What Does Cutting-Edge Macroeconomics Tell Us About Economic Policy for the Recovery

10/21/10 10:45 AMWhat Does Cutting-Edge Macroeconomics Tell Us About Economic Policy for the Recovery? - Grasping Reality with Both Hands

Page 1 of 12http://delong.typepad.com/sdj/2010/10/what-does-cutting-edge-macroeconomics-tell-us-about-economic-policy-for-the-recovery.html

Grasping Reality with Both HandsThe Semi-Daily Journal of Economist J. Bradford DeLong: Fair, Balanced, Reality-Based, and Even-HandedDepartment of Economics, U.C. Berkeley #3880, Berkeley, CA 94720-3880; 925 7080467; [email protected].

Economics 210aWeblog ArchivesDeLong Hot on GoogleDeLong Hot on Google BlogsearchOctober 08, 2010

What Does Cutting-Edge Macroeconomics Tell Us About

Economic Policy for the Recovery?

Let us start with one of the firsteconomists, Jean-Baptiste Say.

Say wanted to be a technocrat, andwas well on the way—specialassistant to Girondist Party FinanceMinister Etienne Claviere in theearly days of the first FrenchRepublic. His patron was fired,purged, arrested, imprisoned,probably tortured, sentenced to theguillotine, which he cheated bycommitting suicide the day beforehis scheduled execution.

Say somehow managed to escape the wreck of the Gironde—not just with his life butwith his liberty and property as well. Thereafter it was clear to him that civil service lifewas too risky. Being a public intellectual—that was the ticket. So Say turned to writingtreatises on political economy instead.

Say, in the early and middle stages of his career, was certain that the kind of "generalglut" we are now undergoing--a generalized deficiency or demand for pretty muchevery kind of good and service and labor, generalized high unemployment and excesscapacity across the board--was inconceivable. After all, Say wrote, people make only ifthey planned to use themselves or to sell. People sell only if they plan to buy. Supplythus creates not exactly its own but an equal amount of planned demand. There could

Dashboard Blog Stats Edit Post

10/21/10 10:45 AMWhat Does Cutting-Edge Macroeconomics Tell Us About Economic Policy for the Recovery? - Grasping Reality with Both Hands

Page 2 of 12http://delong.typepad.com/sdj/2010/10/what-does-cutting-edge-macroeconomics-tell-us-about-economic-policy-for-the-recovery.html

be no gap between the aggregate value of what people made and what they planned tobuy.

Now this did not, Say stressed, mean that unemployment could not be elevated.Suppliers could guess wrong about where the demand would be. I have a standardexample I use for my Berkeley classes. Employers hire and pay a lot of baristas tomake half-caf double lattes made half skinny and half with half-and-half. But whatconsumers want are yoga lessons. They seek inner peace rather than the adrenalinerush of caffeination.

In such a situation there will be deficient demand for double lattes and excess demandfor yoga lessons. Baristas will be fired and collect unemployment insurance. Prices ofyoga lessons and wages in the fitness sector will boom. The market will deal with it.There is a lot of money to be made by figuring out how to retrain baristas as yogainstructors. There are big profits from redeploying labor from the slack-demand foodservice to the high-demand fitness industry.

And in such a situation having the government intervene will only muck things up. Ifthe government enacts a stimulus program and taxes and borrows to spend money onpublic purchase and provision of red-eye lattes— well, then:

1. We make a lot of coffee that nobody wants to drink.

2. We retard the process of retraining baristas so that they can demonstrate how toproperly perform the yoga posture of the downward-facing dog.

3. We run the risk of inducing a general collapse of confidence in the marketeconomy: people will begin to wonder what politician is ever going to raise taxesto pay off rising government debt, and productivity will fall as people seek to guardthemselves against their rising fears of future disruptions of the monetaryeconomy that enables our highly-productive advanced societal division of labor.

That is the 1803-vintage argument of Jean-Baptiste Say.

That is is what I take to be the guts of Niall Ferguson's read on today's economicproblems. They are, he thinks, in essence structural and not cyclical. They are not to bealleviated but rather deepened and complicated by government attempts to solve them.Public spending putting people or artificially inducing private employers to put peopleto work will backfire.

I, by contrast, take my stand with John Stuart Mill's 1829 critique of Jean-Baptiste Say(1803).

