Utopia, you are standing in it!

 I am still reading this much discussed research by Christina Romer and Jared Bernstein where they estimate the impact of Obama plan (Econbrowser has a nice graph which explains the impact in a nutshell). Both head Council of Economic Advisors of President elect Obama, so it is a must read. Another thing to read is CBO’s estimate of the US economy (I will try and do a comparison later on; for insights read Krugman’sblog).

Coming back to Romer/Bernstein estimation, NYTpoints:

Christina Romer, whom Mr. Obama has designated to be his chief economist, concluded in research she helped write in 1994 that interest-rate policy is the most powerful force in economic recoveries and that fiscal stimulus generally acts too slowly to be of much help in pulling the economy out of recessions, though associates said she now supports a big stimulus package if policy…

I came across this paper by Lee Ohanian of Minneapolis Fed , who has done some great work on  Great Depression. The paper is a review of this book – The Defining Moment (free to download chapetrwise)-  written on Great Depression by various economists and edited by Michael D. Bordo, Claudia Goldin, and Eugene N. White.

The abstract of the paper is quite interesting and apt for today’s times:

This paper reviews The Defining Moment, edited by Michael D. Bordo, Claudia Goldin, and Eugene N. White. The volume studies how the Great Depression changed government policies, including changes in monetary policy, fiscal policy, banking policy, agricultural policy, social insurance, and international economic policy.

I argue that a theory of policy evolution is required to answer how the Great Depression affected these policies. In the absence of this theory, the contributors provide insight into the question by showing how policies changed sharply…

There is an intriguing paper by Douglas Irvin on the topic. Voxeu has a nice summary (one of the best things to have happened on web for economics students- voxeu. Most economists use it to summarise key papers/thoughts/ideas etc)).

He says:

South Korea had its assembly election on 15 April, with various covid-19 precautions in place. The Democratic Party of President Moon Jae-in (elected in 2017) won a majority of seats.

As discussed previously at F&V, the electoral system was changed from mixed-member majoritarian (MMM) to, at least partially, mixed-member proportional (MMP) prior to this election. It is only partially MMP not mainly because the number of compensatory list seats is so small (30 out of 300 total), but because there remain 17 seats that are, apparently, allocated in parallel (i.e., as if it were MMM).

There was some discussion in various media accounts (and in the previous thread) of the major parties setting up “satellite” parties to “game” the MMP aspect of the system. Under such a situation, a big party will contest the nominal tier seats and use a separate list to attract list votes and seats. By not…

I’ve mentioned in posts over the last few days The Treasury’s estimate that the current “Level 4” restrictions will have reduced GDP by about 40 per cent relative to normal levels and the Reserve Bank’s estimate of a 35 per cent reduction.    Both estimates seem a lot more realistic than some of the private sector estimates that were still doing the rounds early in the week.  But I still reckon the Reserve Bank estimate, in particular, is almost certainly too low –  especially if we are concerned, as we should be, with the “true” reduction in the volume of economic activity, not with what SNZ may initially report (accurate measurement is going to be a challenge).

What makes me sceptical?  Well, there is the fact that our partial lockdown seems to be more restrictive, particularly (but not exclusively) on economic dimensions, than those in many other countries.  Thus ANZ…