Understanding The “Sectoral Problem” In Business Cycles: A Note

by Mario Rizzo   There has been some important discussion emanating from Paul Krugman’s unoriginal question implicitly about the Austrian Business Cycle Theory (as well as other sectoral theories of employment shifts both during and outside of business cycles). (See Econbrowser, Marginal Revolution, Econlog, Angry Bear, for examples.)    His question, as Tyler Cowen states it: “…[W]hy, … Continue reading Understanding The “Sectoral Problem” In Business Cycles: A Note

The Great Moderation In Macroeconomics

by Mario Rizzo   I have now read both Paul Krugman’s New York Times essay on the state of macroeconomics and John Cochrane’s reply. They are each, in very different ways, quite disappointing. The level of argument is poor, the prejudices are simplistic, and the tones are annoying.   Beginning with tones: Krugman is too dismissive of … Continue reading The Great Moderation In Macroeconomics

What Is The Mechanism? Or Is It Just A Miracle?

by Mario Rizzo   In Sunday’s New York Times, Paul Krugman says:   “From the beginning, I argued that the American Recovery and Reinvestment Act, a k a the Obama stimulus plan, was too small. Nonetheless, reasonable estimates suggest that around a million more Americans are working now than would have been employed without that plan — … Continue reading What Is The Mechanism? Or Is It Just A Miracle?

DE HAUT EN BAS: Niall Ferguson, Paul Krugman and John Maynard Keynes

by Mario Rizzo   Recently Niall Ferguson wrote an interesting op-ed piece for the Financial Times about a debate of sorts he has been having with Paul Krugman on the spike in long-term interest rates and its relation to the large debt the U.S. Treasury must finance.   In the course of that article Ferguson described Krugman’s … Continue reading DE HAUT EN BAS: Niall Ferguson, Paul Krugman and John Maynard Keynes

Paul Krugman: Ipse Dixit

by Mario Rizzo   Under other circumstances, Paul Krugman would have made an excellent pope if we judge by his economics pronouncements. Let me take two examples from a recent New York Times column. This is my interpretation of what he is saying.   1. On the one hand, as Keynesians have always taught: There is no … Continue reading Paul Krugman: Ipse Dixit

Relative Prices Matter At All Times

by Mario Rizzo Paul Krugman has written a column stating that wage cuts at this time are a bad idea. Following Keynes he claims that nominal cuts will do no good – they will not stimulate employment (or prevent unemployment) – because aggregate demand will fall. Real wages will thus remain unchanged.   In part, Keynes … Continue reading Relative Prices Matter At All Times

Do Something, Now!

by Young Back Choi Paul Krugman complains the centrist US Senators’ attempt to whittle down the House stimulus plan by some $80 billion “eliminates hundreds of American jobs, deprives millions of adequate health care and nutrition, [and] undermines schools….” If not more government spending is eliminating jobs and depriving people of goods, then, obviously, the … Continue reading Do Something, Now!