Mill pointed out that people in the aggregate can and do spend less than they earn oncurrently-produced goods and services. They do so whenever they are unhappy withand seek to build up their net holdings of financial assets. Then you do have a generalglut--an excess supply of pretty much every kind of currently-produced good andservice and of currently-employed labor.

It happens whenever you have a substantial excess demand for financial assets.

Historically, we have seen general gluts caused by three kinds of excess demands forfinancial assets. We have seen monetarist depressions caused by a shortage relative todemand of liquid cash money. We have seen Keynesian depressions caused by ashortage relative to demand of bonds--of savings vehicles to carry wealth through timeso that you can spend it in the future. And we have our current situation, which looksto be a shortage not of money or of bonds so much as a shortage relative to demand ofsafe AAA high-quality assets--a financial excess demand for safety, for placed you can

10/21/10 10:45 AMWhat Does Cutting-Edge Macroeconomics Tell Us About Economic Policy for the Recovery? - Grasping Reality with Both Hands

Page 3 of 12http://delong.typepad.com/sdj/2010/10/what-does-cutting-edge-macroeconomics-tell-us-about-economic-policy-for-the-recovery.html

park your wealth and be confident it will not melt away while your back is turned.

We know how to cure monetarist downturns through standard open-marketoperations: have the central bank buy short-term government bonds for cash, thusincreasing the stock of liquid cash money. That strategic intervention in financialmarkets eliminates the excess demand for money and as a consequence eliminates thedeficiency in demand for currently-produced goods and services and currently-employed labor as well.

We know how to cure Keynesian downturns: induce households to save less and sodemand fewer bonds or induce businesses or the government to issue more bonds.Those strategic interventions in financial markets eliminate the excess demand formoney and as a consequence eliminate the deficiency in demand for currently-produced goods and services and currently-employed labor as well.

Now neither if those is likely to work terribly well if the financial excess demand is notfor money or for bonds but for safety. Open-market operations that swap onegovernment liability for another, private issues of risky bonds, issue of risky bonds bygovernments with shaky credit, or reductions in household saving that do not reducedesired holdings of safe assets leave the excess demand for safety unmet and thedeficient demand for currently-produced goods and services and currently-employedlabor unrelieved.

In a Minskyite downturn like the current one, the only cure is what Economist editorWalter Bagehot set out in 1868.

The government must lend freely.

It must meet the demand for safe assets by--as long and as much as it can--expandingthe supply of financial assets that the market perceives as safe. Quantitative easingpolicies by which the central bank adds to the stock of its own safe liabilities that theprivate sector van hold by buying up risky assets. Small increases in the inflation targetto diminish demand for safe assets by levying a small inflation tax on them. Treasuryand central bank guarantees of risky private assets to transform them into safe ones.Public recapitalizations of banks with impaired capital to make their liabilities safeassets. Pulling infrastructure spending forward into the present and pushing taxes backinto the future, and so increasing the supply of safe assets by having the governmentissue more of it's own safe debt. All of these have a place.

All of these have a place, that is, until the swelling of the liability side of thegovernment's balance sheet cracks its status as a safe debtor whose promises-to-payare credible. Then you find that you have not increased but decreased the supply ofsafe assets to the market, and made the problem worse and not better.

That can happen. Think Austria in 1931. Think Greece today. Think Argentina aboutonce a decade since 1890.

That is what Niall Ferguson fears from any further expansions of the liability side ofgovernment balance sheets. And he sees no upside--for he sees our problem as not ageneral glut but as a structural imbalance, and government policies to boost demand aslikely to cause inflation and retard needed adjustment.

I, by contrast, think that the right question to ask is the question that Thomas RobertMalthus asked Jean-Baptiste Say in 1819:

[I]nstead of this, we hear of glutted markets, falling prices, and cotton goodsselling at Kamschatka lower than the costs of production. It may be said, perhaps,

10/21/10 10:45 AMWhat Does Cutting-Edge Macroeconomics Tell Us About Economic Policy for the Recovery? - Grasping Reality with Both Hands

Page 4 of 12http://delong.typepad.com/sdj/2010/10/what-does-cutting-edge-macroeconomics-tell-us-about-economic-policy-for-the-recovery.html

that the cotton trade happens to be glutted; and it is a tenet of the new doctrine onprofits and demand, that if one trade be overstocked with capital, it is a certainsign that some other trade is understocked. But where, I would ask, is there anyconsiderable trade that is confessedly under-stocked, and where high profits havebeen long pleading in vain for additional capital? The... [crisis] has now been...[ongoing] above four years; and though the removal of capital generally occasionssome partial loss, yet it is seldom long in taking place, if it be tempted to removeby great demand and high profits; but if it be only discouraged from proceeding inits accustomed course by falling profits, while the profits in all other trades, owingto general low prices, are falling at the same time, though not perhaps precisely inthe same degree, it is highly probable that its motions will be slow and hesitating...

