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links for 2008-12-05
Economist's View — Conservatives cherry-pick in continued assault on New Deal - Media Matters Some unpleasant Keynesian arithmetic - Dani Rodrik Does daylight saving time save electricity? - voxeu.org Real balance effects (wonkish) - Paul Krugman Nice females also hunt - International Herald Tribune I’m with Mephistopheles - knzn Jobless claims data tell a mixed story - Credit Writedowns The crisis and protectionism: Steps world leaders should ...

Truth in Lending
Lawrance G. Lux — I fear to permit access to this Rodrik Piece, simply because I know that countervailing factors actuate to functionally freeze the Keynesian multiplier in a very inefficient position. The placement of that Position is very debatable, but Economists would spout the Numbers every other Word, if it ever exceeded 1.3 for the Keynesian multiplier. It highlights a genuine tendency in Economics; for real World work, put a decimal point and two zeros in front of that number. One can hear the murmur in every Econ Graduate Dept. in the Country: "I took Economics in the first place, ...

We Are All in This Together
The Baseline Scenario — ... Dani Rodrik has a short, clear post on (a) why countries are tempted to engage in protectionism during recessions and (b) why they shouldn’t. It only uses 1st-semester macroeconomics. The bottom line is that the preferred outcome is for all countries to engage in fiscal stimulus at the same time. The hitch is that most of the developing world can’t afford to. The implication is that it is in the interests of the wealthy countries to find a way to support the developing world. ...

Their weird obsession
Marginal Revolution — ... That's Dani Rodrik and do read the whole thing, if only to see where the title of this post comes from.  I may be reading him incorrectly, but I believe he is claiming that a complete ban on imports would raise U.S. gdp by trillions. ...

How Large of a Keynesian Multiplier Do You Want?
EconoSpeak — ... as high as 5: UB suggests that it has a multiplier of 5. If they did, this would be like the goose that laid the golden egg. My gosh, all they'd have to do is appropriate $140B to UB, and they could pay for the whole $700 Federal bailout ... A more telling multiplier is the economic impact divided by the whole UB budget of $832M, to get a multiplier of 1.8. I think that seems a lot more reasonable than 5 to 1. A multiplier of 1.8? That is what Dani Rodrik comes up with if we keep our international markets open but: The ...

Protectionism Pressures
The Aleph Blog — ... regarding a post of Dani Rodrik.  Beijing wants to employ many people who are migrating from the farms to the cities, and so it wants to produce more goods that they can export.  To make those goods competitive, they don’t want the Yuan to appreciate.  And ...

Links Pearl Harbor Day '08
naked capitalism — ... #1 for SOC: Bailing out Cerberus and the US Auto Industry Roger Ehrenberg Countrywide Class Action: What’s a Good Sale? Chris Whalen, The Big Picture Big Deal: The Government's Response to the Financial Crisis Steven Davidoff, David Zaring What Causes Gluts and How Can They be Cured? Mark Thoma US Treasuries and our Horribly Distorted International Currency Exchange Mechanism Jesse's Cafe Americain Some unpleasant Keynesian arithmetic Dank Rodrik Antidote du jour: ...

Multiplier Math: Is U.S. Protectionism on the Way?
EconomPic — ... post how large a stimulus package would need to be based on certain assumptions in unemployment and the multiplier (a summary chart of that discussion is as follows): As can be seen above, if unemployment were to rise above current 8.5% estimates, the multiplier becomes increasingly important in determining an appropriate size for a stimulus package. Thus, an important question is how large will the multiplier be? Fortunately, Dani Rodrick's recent post dives into the math behind the multiplier and he isn't fond of what it tells him. ...

beggar thy neighbor
Decline and Fall of Western Civilization — ... Great Depression was brutal for the US and for some Latin American countries, but not nearly as bad for continental Europe and I think barely noticed in corporatist Germany and Italy. What if current account deficit countries conclude today, like they seem to have done in the 1930s, that by restricting trade they can force most of the global adjustment onto the current account surplus countries? That would be devastating for Asian exporters and especially China. dani rodrik is also talking about this, as pettis notes, whereupon he says: ...

Reasons I Haven't Needed to Post
Angry Bear — ... , and that a dollar spent with a multiplier of at best 1.0 should be preferred to investments with spillover effects into private industry (and therefore multipliers definitionally greater than 1.0). ...

Aggregate Demand and Finance and the Collapse in Trade
Econbrowser — ... , and Dani Rodrik) in a way that will not induce retaliation. Of course, the net effect is still likely to be toward greater protectionism. ...

Do High Income Individuals Have a Lower Marginal Propensity to Consume or a Higher Propensity to Import?
EconoSpeak — ... I’m not sure I’m buying this notion that distributing income from the rich to the poor is going to necessarily reduce our national savings rate either. But here’s a related query related to the Keynesian multiplier related to certain open economy musings by Dani Rodrik: ...

Does Protection Have No Impact on Aggregate Demand?
EconoSpeak — ... the work of Ben Bernanke himself (along with other scholars like Barry Eichengreen). The important finding is that countries that devalued their currencies by getting off the gold standard were able to recover more quickly, thanks in part to an increase in their net exports relative to countries that stayed on gold. Note that a currency depreciation amounts to a policy of combining import tariffs with export subsidies--hence the mercantilist intent and effect. Dani also notes: How much of a boost to economic activity will a fiscal ...

Buy American: Is There a Trade-off Between Free Trade and Full Employment?
EconoSpeak — Paul Krugman gets partial credit for expounding on an argument made by Dani Rodrik (here and here): The economic case against protectionism is that it distorts incentives: each country produces goods in which it has a comparative disadvantage, and consumes too little of imported goods. And under normal conditions that’s the end of the story. But these are not normal conditions. We’re in the midst of a global slump, with governments everywhere having trouble coming up with an effective response ... how would this change if each country adopted ...