Administration's employment forecasts is hypocritical. suppose you were to do a blindfold test. Give an economist the actual output growth of 7.8 percent over three years (roughly 2.5 percent per year) and ask the economist... MORE
March 7, 2004
Fiscal Policy
Arnold Kling
Noam Scheiber argues that the Bush tax cuts in fact were stimulative. Liberals in Congress and at places like the Economic Policy Institute complain that the Bushies should have targeted the bulk of their tax cuts toward the working poor... MORE
March 5, 2004
Macroeconomics
Arnold Kling
There is a silly controversy concerning when the recession began. The White House has argued revisions last year to economic data meant the fourth quarter of 2000 would be more accurate, a change that would shift the start of the... MORE
March 2, 2004
Macroeconomics
Arnold Kling
I turn out to be more Keynesian than Brad DeLong, at least in an old-fashioned sense. In a long and interesting post, Brad DeLong finds little difference between new Keynesians and monetarists. The former he describes as believing in five... MORE
January 28, 2004
Finance: stocks, options, etc.
Arnold Kling
Tyler Cowen recommends two articles by Perry Mehrling on the relationship between the theory of finance and monetary theory/macroeconomics. One of the articles is a nice summary of the work of Fischer Black. What Black did was to conceive of... MORE
January 17, 2004
Finance: stocks, options, etc.
Arnold Kling
Brad DeLong wonders why the bond market isn't punishing the Bush Administration harder for its fiscal sins. He lists a number of possible explanations, including 1. The people who matter in financial markets are expecting either (a) that there will... MORE
January 5, 2004
Macroeconomics
Arnold Kling
Edmund S. Phelps looks at one of my favorite topics: parallels between the current economy and the Great Depression. Each boom was caused by the advent of a new general-purpose technology -- commercially available electric power in the '20s, the... MORE
January 2, 2004
Finance: stocks, options, etc.
Arnold Kling
William Nordhaus reviews two books on the economy of the 1990's. One of the books, by Janet Yellen and Alan Blinder, apparently finds little evidence that economic policy was a major factor in the rapid economic growth of that era.... MORE
December 5, 2003
Macroeconomics
Arnold Kling
The Bureau of Labor Statistics uses two different surveys to measure job growth. The latest report shows that for the last two months, the household survey shows an increase of just over one million jobs. The payroll survey shows an... MORE
November 30, 2003
Macroeconomics
Arnold Kling
Today's New York Times has two opinion pieces on the labor market. Pessimist Steve Roach does not believe that the productivity growth that we are seeing is real or lasting. we are woefully underestimating the time actually spent on the... MORE
November 10, 2003
Macroeconomics
Arnold Kling
One of the more irritating tropes in economic journalism is the "knife-edge" metaphor. A reporter will write a news-analysis piece that breathlessly explains that the Federal Reserve is on a knife edge, with recession on one side and inflation on... MORE
November 7, 2003
Macroeconomics
Arnold Kling
W. Michael Cox and Richard Alm look at the data on gross flows in the labor market. New Bureau of Labor Statistics data covering the past decade show that job losses seem as common as sport utility vehicles on the... MORE
November 6, 2003
Macroeconomics
Arnold Kling
Federal Reserve Board Governor Ben S. Bernanke offers his views on current issues in macroeconomics. He points to research which suggests that the household survey of employment, which shows a stronger labor market than the payroll survey, may be misleading.... MORE
October 31, 2003
Macroeconomics
Arnold Kling
Is a real economic recovery underway? If so, do President Bush's tax cuts deserve credit? These questions have been raised by Paul Krugman and others. When I was a young economist working in the forecasting section of the Federal Reserve... MORE
October 14, 2003
Macroeconomics
Arnold Kling
In this essay, I summarize what I have been reading about the Great Depression and its implications for today. The Depression certainly was an era of displacement. In fact I have borrowed the very term "displacement" from the late economic... MORE
October 9, 2003
Macroeconomics
Arnold Kling
The Great Depression continues to be a fascinating period to study. As Thomas Sowell points out, the myth is well entrenched that the New Deal pulled the economy out of the Depression. Only now has a book been written in... MORE
September 26, 2003
Macroeconomics
Arnold Kling
In an earlier post, I asked, What is the likelihood that some of the weak job growth and strong productivity growth of the past two years is in part a statistical mirage? Allan Meltzer says that the likelihood is high.... MORE
September 18, 2003
Income Distribution
Arnold Kling
Marc Brazeau asks (see Steve Antler's site), Two common arguments against raising the minimum wage are possible inflationary effects and job loss. Why aren't these issues raised in relation to executive compensation? I think that the conventional wisdom is that... MORE
Macroeconomics
Arnold Kling
The U.S. Department of Labor uses two different surveys of the labor market. As Alan Reynolds put it, When government officials asked people if they had a job last month, 137.6 million said "yes." But when employers were asked, they... MORE
September 8, 2003
Macroeconomics
Arnold Kling
What grade should President Bush earn in macroeconomics? Brad DeLong writes, As a short-run employment- and demand-generating program, an objective grade would be a D if not an F. It was about cutting the taxes of the rich, improving incentives... MORE
September 7, 2003
Macroeconomics
Arnold Kling
The latest labor market data show that aggregate hours worked fell again in August. This means that LUCY, my indicator of labor capacity utilization, also dropped. The longer that this productivity-cushioned recession continues, the more of a puzzle it presents... MORE