And, in the end, Say bowed. The case of the 1824-5 financial crisis in Britain and the1825-6 depression convinced him that there could be a general glut. By the time Saywrote his last book, his 1829 Cours Complet d'Economie Politique, he no longerbelieved in Say's Law that supply creates its own demand.

Until we see actual, real signs that expansions of government balance sheets areimpairing investor confidence in government promises-to-pay, it seems to me that itwould be extremely foolish not to continue to attempt to boost production andemployment by expanding government balance sheets. I want to see the money thatstimulative policies are impairing confidence--and not just listen to arguments thatstimulative policies ought to be impairing confidence.

Brad DeLong on October 08, 2010 at 07:35 AM in Economics, Economics: FederalReserve, Economics: Finance, Economics: Fiscal Policy, Economics: History,Economics: Macro, Obama Administration | Permalink

Reblog (0) |

Favorite

| Digg This | Save todel.icio.us | Tweet This!

TrackBack

TrackBack URL for this entry:http://www.typepad.com/services/trackback/6a00e551f0800388340133f4ee4167970bListed below are links to weblogs that reference What Does Cutting-Edge Macroeconomics TellUs About Economic Policy for the Recovery?:

Comments

anon said...That's a nice post, but I don't understand the title. Do we really think Say and Mill arecutting-edge, or is this some sort of implied jab at modern macro saying something tothe effect that stuff written almost 200 years ago is actually the cutting-edge?

Reply October 08, 2010 at 07:55 AMNeal said...The assumption that the current crisis is intensified by the population's (and ordinary

10/21/10 10:45 AMWhat Does Cutting-Edge Macroeconomics Tell Us About Economic Policy for the Recovery? - Grasping Reality with Both Hands

Page 5 of 12http://delong.typepad.com/sdj/2010/10/what-does-cutting-edge-macroeconomics-tell-us-about-economic-policy-for-the-recovery.html

businesses) demand for safe assets instead of spending their cash ignores the fact thatthe although the "Household" category of purchasers of Treasury's is the largestpurchaser of bonds, the "Household" as defined by the Treasury is a catch-all, sweepaccount for all other categories not otherwise identified by the Treasury

(quote)

So who was buying the $1.44tn in new Treasuries? These same US banks have alsospent the last two quarters net selling US municipal bonds.

Looking down to table F.209 Treasury Securities the biggest listed buyers are:

* Household sector: $534bn in 2009 (versus $168bn in 2008 and -$85bn in 2007)* Fed: $300bn in 2009* Rest of World: $503bn

As various commentators have pointed out, the ‘Household Sector’ is a catchallincluding US private individuals and any other unidentified buyers. Looking down totable F.210 the $503bn of mystery Treasury buyers in the household sector fit neatlywith $619bn of Agency and GSE-backed bond sales by the same household sector.Given that US private citizens are unlikely to be very large holders of agency and GSEbonds, the 'mystery household sector buyer' is seemingly foreign government relatedentities, most likely central banks/ sovereign wealth funds. This would imply thatforeign sovereign-linked buyers bought up to $1tn of US treasuries in 2010. Thisnumber tallies well with China/ Asia’s extraordinary money supply growth in 2009 andFed purchases of $1tn of agency bonds in 2009, which are now coming to an end.

(end quote)

http://seekingalpha.com/article/194289-fed-q4-flow-of-funds-data-who-is-buying-treasuries

It seems that the biggest bond purchasers ARE NOT safety seeking individuals orordinary corporations. They are the Fed and the US government creating money(safety be damned, the lower the rate the better) and they are "foreign governmentrelated entities" who are purchasing leverage in the currency markets.

From this it is clear that the issuance of bonds has nothing to do with sudden andgigantic increase in demand by the indigenous population for safe assets, it has entirelyto do with the needs of the government to create of cash, buy toxic assets from the bigfinancial players and the control of international currency exchange rates.

Yes, bonds have to be sold to try to create better economic conditions, but it ain't theAmerican populace and ordinary businesses buying them.

