Monthly Archives: February 2009

Romer on the Stimulus

The success of the stimulus package hinges on the multiplier effect of the increase in government spending. In a talk at the University of Chicago, CEA chair Christina Romer defended her estimate of the multiplier as well as more general criticism of the package.

Whose Moment is This?

It seems to have become somewhat of a contest among pundits, politicians, and economists to name the most relevant economist for the current crisis. Here are the latest:

  • Greg Ransom points out that Sears Chairman Eddie Lampert is recommending that shareholders read Hayek.
  • A recent Bloomberg article opens, “So long, Milton Friedman. Hello, James Tobin.”


  • I highly recommend Tom Keene’s interview with Marvin Goodfriend. Keene, as always, asks the right questions.
  • You can see Robert Skidelsky’s speech to the Manhattan Institute on Keynes and Hayek this weekend on C-SPAN’s Book TV. I haven’t yet seen the speech, but Skidelsky is always fun to listen to.

What I’m Reading

1. Mario Rizzo presents a more nuanced version of Keynes with respect to fiscal stimulus.

2. The Money Illusion — an interesting new blog from Scott Sumner. I would note that his posts on the current crisis and the refutation of the Austrian business cycle theory by Friedman and Schwartz are particularly interesting (I happen to disagree with his conclusions, but they are interesting nonetheless).

3. The Theory of Money by Jurg Niehans — a classic.

4. Great Depressions of the Twentieth Century edited by Kehoe and Prescott.

Leijonhufvud on the Financial Crisis

Axel Leijonhufvud has written an excellent policy paper for CEPR. Some highlights after the jump.

Continue reading

Industrial Production

A disturbing graph via Casey Mulligan.

Recommended Reading

1. “Demand for Commodities Is Not Demand for Labor” — Peter Klein

2. “The False Alarm of 2008 Continues” — Casey Mulligan

3. Mario Rizzo asks how we will be able to judge the success of stimulus ex post.

4. Will Ambrosini on technical regress (or, in other words, understanding what negative technology shocks in real business cycles really mean).