Olivier Blanchard: Rethinking Macroeconomic Policy
The Great Inflation of the 2010s: Hoisted from Niall Ferguson's Archives from Two Years Ago

Noted for April 30, 2013

  • Gerald Silverberg: Meltdown Economics & Other Complex Catastrophes: Reinhart-Rogoff vs. New Zealand 1951 Topsy-Turvy (historical-statistical nitty-gritty and postmodernist nightmare): I've calculated New Zealand real GDP growth rates for the period 1946-1951 based on three data series available from Statistics New Zealand…. None of these series corresponds to the data employed by Reinhart and Rogoff, although the Maddison data comes closest. Moreover, the three series are wildly inconsistent…. If RR had used the Statistics NZ  value of +15,60% for 1951 instead of the -7.6% one they did use, they would have obtained the exact opposite conclusion - that countries with debt ratios over 90% had significantly higher growth rates than lower indebted countries! That is the danger one runs by basing such a far-reaching conclusion on just one observation of the most minor country in the database. In any event, the gyrations in NZ's postwar growth experience had nothing whatsoever to do with its indebtedness but were rather driven by unprecedented industrial disputes and the Korean War wool export boom. Now some nitty-gritty on the 1951 NZ waterfront lockout/strike: (1) The waterfront dispute did not entirely close the ports. (2) After locking out the waterside union workers, the government declared a state of emergency and used military troops to reestablish some measure of port activity (as well as in the coal mines). (3) While it was the longest NZ industrial dispute, it was not the most violent one. That was the Great Strike of 1913. (4) Support strikes were staged by coal miners, railroad and hydroelectric workers, frozen meat processors and in other sectors amounting to some 22,000 workers during much of the 151 day dispute. The government ultimately achieved its primary goal in provoking the dispute - the destruction of the waterside union, which had separated from the main labor federation, by branding them communists and blacklisting their leadership and activists."

  • Aaron Carroll: The best ad for health services research in some time: "Ezra Klein has a longform piece out on a care model in Pennsylvania, not too far from where I grew up, that is using nurses to manage Medicare patients better. There’s no new science. There’s no new medicine. It’s health services work – reorganizing the way we care for patients – and it’s making a huge difference in terms of quality and costs. Medicare is about to shut it down. Here’s why: 'Brenner puts it more vividly. “There is a bias in medicine against talking to people and for cutting, scanning and chopping into them. If this was a pill or or a machine with these results it would be front-page news in the Wall Street Journal. If we could get these results for your grandmother, you’d say, ‘Of course I want that.’ But then you’d say, what are the risks? Does she need to have chemotherapy? Does she need to be put in a scanner? Is it a surgery? And you’d say, no, you just have to have a nurse come visit her every week.”' That’s the problem with health services research in a nutshell. When I tell people that we get results from talking to people, from getting the pieces of the system better coordinated, by advising physicians better, just by improving communication – then their eyes glaze over. They don’t see it as 'real' research, or 'real' care. It’s soft. But it works."

Lawrence H. Summers | Alison Galbraith: Financial burdens in the health exchanges | Gillian Tett: Markets Insight: US mortgage market depends on state support | Jon Ronson: Amber Waves of Green: The Surprising Truths About Income Inequality in America | Noah Smith: Noahpinion: Book Review: The Occupy Handbook | Mike Konczal: What Does the New Community Reinvestment Act (CRA) Paper Tell Us? | Barry Eichengreen and Douglas Irwin (2009): The protectionist temptation: Lessons from the Great Depression for today | Spies of Warsaw: Season 1, Episode 1 |

  • Simon Wren-Lewis: mainly macro: Why Inflation is not falling: "There has been considerable interest in the recent IMF study that found that the responsiveness of inflation to the output gap (or equivalent measure) falls at low levels of inflation. But if the econometrics is right (and Nick Rowe has some cautionary tales here), what is the explanation?…. One standard… is based on the menu cost model of price inertia…. Another quite plausible story which has solid empirical backing is that workers particularly resist nominal wage cuts…. The story I want to tell involves firms’ pricing behaviour, and the role of more risk averse banks. Suppose a firm sees demand for its output fall. Its profits are lower, but it calculates that it can reduce that decline in profits by cutting its price, if that price cut increases demand…. In normal times firms would be prepared to take those risks, either because the risks are symmetric (maybe demand will increase by more than expected), or because they represent an investment with a positive eventual payoff (as customers switch products)…. However, since the financial crisis, the firm may have noticed that the behaviour of its bank has changed. It refused the business down the road any credit, even though by all accounts its difficulties were clearly temporary…. The idea is that the aftermath of the financial crisis, by raising the risk of bankruptcy associated with short term losses, has lead to greater price rigidity."