Reply October 08, 2010 at 08:32 AMRichard said in reply to Neal...Does it matter if they're willing to finance the federal government at absurdly low long-term rates?

Reply October 08, 2010 at 08:51 AMthe idler said...Niall Ferguson? Yeesh. The parrot pictured above can be trained to endlessly repeatthe totality of his panacea for every economic ill: Tax cuts for the rich...Tax cuts for therich...Tax cuts for the rich...EEYOO!

Reply October 08, 2010 at 09:20 AMMichael Pettengill said...What do cutting edge economists say about the stupidity of Reagan hiking taxes in a

10/21/10 10:45 AMWhat Does Cutting-Edge Macroeconomics Tell Us About Economic Policy for the Recovery? - Grasping Reality with Both Hands

Page 6 of 12http://delong.typepad.com/sdj/2010/10/what-does-cutting-edge-macroeconomics-tell-us-about-economic-policy-for-the-recovery.html

recession, the stupidity of Reagan hiking the payroll tax when unemployment was 9%,the stupidity of HW Bush hiking taxes in a recession, the stupidity of HW Bushspending $125B on a TARP bailout out of banks sunk by bad mortgages, the stupidityof Clinton hiking taxes in a weak economy.

What about the cutting-edge economists talking about all the examples of tax cutscreating massive increases in employment, much greater than the employmentincreases of the obviously stupid big-government tax-hiking wasteful-government-spending of FDR in the 30s?

Clearly the employment growth in FDR's first two terms, which would translate intoabout 40 million jobs added during the two GW Bush terms was a disastrousconsequence of tax hikes, and big government make work projects on wasteful thingslike dams, power plants, roads and bridges, water and sewer systems, libraries andschools, with the debt monetized by the moron Mariner Eccles who was engaged in agovernment take over of the banking system.

Maybe the testimony and writings of Mariner Eccles should be read to see how not todo things today as his policy advice to FDR just destroyed the US economy untilReagan saved us from government control of everything that just transferred thewealth from the poor to the rich.

Reply October 08, 2010 at 10:57 AMMatt Young said...http://blogs.investors.com/capitalhill/index.php/home/35-politicsinvesting/2124-100-oil-could-sink-the-feds-qe2

Jed Graham thinks he has found a sign of eak confidence in federal stimulus. higher oilprices that go along with monetary easing.

Oil above $85 generates lack of confidence.

Reply October 08, 2010 at 10:58 AMKurt Cagle said...Michael Pettengill said ...

Clearly the employment growth in FDR's first two terms, which would translate intoabout 40 million jobs added during the two GW Bush terms was a disastrousconsequence of tax hikes, and big government make work projects on wasteful thingslike dams, power plants, roads and bridges, water and sewer systems, libraries andschools, with the debt monetized by the moron Mariner Eccles who was engaged in agovernment take over of the banking system.

Curiously enough, those dams, power plants, roads and bridges, schools etc., weresignificant factors in the post-agricultural industrialization of the United States -without these, you would not have had the markets of the 1950s and 60s, or the ITtech boom of the 80s and mid-90s. More significantly, it is precisely the decay of thesethings today that is part of the problem with the present economy. As such projects go,the CCC projects have been responsible for more economic growth than any set ofcompanies listed in the NYSE.

Reply October 08, 2010 at 01:27 PMBob Athay said in reply to the idler...A wild parrot perched at a bird feeder within earshot of any Republican politicianwould pick up that much in < 30 seconds-- and possibly "Reagan proved... Deficitsdon't matter".

10/21/10 10:45 AMWhat Does Cutting-Edge Macroeconomics Tell Us About Economic Policy for the Recovery? - Grasping Reality with Both Hands

Page 7 of 12http://delong.typepad.com/sdj/2010/10/what-does-cutting-edge-macroeconomics-tell-us-about-economic-policy-for-the-recovery.html

OK, now move the bird feeder within earshot of Brad's Econ 1 classroom. In < 30minutes it'll be repeating more about economics than Niall Ferguson ever knew.

Reply October 08, 2010 at 03:13 PMNewAlgier said...But doesn't lending freely reward those who ran the economy into the ditch? Theregulators, the financial speculators, the fee machines, the liar loans... modern macroneeds to delve further into the world of behavioral finance, I think.

Liabilities need to relate more closely with the assets backing them. I'm a simple guy:to me, it means that either you inflate the debt away by debasing money, or you writeoff the liabilities and recapitalize the resulting failed financial institutions. Or yousocialize the debt: enact massive stimulus that puts money in the pockets of citizensand debt at the government, which you inflate away at leisure.

