Evening Must-Read: Marco Del Negro et al.: Inflation in the Great Recession and New Keynesian Models
Evening Must-Read: Nick Rowe: Siimple Arithmetic for John Taylor's Mistaken Legislated Rule

Noted for Your Evening Procrastination for July 13, 2014

Over at Equitable Growth--The Equitablog




  1. Kevin Drum: Economic Growth Looks Pretty Grim These Days: "The glass-half-full view is: Whew! That huge GDP drop in Q1 really was a bit of a blip, not an omen of a coming recession. The economy isn't setting records or anything, but it's back on track. The glass-half-empty view is: Yikes! If the dismal Q1 number had really been a blip, perhaps caused by bad weather, we'd expect to see makeup growth in Q2. But we're seeing nothing of the sort. We lost a huge chunk of productive capacity in Q1 and apparently we're not getting it back.... I am, by nature, a glass-half-empty kind of person, so feel free to write off my pessimism about this. Nonetheless, the GHE view sure seems like the right one to me. It's just horrible news..."

  2. Noam Scheiber: Hillary Clinton's Inequality Rhetoric Is Weak: "One of the lines I tripped over during Hillary Clinton’s riff on income inequality last week was her contention that 'we have to have a.... consensus on how to deal with this'.... The challenge Clinton faces in channeling the current populist mood without alienating her longtime Wall Street benefactors.... A nugget that brought that 'consensus' line immediately back to mind... 'We’re all in this mess together', the mess being taxes, financial regulation, and economic growth.... This is apparently how Clinton frames the discussion these days. It is, to say the least, discouraging. The only other time I’ve heard people use words like 'consensus' and 'in this together' during conversations about financial regulation was while talking to Wall Street executives.... Has Hillary picked up this line because she’s spent too much time in the company of well-heeled corporate types?..."

  3. Cosma Shalizi: A Statement from the Editorial Board of the Journal of Evidence-Based Haruspicy: "Attention conservation notice: Leaden academic sarcasm about methodology. The following statement was adopted unanimously by the editorial board of the journal, and reproduced here in full: "We wish to endorse, in its entirety and without reservation, the recent essay 'On the Emptiness of Failed Replications' by Jason Mitchell. In Prof. Mitchell's field, scientists attempt to detect subtle patterns of association between faint environmental cues and measured behaviors, or to relate remote proxies for neural activity to differences in stimuli or psychological constructs. We are entirely persuaded by his arguments that the experimental procedures needed in these fields are so delicate and so tacit that failures to replicate published findings must indicate incompetence on the part of the replicators, rather than the original report being due to improper experimental technique or statistical fluctuations. While the specific obstacles to transmitting experimental procedures for social priming or functional magnetic resonance imaging are not the same as those for reading the future from the conformation and coloration of the liver of a sacrificed sheep, goat, or other bovid, we see no reason why Prof. Mitchell's arguments are not at least as applicable to the latter as to the former. Instructions to referees for JEBH will accordingly be modified to enjoin them to treat reports of failures to replicate published findings as 'without scientific value', starting immediately. We hope by these means to ensure that the field of haruspicy, and perhaps even all of the mantic sciences, is spared the painful and unprofitable controversies over replication which have so distracted our colleagues in psychology.' Questions about this policy should be directed to the editors; I'm just the messenger here..."

Should Be Aware of:


  1. Sandy B.: Singularities in the rearview mirror: "And the future is not evenly distributed even in a single place; Trevor Noah [South African comedian, funny, daywalker] was talking about the first escalator in , I think, Mozambique; it was in a mall. People lined up to ride it. And when their friends rode it, they took videos. On their iPhones. And posted them to Facebook..."

  2. Mistermix: We Are So Out of Touch: "My wife dropped her iPhone 5 and the screen shattered.... Using only my unfettered free will, and Google, I was able to find a replacement screen assembly for $80. I’ve worked on a lot of computers over the years, including fixing a laptop or two, but mein Gott are the parts inside that phone tiny. Through the intercession of Baby Jesus, and Google, I fortunately purchased an assembly that included a lilliputian tool set, and man did I need it.... I only had to remove a total of 5 interior screws to do this repair because the Middle Way taught by Gautama Buddha, and Google, led me to a screen assembly rather than a screen, which means that it included the home button, camera and earpiece already attached.... Now I realize that over at Foxconn, the workers probably have a better set of tools and a magnifying lamp, but I was about to have suicide nets installed around my house by the time I got those fucking screws in and out during the three tries it took to get this repair right.... I cannot imagine a life spent working 12 or 16 hour days putting these devices together."

