Grasping Reality on TypePad, by Brad DeLong

GC, AM, and GM: "Theory predicts that the effect of fiscal expansion varies... we evaluate the issue empirically.... Fiscal shocks are identified as residuals from an estimated government spending rule. These shocks are then interacted with conditioning variables in order to explain macroeconomic outcomes across a range of economic environments. The unconditional responses to a spending shock are in line with earlier results, featuring a positive, if relatively small output multiplier, no significant movement in consumption, and a fall in investment and the trade balance. Yet, these average results mask important differences across environments. In particular, the responses of the real exchange rate and net exports vary systematically across exchange rate regimes, with real appreciation and external deficits emerging mainly under a currency peg. Output and consumption multipliers, in turn, become quite sizeable during times of financial crisis."

PK: "One thing I’ve argued many times on this blog is that when assessing the record of fiscal policy, you have to make allowance for the fact that things are different when you’re in a liquidity trap.* Estimating the average effect of fiscal shocks in all regimes, as opposed to those rare occasions when you’re in a liquidity trap, tells you little about how things work now. That’s why I really liked the Almunia et al work on fiscal policy in the 1930s, which tried to focus on a period resembling where we are now. So here’s another entry: Corsetti et al."

PK: "Germany looks at this situation and says, where’s the problem? Unemployment never rose much, and it’s back to pre-crisis levels. Meanwhile, Spain suffers. But here’s the thing: European fiscal policy basically reflects Germany’s situation (with no allowance for the fact that this situation, too, is likely to worsen; see Munchau’s piece.) So does European monetary policy. When the euro was proposed, we worried about one-size-fits-all monetary policy. But the reality is worse: it’s one-size-fits-one."

LG: "A bet on iPhone 4 today may be a vote for the best phone of today. But a bet on Android is a bet on the future. I am betting on an ecosystem and an application environment that encourages best of breed developers to move their product to a growing population of smartphones, and I expect to reap the benefits. I have the utmost respect for Steve Jobs, Apple and all the work Cupertino has done to make my family's lives better, but I think the baton has been passed. I won't be hanging around hoping they will get reinvigorated, to win on their own against a flotilla of partners on the opposing side. Our family is on the side that is going to win the next five years of mobile."

JB: "Aanyone who thinks she has it locked up is nuts, and anyone who thinks that there's zero possibility of her winning is also nuts. But that does raise the question: what can we know now? What should we ignore? And by the way, how does the nomination process work, anyhow?... [S]he's doing the things now that a presidential candidate in her position would do.... If party leaders don't want Palin -- and I think they'd be nuts to want her, but that doesn't mean they won't -- then they'll have little trouble keeping the nomination from her. The best recent example of this was the fate of Mike Huckabee in 2008, but another reasonable example is Dan Quayle's failed bid for the 2000 nomination.... [P]ay attention to reporters and pundits who seem to know what they're talking about when it comes to the Republican party network, and less attention to those who think they know what's in Sarah Palin's head."

AF: "[Newsweek's writers and editors] have released themselves from the obligation of giving readers what readers came to them for: that straightforward and comprehensive account of what just happened. Of course, it is now an article of faith in the magazine business that readers don’t want this at all. Immersed as they are in round-the-clock cable TV and websites, they don’t need a rehash of events a week old.... [T]he presumption that the desires and tastes of journalists are identical to those of their customers is one of the many mistakes that brought Meacham and his colleagues to their present pickle. Meanwhile, the most successful weekly magazine in the English-speaking world is the Economist, and one of the most successful magazine start-ups of the recent past has been the Week. Both offer readers, among much else, a rehash of the past week’s events. Donald Graham might want to give them a second look."

PK: "Not to worry, said Mr. Bernanke: the Fed had the tools required to head off an American version of the Japan syndrome, and it would use them if necessary. Today, Mr. Bernanke is the Fed’s chairman — and his 2002 speech reads like famous last words. We aren’t literally suffering deflation (yet). But inflation is far below the Fed’s preferred rate of 1.7 to 2 percent, and trending steadily lower; it’s a good bet that by some measures we’ll be seeing deflation by sometime next year. Meanwhile, we already have painfully slow growth, very high joblessness, and intractable financial problems. And what is the Fed’s response? It’s debating — with ponderous slowness — whether maybe, possibly, it should consider trying to do something about the situation, one of these days."

TNC: "My own feelings about the case are complicated. It's very difficult, given the legal standard, for me to believe that Oscar Grant was murdered. Moreover, I've long been unclear on the good of... punitive justice... [not just] because it tends to adversely effect people who look like me.... To make it plain, I understand the good of never allowing Johannes Mehserle to have the power of State-sanctioned lethal force. I don't understand the good of putting him in a box.... To me, this killing is part of something more systemic. It's about a desire to tolerate everything from the death of a suspect in the custody of correctional officers, to the execution of an innocent man to save us against the terrible, but still unlikely, threat of violent crime. Putting Mehserle away for some years taps out at the cathartic. I'm much more interested in living in a country where the police don't arrest you in your own home for rudeness."

A bushel is...1.244 cubic feet... 32 quarts in a bushel.. corn (shelled) – 56 lbs. at 15.5% moisture, soybean – 60 lbs. at 13% moisture, oats – 32 lbs. at 14% moisture, wheat – 60 lbs. at 13.5% moisture, and barley – 48 lbs. at 14.5% moisture...

TD: "Yesterday's Washington Post article suggesting the Fed was moving closer to additional policy action left me somewhat puzzled. It left out a critical piece. What is the threshold for additional action? Particularly any action of significance? Recent Fedspeak suggests the threshold is pretty high - financial crisis high. Otherwise, any action is likely to be more window dressing than anything else."