Paul Krugman Is Shrill: John Taylor Does Not Appear to Know What He Is Talking About
Paul Krugman:
What's Behind Low Investment?: John Taylor... show[s] a striking correlation between investment and unemployment... [and] leaps from that correlation to saying that what we need for economic recovery is to “lighten up on the anti-business sentiment coming out of Washington,” I wonder what is going on in his head....
[The] plunge in fixed investment since 2006... [is] the housing bust! Yes, business investment is... no lower than you might expect given the depressed state of the economy.... What the data actually say is that we had a catastrophic housing bust and consumer pullback, and that businesses have, predictably, cut back on investment in the face of excess capacity. The rest is just politically motivated mythology.
