Links - Catching Up (Part 1)

• No, We Don’t “Need” a Recession - J. Bradford DeLong I recently received an email from my friend Mark Thoma of the University of Oregon, asking if I had noticed an increase in commentaries suggesting that a recession would be a good and healthy purge for the economy (or something along those lines). In fact, I, too, have noticed more commentators expressing the view that “recessions, painful as they are, are a necessary growth input.” I am rather surprised by it. ...
• Economics’ Lack of Interest in Gender Proves: the “Dismal Science” Really Is Dismal
 - ProMarket Economists are still in the dark about the role of gender. For economics to be credible, we have to recognize that our knowledge is incomplete and learn from the diversity of humanity and experiences in our own profession.
• ‘It Was a Mistake for Me to Choose This Field’ - The New York Times Economics is neither a welcoming nor a supportive profession for women. In 2017, Alice H. Wu, now a doctoral student in economics at Harvard, published an eye-opening study of online conversations among economists that provided convincing evidence that overt sexism was a serious problem in the field. Last year the economist Roland G. Fryer Jr., a star of the Harvard department, faced sexual misconduct allegations, prompting calls to condemn the widespread sexual harassment and discrimination in the profession. (In July, Harvard suspended Professor Fryer for two years.) But if economics is hostile to women, it is especially antagonistic to black women.
• The optimal inflation target in the face of a lower r-star - VoxEU How to adjust to structurally lower real natural rates of interest is a challenging but inescapable issue for central bankers. Using simulation and US data, this column studies how changes in the steady-state natural interest rate affect the optimal inflation target. It finds that starting from pre-crisis values, a 1 percentage point decline in the natural rate should be accommodated by an increase in the optimal inflation target of about 0.9 to 1 percentage point. It also discusses alternatives to adjusting the target, such as non-conventional monetary policies.
• Herd behaviour in asset markets: The role of monetary policy - VoxEU One important conclusion of Robert Shiller’s influential 2015 book, Irrational Exuberance, is that bubbles are random exogenous phenomena that cannot be foreseen and do not depend on macroeconomic policies. This column introduces a new CEPR Policy Insight which throws light on the root causes of speculative fevers in asset markets and related financial booms and busts. It shows empirical evidence indicating that Shiller may have overlooked the role that lax monetary policy played in triggering financial bubbles in the 2000s by offering investors a perverse promise of ever-increasing asset prices.
• Introduction to Heterogeneity Series: Understanding Causes and Implications of Various Inequalities - Liberty Street Economics Economic analysis is often geared toward understanding the average effects of a given policy or program. Likewise, economic policies frequently target the average person or firm. While averages are undoubtedly useful reference points for researchers and policymakers, they don’t tell the whole story: it is vital to understand how the effects of economic trends and government policies vary across geographic, demographic, and socioeconomic boundaries. It is also important to assess the underlying causes of the various inequalities we observe around us, whether they are related to income, health, or any other set of indicators. Starting today, we are running a series of six blog posts (apart from this introductory post), each of which focuses on an interesting case of heterogeneity in the United States.
• Jack Schwartz on the Weaknesses of the Mathematical Mind - Uneasy Money I was recently rereading an essay by Karl Popper, “A Realistic View of Logic, Physics, and History” published in his collection of essays, Objective Knowledge: An Evolutionary Approach, because it discusses the role of reductivism in science and philosophy, a topic about which I’ve written a number of previous posts discussing the microfoundations of macroeconomics.
• The Crisis of Central-Bank Governance - Lucrezia Reichlin The European Central Bank may enjoy stronger protection against political pressure than other central banks do, but it also faces unique constraints. The more the ECB is forced to expand its policy remit to meet new economic challenges, the more likely it is to trigger destabilizing political conflicts within the eurozone.
• No More Half-Measures on Corporate Taxes - Joseph E. Stiglitz In the face of climate change, rising inequality, and other global crises, governments are losing out on hundreds of billions of dollars in tax revenue as a result of corporate tax arbitrage. Yet despite the obvious deficiencies of the global tax regime, policymakers continue to propose only piecemeal fixes.
• Why We Need More Economists - Roger E.A. Farmer The economics profession should not be so defensive toward critics who blame it for rising inequality. Insights from the dismal science – and in particular economists' advocacy of market-based policies to boost prosperity – have proven their worth many times over.
• Wanted: A Global Green New Deal - Joseph E. Stiglitz To live within our planetary means, we will have to change many aspects of how we live – how we organize our economies, our cities, and our transportation, energy, housing, and food systems. The good news is that most of the world now recognizes this; the bad news is that its largest polluter does not.
• How to Ward Off the Next Recession - Jean Pisani-Ferry A decade after the Great Recession, Europe’s economy is still convalescing, and another period of prolonged hardship would cause serious, potentially dangerous economic and political damage. With monetary and fiscal policy unlikely to provide enough stimulus, policymakers should explore alternative options.
• How to Rethink Capitalism - Simon Johnson The 2008 financial crisis, together with failed efforts to combat climate change and sharply rising inequality, has frayed the neoliberal consensus that has prevailed in the United States and much of the West for more than two generations. Three issues must be considered in weighing what comes next.
• Are Workers Losing to Robots? - FRBSF The portion of national income that goes to workers, known as the labor share, has fallen substantially over the past 20 years. Even with strong employment growth in recent years, the labor share has remained at historically low levels. Automation has been an important driving factor. While it has increased labor productivity, the threat of automation has also weakened workers’ bargaining power in wage negotiations and led to stagnant wage growth. Analysis suggests that automation contributed substantially to the decline in the labor sha