How politicization is hurting economics
Financial Crisis Denialism
Paul Krugman, NYT
People have been asking me for a while to respond to John Taylor's claim that financial-crisis-induced recessions aren't characterized by slow recovery. It's a very convenient claim for Romney/Ryan, of course, because if true it eliminates the best excuse for lackluster performance under Obama.
Well, Reinhart and Rogoff, who literally wrote the book on crises and their aftermath, have weighed in, and they're not happy. They have two main complaints, both of which are completely valid.
The first is that looking at the rate of recovery from the trough is a very peculiar criterion -- especially when, as Taylor does, you look only at the first year (!) of recovery. By this standard, the New Deal was a tremendous success story, because growth was fast in 1933-4. Never mind the fact that pre-crisis per capita GDP wasn't restored for more than a decade. As R-R say, surely the relevant comparison is with the pre-crisis peak, especially given the fact that post-crisis economies often suffer periods of relapse (as is happening in Europe now).
(More here.)
Paul Krugman, NYT
People have been asking me for a while to respond to John Taylor's claim that financial-crisis-induced recessions aren't characterized by slow recovery. It's a very convenient claim for Romney/Ryan, of course, because if true it eliminates the best excuse for lackluster performance under Obama.
Well, Reinhart and Rogoff, who literally wrote the book on crises and their aftermath, have weighed in, and they're not happy. They have two main complaints, both of which are completely valid.
The first is that looking at the rate of recovery from the trough is a very peculiar criterion -- especially when, as Taylor does, you look only at the first year (!) of recovery. By this standard, the New Deal was a tremendous success story, because growth was fast in 1933-4. Never mind the fact that pre-crisis per capita GDP wasn't restored for more than a decade. As R-R say, surely the relevant comparison is with the pre-crisis peak, especially given the fact that post-crisis economies often suffer periods of relapse (as is happening in Europe now).
(More here.)
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