September 3, 2003
Macroeconomics
Arnold Kling
I continue to think that the term jobless recovery should be replaced by productivity-cushioned recession. Meanwhile, Erica L. Groshen and Simon Potter have written more about the phenomenon. we look for evidence that structural change played a dominant role in... MORE
August 27, 2003
Macroeconomics
Arnold Kling
On the topic of the economic impact of the New Deal, Patrick Sullivan pointed to an interesting article by Cole and Ohanian. They make two points. One is that the recovery from the downturn of 1929-1933 was unusually weak. The... MORE
Macroeconomics
Arnold Kling
This group of economists with strong Democratic Party ties says that we needed fiscal policy that provided more stimulus in the short run and a lower deficit in the long run. Robert Solow says, There are three characteristics you want... MORE
August 25, 2003
Macroeconomics
Arnold Kling
Cato's Jim Powell makes the case against the New Deal. Among the material Powell cites: Richard K. Vedder and Lowell E. Gallaway, in their 1997 study Out of Work, estimated that by 1940 unemployment was eight points higher than it... MORE
August 17, 2003
Macroeconomics
Arnold Kling
Brad DeLong has influenced my thinking on the current state of the economy. In a recent post where he looks at data on output relative to hours worked, he writes, CEA Chair Greg Mankiw said last week that the 3.5%... MORE
August 7, 2003
Macroeconomics
Arnold Kling
I say that the recession continues, according to an indicator of capacity utilization in the labor market. From March of 2001 through November of 2001 -- the respective dates for the beginning and the end of the recession, according to... MORE
July 1, 2003
Monetary Policy
Arnold Kling
Graham Turner claims to offer magical monetary manipulations. A year and a half after the Japanese government introduced its first fiscal stimulus, the yield curve (10-year Japanese government bond yields minus the discount rate) had steepened by nearly 2 percentage... MORE
June 19, 2003
Macroeconomics
Arnold Kling
In this essay, I discuss two alleged bubbles and what they might imply for U.S. macroeconomics. Why do foreign investors invest so heavily in dollar-denominated assets and bear the risk of a decline in the dollar? Personally, I think it... MORE
June 17, 2003
Macroeconomics
Arnold Kling
Robert Solow favors common sense over exotic theory. On the concerns about deflation in the U.S., he writes, If you look at the hundreds of prices that are tracked by the Bureau of Labour Statistics as elements of the consumer... MORE
May 16, 2003
Fiscal Policy
Arnold Kling
Jacob Levy criticizes the Senate's proposed temporary tax cut on dividends. The arguments in favor of repealing the dividend tax have to do with removing distortions from the capital markets and from the incentives faced by corporations, and with improving... MORE
May 9, 2003
Macroeconomics
Arnold Kling
Continuing the discussion that began with the thread Liquidity Trapped?, we can add opinions from Richard Berner of Morgan Stanley and Victor Canto of the Cato Institute. Canto writes, The data make a compelling case that we are on the... MORE
May 7, 2003
Macroeconomics
Arnold Kling
The threat of deflation and/or a liquidity trap has been discussed in a number of places recently. Columnist Robert J. Samuelson writes, Global demand remains weak; surplus capacity discourages new investment; gluts depress prices. Deflation could be dangerous: Lower prices... MORE
May 6, 2003
Macroeconomics
Arnold Kling
In Would Keynes Change His Mind?, I suggest that some key elasticities in the economy have changed since Keynes wrote. Today, the economy is more elastic than it was in the 1930's. Today's recession is a far cry from the... MORE
April 9, 2003
Macroeconomics
Arnold Kling
The future of Iraq's economy is suddenly a topical issue. I wrote, The new government in Iraq should encourage the growth of a private sector, by keeping taxes and regulation on businesses to a minimum. However, for the next several... MORE
March 12, 2003
Macroeconomics
Arnold Kling
Israel is an example of a country where there is a need to confront government spending. The cooperation of the public sector is essential to the success of an economic plan to cut spending, said Treasury wage director Yuval Rachlevsky... MORE
March 7, 2003
Macroeconomics
Arnold Kling
Morgan Stanley's Steve Roach writes about the timidity of the European Central Bank. Incrementalism doesn’t work in combating deflation. That was one of the key lessons that the research staff of the Federal Reserve drew in a widely noted paper... MORE
March 6, 2003
Macroeconomics
Arnold Kling
Jim Glass cited an essay by Eugene Steuerle called Do We Really Need More Stimulus? The total decline in fiscal posture for 2003 alone comes to around $500 billion. Compare this to the size of the economic decline...the total decline... MORE
March 5, 2003
Macroeconomics
Arnold Kling
Martin Feldstein, writing in the Wall Street Journal (subscription required), makes the case for fiscal stimulus. The shift of the cyclically adjusted federal budget from a $108 billion surplus in 2001 to a $117 billion deficit in 2002 added $225... MORE
February 12, 2003
Macroeconomics
Arnold Kling
Columnist Robert J. Samuelson describes the Budget debate as each side trying to embarrass the other, without ever confronting the truly important budget issues What both sides are trying to avoid discussing, according to Samuelson, is the anomalous structure of... MORE
February 6, 2003
Macroeconomics
Arnold Kling
Kevin Hassett believes that the U.S. budget deficit is a matter more of politics than economics. On the issue of deficits and interest rates, he writes My own view is that there are many close substitutes for U.S. government bonds... MORE
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