Posts Noted 2011 March 31

Blog posts noted on 31 March 2011. Most are comments on John Taylor's post highlighted by Greg Mankiw which was noted yesterday.

• Pincus re-presented ponders how:

Pincus marshalls his evidence to tell a significantly different story from the received one. And as an academic work, it is highly readable and logical. But it is from beginning to end a complex canvas, and it is difficult for a non-specialist reader to keep it all in mind. How might an author -- or a producer -- more fully engage the reader's historical imagination in these complex events? How might the material be presented in a way that gives the reader a more comprehensive apprehension of this history of the English Revolution?

• Debt: The first five thousand years is introduced as:

Throughout its 5000 year history, debt has always involved institutions – whether Mesopotamian sacred kingship, Mosaic jubilees, Sharia or Canon Law – that place controls on debt's potentially catastrophic social consequences. It is only in the current era, writes anthropologist David Graeber, that we have begun to see the creation of the first effective planetary administrative system largely in order to protect the interests of creditors.

• Paul Krugman notes in What’s Behind Low Investment? that:

What the data actually say is that we had a catastrophic housing bust and consumer pullback, and that businesses have, predictably, cut back on investment in the face of excess capacity. The rest is just politically motivated mythology.

• Paul Krugman notes in More on Unemployment and Investment that:

Investment is low as a share of GDP; well, that’s no surprise given how depressed the economy is. And if anything investment is a bit stronger than you might have expected from past behavior.

• Noahpinion says that John Taylor draws a Phillips Curve:

To reiterate, Taylor's graph is perfectly consistent with a world in which demand shocks drive the business cycle and demand-side policy is the key to stabilizing investment. His supply-side conclusions are purely a function of his assumption that we live in an RBC-type world. But there are good reasons to think he's wrong. For an argument as to why New Keynesian models are better than RBC models, see this 1989 paper by...Greg Mankiw.

• Mark Thoma points to some more remarks about About That Striking Graph from John Taylor including Paul Krugman's one listed above.

I still think that the time span is important: 1990 to the present. It was during this time that housing became a commodity. Thus, housing should now be included in the overall investment cycle.