Jonathan Portes: We're nowhere near knowing what quantitative easing does: "There’s certainly no consensus in academia, policymaking circles or among commentators over how the financial crisis arose, what the responses should be and what the consequences are for economics. I’m not a historian of economic thought but I would assume that if you went back to 1929 the situation was very similar…. The Great Moderation was effectively a period – from a policymaking point of view – where people thought macroeconomics was dead. The received wisdom was that macroeconomics was over as a policymaking problem and hence academic macroeconomics wandered off into areas that had almost nothing to do with policy…. Now, however, there are quite fundamental debates going on for example about what do we think the consequences of deleveraging will be on demand, what channels that could work through and what policies can be undertaken to counter it. Within these you have big differences of opinion with some people arguing that QE is completely ineffective and that monetary policy is impotent, while other people believe that monetary policy just hasn’t been tried hard enough…. I tend to regard fiscal policy as the conservative side of macroeconomic policy management because we do sort of know how to calibrate it. This is why I find the Financial Times editorial line completely bizarre as for a some time now they have argued that we should take the “helicopter money” idea seriously while supporting the government’s fiscal plans on the grounds of credibility. It seems to me the idea that you risk the government’s credibility by borrowing an extra couple of percent of GDP for investment but there would be no risk to credibility by doing something which nobody in modern times in an advanced developed country has ever tried and that is generally considered to be last ditch strategy is an odd conclusion."
Paul Krugman: Density: }America is a vast, thinly populated country… fewer than 90 people per square mile, [but] the average American lives in a… neighborhood with more than 5000 people per square mile. The next time someone talks about small towns as the “real America”, bear in mind that the real real America — the America in which most Americans live — looks more or less like metropolitan Baltimore…. US population and hence the population density rose about 10 percent over the course of the naughties, the average American was living in a somewhat less dense neighborhood in 2010 than in 2000, as population spread out within metropolitan areas. If you like, we’re becoming a bit less a nation of Bostons and a bit more a nation of Houstons. This is, I think, a picture of urban geography in which the link between overall rising population and land prices is likely to be diffuse at best. So I think I call this one for Smith — although McBride’s point that actual real housing prices do seem to have an upward trend remains important, and needs explaining."
Lucian A. Bebchuk: The Myth that Insulating Boards Serves Long-Term Value | Zsolt Darvas et al.: Europe's growth problem (and what to do about it) | Stadtholder | M Ayhan Kose, Prakash Loungani, and Marco E Terrones: Why is this global recovery different? | Jim Farmelant: The Strange Case of Dr. Hayek and Mr. Hayek | Jean-Pierre Landau: Macroprudential rebalancing | Tylenol May Reduce Fear Linked to Existential Uncertainty | Scott Lemieux: The Catastrophe of Mass Unemployment |
Barry Ritholtz: What Are Gold’s Fundamentals ?: "History shows Gold trades differently than equities. Why? It comes back to those fundamentals. It has none…. It has no true intrinsic value, no cash flow, no earnings, no coupon. no yield. What people call fundamentals are nothing more than broad macro analysis (and how have your macro funds done lately?). Gold is the ultimate greater fool trade, with many of its owners part of a collective belief theory rife with cognitive errors and bias. I do not want to engage in Goldenfreude — the delight in gold bugs’ collective pain — but I am compelled to point out how basic flaws in their belief system has led them to this place where they are today."
Noah Smith: What if all those times really were different?: "In particular, the notion that 90% is some kind of special threshold - which Reinhart and Rogoff have repeated time and again when making the public case for austerity - appears to lack material support, but RR's email response repeats the 90% level but doesn't really address its disappearance in HAP's results…. RR appear to be doing everything they can to imply that correlation = causation, while never seriously addressing the possibility that it might not. But actually, this post is not about that dispute…. 'Similar symptoms, disparate causes.' When evaluating the history of financial crises, we should constantly keep this phrase in mind. This is the alternative hypothesis; maybe each time is different. Proving a common cause, or even a common structure, requires more than simply tabulating lists of similarities. Now a disclaimer: I strongly suspect that RR are onto something, and that certain causal features of financial crises really do crop up again and again across time and space. But I think that books like This Time Is Different are merely jumping-off points for an investigation of that hypothesis; they do not constitute any kind of proof. Naturalism is where understanding of the world begins, but not where it ends."