But paying the goofballs who messed up by taking their crappy financial assets, atdollar-for-dollar, without firing them is stupid. It's a transfer of wealth from me tosociopaths, and I'll be damned before I will.

Reply October 08, 2010 at 08:29 PMMichael Pettengill said in reply to NewAlgier..."Liabilities need to relate more closely with the assets backing them. I'm a simple guy:to me, it means that either you inflate the debt away by debasing money, or you writeoff the liabilities and recapitalize the resulting failed financial institutions. Or yousocialize the debt: enact massive stimulus that puts money in the pockets of citizensand debt at the government, which you inflate away at leisure."

For FDR, the liabilities incurred were backed up by the Hoover Dam, and other powerplants, roads and bridges, etc which generated revenue from electricity sales, orimputed revenue from the value of shipping goods around the nation.

For Reagan and Bush, the liabilities are backed by the meals at burger king, thevacations taken, the really big houses with unaffordable power bills.

I have for a number of years been thinking we as a nation should have the same assetand liabilities balance sheet as FASB requires corporations to have. It would list theHoover Dam, the bridges, roads, the land they are on, at the acquired value lessdepreciation plus the improvements. Inflation adjust that value.

The really interesting exercise would be setting one or more "market" prices. Whatwould be the replacement price. What is the asset price based on real or imputedrevenue. Those are dicey questions with some methods of valuing things, say a mark tomarket of forest land, which then gets hit with the double whammy of pine beetledestroying the forest plus a real estate market crash wiping out the vacation home onthe lake value.

I can't help but believe the sunk costs in current dollars for all the assets of all thegovernments would exceed the total liabilities of the governments.

Reply October 08, 2010 at 10:45 PMRichard H. Serlin said...There are two things I'd say to this:

1) Why not pass tax increases for the future now, large permanent ones, especially onthe wealthy, to show the market that the government is serious about its solvency. Thevast majority of the tax increase would be in the future and so not crimp currentdemand much, and it could be more than offset by an increase in current spending and

10/21/10 10:45 AMWhat Does Cutting-Edge Macroeconomics Tell Us About Economic Policy for the Recovery? - Grasping Reality with Both Hands

Page 8 of 12http://delong.typepad.com/sdj/2010/10/what-does-cutting-edge-macroeconomics-tell-us-about-economic-policy-for-the-recovery.html

investing by the government.

2) If market fears of solvency are a problem, why not spend an extra trillion or two onhigh return investments of the kind the pure free market will grossly underprovide orinefficiently provide due to long proven in economics market problems, externalities,etc. (because of the high return, the government increases its ability to pay back debtin the future), and pay for the spending with even concurrent tax increases, let alonefuture ones. You essentially would force people to save less and invest and spend more-- a large portion of the tax increase money would have been saved anyway, especiallyif from the rich, while, by contrast, 100% of that money will be spent and invested bythe government. So even if the spending and investing by the government isn't deficit,even if it's 100% paid for with increased taxes, there will still be a large increase inaggregate demand for goods and services.

Reply October 09, 2010 at 12:02 AMNick Rowe said...OK Brad, a challenge for you:

A general glut means an excess supply of *newly-produced* goods. You say that ageneral glut can be caused by an excess demand for financial assets: which could bemoney, bonds, or safe assets. Is it theoretically possible for a general glut to be causedby an excess demand for something that is neither a financial asset nor a newly-produced good? For example, could it be caused by an excess demand for: land, oldhouses, old books, antique furniture etc.? Or, what about intermediate cases, like anexcess demand for gold, where new and old gold is identical, but new production isvery small and inelastic compared to the existing stock?

My position is that a general glut can *only* be caused by an excess demand for themedium of exchange. An excess demand for any of those other assets can only cause ageneral glut if it spills over into an excess demand for the medium of exchange. Thedistinction between financial and non-financial assets is irrelevant. Why should itmatter?

I'm trying to smoke out your inner quasi-monetarist!

Reply October 09, 2010 at 04:14 AMNick Rowe said...You see, Say(1803) (lovely way to express this, by the way) was very nearly right.Suppose we start in equilibrium, then there's a sudden desire to stop buying newly-produced goods and buy land instead. Either the price of land rises to equilibrium or itdoesn't. If the price of land rises to equilibrium, then people stop wanting to buy landand return to buying newly-produced goods. If the price of land stays fixed (it's sticky,or whatever) people cannot buy land because nobody is willing to sell. So they have tobuy something else with their income instead, or else hoard money.

