Mark Thoma: Economist's View: 'The Beginning of the End for Eurozone Austerity?' | Noah Smith on Stephen Keen | Ezra Klein: The cost curve is bending. Does Obamacare deserve the credit? | Rebecca Theiss: Social Security’s challenges continue to be modest and manageable |
Austin Frakt: Medicare Advantage Spillovers: "Katherine Baicker, Michael Chernew, and Jacob Robbins estimate the extent to which Medicare Advantage (MA) induces changes in other parts of the health care market…. It’s unlikely that additional MA payments are fully offset by spillovers [improving efficiency in the system as a whole]. Prior TIE coverage… explains why you can’t keep raising MA payments forever and expect large spillovers…. At some point all the practice pattern changes have been wrung out of the system and there’s no more spillover juice left. Where’s the threshold? I don’t know. Nobody does…. The paper itself also has a nice discussion of spillover mechanisms."
Kevin Drum: Internal Polling Proves It: That First Debate Was a Disaster For Obama: "As you may recall, last year Obama's poll numbers fell off a cliff after his first debate performance…. Today, Josh Green gets his hands on internal Obama campaign polling that shows just how dramatic the drop was. The Obama organization surveyed 10,000 people per night in swing states, so their polling was far more accurate than the smaller tracking polls of outfits like Gallup. There are four main turning points: (1) Romney's selection of Paul Ryan as his running mate (or perhaps something else around the same time) produced a monthlong slide in Obama's numbers, capped by a small but sharp drop during the Republican convention. (2) The Democratic convention produced a sharp uptick. (3) The 47 percent video produced a sharp uptick. (4) The first debate was a disaster, wiping out nearly all the gains from the convention and the video. In the end, though, what you see is a lot of regression to the mean:"
Robert Shiller: Austerity and Demoralization: "The high unemployment that we have today in Europe, the United States, and elsewhere is a tragedy… aggregate output loss… personal and emotional cost to the unemployed of not being a part of working society…. Austerity, according to some of its promoters, is supposed to improve morale… the kind of fiscal austerity that is being practiced now has the immediate effect of rendering people jobless and filling their lives with nothing but a sense of rejection and exclusion…. Sudden austerity cannot be a morale builder…. We need fiscal stimulus – ideally, the debt-friendly stimulus that raises taxes and expenditures equally…. But, if tax increases are not politically expedient, policymakers should proceed with old-fashioned deficit spending. The important thing is to achieve any fiscal stimulus that boosts job creation and puts the unemployed back to work."
Paul Krugman: Procyclical Policy for Germany: "From the point of the euro area as a whole, fiscal policy has been dramatically and destructively 'procyclical'…. The peripheral countries don’t have room for stimulus (although I think you can argue that they have room for reduced austerity). This means that any attempt to make European fiscal policy less contractionary has to involve expansion in the core, mainly Germany. R&R are opposed to any such move, however, because 'for Germany, which can afford it, fiscal expansion would be procyclical'…. And they call for expansionary monetary policy instead. OK, this baffles me…. What, exactly, does it mean to call for expansionary monetary policy by the ECB?… Second… if we’re against policies that are procyclical for Germany, what on earth do R&R imagine a more expansionary monetary policy (however achieved) does?… Finally, aren’t policies that are procyclical for Germany, and raise inflation there, the whole point of the exercise? We have a competitiveness gap between the periphery and the core that must be closed through some combination of falling wages in Portugal, Spain, etc. and rising wages in Germany. The idea is to shift the balance of that adjustment somewhat away from the deflationary countries — overheating in Germany isn’t a bug, it’s a feature…. I get that they’re against fiscal expansion anywhere in Europe despite the continent’s clearly too-tight overall fiscal policy, but I don’t understand why."
Paul Krugman: Debt and Growth: "There are really three points… any one of those points is enough to refute most of the debt/deficit discussion of the past three years. (1) There is no threshold at 90 percent, even though that claim has dominated a lot of policy discussion…. (2) There is a mild negative correlation between debt and growth… not… strong enough correlation to justify the debt panic of recent years. Brad DeLong’s version: 'as best as I can tell we are talking that an increase in debt from 50% of a year’s GDP to 150% is associated with a reduction in growth rates of 0.1%/year over the subsequent five years…' (3) There is pretty good evidence that the relationship is not, in fact, causal, that low growth mainly causes high debt rather than the other way around. We’ve spent three years letting policy be dominated by unwarranted fears."