Brad DeLong — Antonio Fatas: A 2016 Recession Would Be Different

If a recession ends up happening, helicopter money will likely become a policy option.

WCEG — The Equitablog
Antonio Fatas: A 2016 Recession Would Be Different
Brad DeLong

The Arthurian — Antonio Fatas and the Chain of Causality

Another howler from Ken Rogoff, the Thomas D. Cabot Professor of Public Policy and Professor of Economics at Harvard University and one of the Very Serious People of the economics profession (rolling eyes).

Fatas says Rogoff "argues that the world economy is suffering from a debt hangover rather than deficient demand." I had to check that. When I read Fatas, I thought he might be misinterpreting Rogoff. He's not. He's right. Rogoff sees secular stagnation as one possibility, and crushing debt as "another possibility".

Rogoff sees the excessive debt explanation as an alternative to the deficient demand explanation.

That's just plain silly. Excessive debt is not an alternative to the "deficient demand" explanation. Excessive debt is the cause of deficient demand. First, the growing cost of growing debt consumes a growing portion of income. So demand atrophies gradually at first. Then, people suddenly come to think of their debt as excessive, and they suddenly cut their borrowing and spending. Demand falls suddenly -- economists call that a "shock" -- and we have "deficient demand".

The New Arthurian Economics
Antonio Fatas and the Chain of Causality
The Arthurian

Mark Thoma — 'The Intellectual Bankruptcy of the Austerians'

Some comments on the latest report from the BIS

Economist's View
'The Intellectual Bankruptcy of the Austerians'
Mark Thoma | Professor of Economics, University of Oregon

BIS or BS? The title to this post should be "Calling BS."