Ultimately there are only two things an individual can do with his income, if everybodyelse is trying to do the same thing: buy newly-produced goods, where there are plentyof willing sellers in a general glut; or hoard money, by not buying things, which nobodyelse can stop you doing.

Reply October 09, 2010 at 04:27 AMNeal said...Richard:

Yhe poiny I'm trying to make is that it not the ordinary citizens and businesses searchfor safe assets that is intensifying the downturn. They ARE NOT the primary buyers of

10/21/10 10:45 AMWhat Does Cutting-Edge Macroeconomics Tell Us About Economic Policy for the Recovery? - Grasping Reality with Both Hands

Page 9 of 12http://delong.typepad.com/sdj/2010/10/what-does-cutting-edge-macroeconomics-tell-us-about-economic-policy-for-the-recovery.html

Treasurys. Ordinary businesses and citizens are looking for income, and barring that,assets to be turned into cash.

Reply October 09, 2010 at 08:14 AMBob Athay said...@ Jeff Shattuck:

What you're saying here basically the same argument that Treasury Secretary AndrewMellon made to Herbert Hoover, aka the Liquidationist or Treasury view. According toHoover's memoirs (1952) Mellon said:

“Liquidate labor, liquidate stocks, liquidate the farmers, liquidate real estate... It willpurge the rottenness out of the system. High costs of living and high living will comedown. People will work harder, live a more moral life. Values will be adjusted, andenterprising people will pick up the wrecks from less competent people”

I really wish that the people who take this point of view now, e.g., the Tea Party crowd,Republican Congressional leadership, etc. could state their position as clearly. JosephSchumpeter, a highly respected economist in that era, maintained depressions servedan unpleasant but necessary role in allowing markets to adapt and reallocate resourcesas conditions changed. Try a Google search on "Schumpeter" and "CreativeDestruction".

Trouble was, it didn't work out that way at all. The data's pretty clear on that subject.So if the Austrian / Liquidationist prescription was the wrong thing to do from 1929through 1932, given that the economy grew steadily under the stimulus programspushed by FDR and that the recession following the end of WWII was rather mild, itamazes me that anyone with even half a brain is arguing the Mellon was right in 1929and right for the present mess.

Full disclosure: I'm a hard science geek with a rather broad range of experience inapplying mathematical models to complex systems and phenomena. But I dodgedsocial sciences as much as the possibly could.

Reply October 09, 2010 at 02:55 PMComment below or sign in with TypePad Facebook Twitter and more...

10/21/10 10:45 AMWhat Does Cutting-Edge Macroeconomics Tell Us About Economic Policy for the Recovery? - Grasping Reality with Both Hands

Page 10 of 12http://delong.typepad.com/sdj/2010/10/what-does-cutting-edge-macroeconomics-tell-us-about-economic-policy-for-the-recovery.html

Me: Economists:

PaulKrugmanMark ThomaCowen andTabarrokChinn andHamiltonBrad Setser

Juicebox

Mafia:

Ezra KleinMatthewYglesiasSpencerAckermanDanaGoldsteinDanFroomkin

Moral

Philosophers:

Hilzoy andFriendsCrookedTimber ofHumanityMarkKleiman andFriendsEricRauchwayand FriendsJohn Holboand Friends

Post Preview

Procrustean Economics (Wonkish)New York Times (blog) - Sep 30, 2010Brad DeLong manfully takes on the efforts of various commentators to define awaythe paradox of thrift and redefine our current problems as somehow wholly ...Related Articles » « Previous Next »

economics DeLong

10/21/10 10:45 AMWhat Does Cutting-Edge Macroeconomics Tell Us About Economic Policy for the Recovery? - Grasping Reality with Both Hands

Page 11 of 12http://delong.typepad.com/sdj/2010/10/what-does-cutting-edge-macroeconomics-tell-us-about-economic-policy-for-the-recovery.html

10/21/10 10:45 AMWhat Does Cutting-Edge Macroeconomics Tell Us About Economic Policy for the Recovery? - Grasping Reality with Both Hands

Page 12 of 12http://delong.typepad.com/sdj/2010/10/what-does-cutting-edge-macroeconomics-tell-us-about-economic-policy-for-the-recovery.html