  3. Prarie Weather: The underclasses: blacks, hispanics, women, and all young voters: "'Millennials' are now well aware that the suppress-the-vote efforts of the Republican party include them.  One Gen Y-er writes in the Washington Post: 'For a time, the targeted populations were primarily racial, ethnic and income groups that traditionally vote Democratic. Now they happen to include Gen-Y’ers, more specifically my college-age brethren.... Our generation’s motley, liberal-to-libertarian-leaning ideological preferences still threaten red-state leadership. In response, Republicans have set out to erect creative, if potentially unconstitutional, Tough-Mudder-style obstacle courses along our path to the polls...' Catherine Rampell... enumerates the heavy-handed efforts of Republican operators... to keep ... American voters from actually voting. It's not that the voting rates for millennials is especially high.  It's that Republicans are desperate... [and] back on controlling access to the ballot box."

Already-Noted Must-Reads:

  1. Steve Randy Waldmann: : Depression is a choice: "I enjoyed Matt Yglesias’ suggestion that depressions are merely a technical problem that will go away once the obsolescence of cash eliminates the zero lower bound on interest rates, and Ryan Avent’s rejoinder.... Avent has the better of the argument when he characterizes our current policy impotence as reflecting behavioral rather than technical constraints. We don’t lack for technical means to counter people’s self-defeating impulse to hoard cash and safe financial assets. On the contrary, we have a whole cornucopia of options!... Squabbling... between market monetarists and post-Keynesians and mainstream saltwater economists is an argument over which of many... options would most perfectly address address this not-really-challenging problem.... We are in a depression because it is our revealed preference, as a polity, not to remedy the problem. We are choosing continued depression because we prefer it to the alternatives.... The preferences of developed, aging polities... are obvious.... Their overwhelming priority is to protect the purchasing power of incumbent creditors. That’s it. That’s everything. All other considerations are secondary.... I am often told that this is absurd because, after all, wouldn’t creditors be better off in a booming economy than in a depressed one?... The revealed preference of the polity is to resist losses for incumbent creditors much more than it is to seek gains.... The policies that might engender a boom are not guaranteed to succeed.... The polity prefers inaction to bearing this risk..."

  2. Swa wages Figure 4N College wage premium by gender 1973 2011 State of Working AmericaState of Working America: Figure 4N | College wage premium, by gender, 1973–2011

  3. Paul Krugman: Liquidationism in the 21st Century: "The BIS position has basically been the same as that of 1930s liquidationists like Schumpeter, who warned against any 'artificial stimulus' that might leave the 'work of depressions undone'. And in 2010-2011 it had an intellectually coherent--actually wrong, but coherent--story underlying that position... that mass unemployment was the result of structural mismatch.... It therefore claimed that easy money would lead to a rapid rise in inflation, despite the high level of unemployment. But it didn’t happen. So... it... look[ed] for new justifications for the same [policy] prescriptions... playing up the supposed damage low rates do to financial stability....
    "That over-indebtedness on the part of part of the private sector is exerting a persistent drag on the economy... is a reasonable story.... But the BIS either doesn’t understand that model’... as if they were equivalent to... real structural problems... a good reason to accept a protracted period of high unemployment as somehow natural, and to reject artificial stimulus.... That, however--as Irving Fisher could have told them!--is not at all the correct implication to draw from a balance-sheet view.... The balance-sheet view... makes a compelling case for... fiscal deficits to support demand while the private sector gets its balance sheets in order, for monetary policy to support the fiscal policy, for a rise in inflation targets both to encourage whoever isn’t debt-constrained to spend more and to erode the real value of the debt.
    "The BIS, however, wants governments as well as households to retrench... and--in a clear sign that it isn’t being coherent--it includes a box declaring that deflation isn’t so bad, after all. Irving Fisher wept.... Are the BIS’s methods unsound? I don’t see any method at all. Instead, I see an attitude, looking for justification..."

  4. Marco Del Negro et al.: Inflation in the Great Recession and New Keynesian Models: "It has been argued that existing DSGE models cannot properly account for the evolution of key macroeconomic variables during and following the recent great recession. We challenge this argument by showing that a standard DSGE model with financial frictions available prior to the recent crisis successfully predicts a sharp contraction in economic activity along with a modest and protracted decline in inflation following the rise in financial stress in the fourth quarter of 2008. The model does so even though inflation remains very dependent on the evolution of economic activity and of monetary policy..."