Archive | January, 2012

Economy a little flat? Whip in some inflation!

Sometimes economists make analogies to make policies coherent. I find this by line particularly appetizing, imagining Bernanke as a soufflé chef trying to keep his light dessert fluffy. According to Menzie Chinn and Jeffry Frieden, the solution is just to whip in a little inflation to keep that soufflé/economy healthy. The basic idea they convey…
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Buy American

Buy American! Or Not.

We hear it all the time: “Buy American”. Indeed, presidential candidate Rick Santorum (who semi-won the Iowa caucuses last night) just received the endorsement of the Conservative Party USA because he apparently “understands that ‘Buy American’ is the key to reviving the US economy”. I am not going to guess as to Mr. Santorum’s motives…
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Monopoly Revisited

Monopoly Revisited

We’ve been having some profitable discussion on the threat of monopoly in a recent post.  In this post, I want to clarify a few things, and perhaps add some additional thoughts. We have established that is impossible to distinguish “competitive prices” from “monopoly prices” because we only observe the market price.  The “competitive price” is…
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More Fallacious Views on Infrastructure ‘Investment’

Piggy-backing off libertas’ post from a few days ago, Think Progress has again made the fallacy of assuming that government expenditures on infrastructure is inherently beneficial to the economy. See quote below: With borrowing costs low and the nation’s unemployment rate high, infrastructure improvement projects can fix the major problems facing our nation’s roads, bridges,…
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circular flow1

DeLong’s ‘Circular Flow’ Falls Flat

Economist Brad DeLong wrote on his blog yesterday about Paul Krugman’s “A Note on the Ricardian Equivalence Argument Against Stimulus.”  While the post was quite complex and requires a previous knowledge of Krugman’s argument, he makes one claim I would like to point out. “He gets it completely wrong because Krugman knows very well who…
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Debt Mythology

Debt Mythology

Paul Krugman implies that deficit spending is necessary to jumpstart a floundering economy, and in the process repeats the well-known “we owe it to ourselves” fallacy about public debt in his latest piece. The implication of the “we owe the debt to ourselves” fallacy is that debt isn’t all that harmful or distortionary because, after…
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OG Mission Impossible logo

Mission Impossible: War and the Economy

Arms Dealer: “Why should I help you?” Hunt: “If you don’t help me, we will be facing war.” Arms Dealer: “But war is good for business.” Hunt: “Nuclear war?” Arms Dealer: “…let’s talk.” I certainly did not expect to be writing about economics in response to seeing Mission: Impossible – Ghost Protocol last night (a…
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