Things to Read on the Evening of November 16, 2013

Must Reads:

1. Larry Summers on the danger that the U.S. and Europe are turning Japanese, i.e., about to repeat Japan’s ongoing post-1991 episode of secular stagnation: “It is not over until it is over…. We may well need, in the years ahead, to think about how we manage an economy in which the zero nominal interest rate is a chronic and systemic inhibitor of economic activity, holding our economies back, below their potential…”
2. Andreas Mueller, Jesse Rothstein, and Till von Wachter: Unemployment Insurance and Disability Insurance in the Great Recession: “[Do] unemployed individuals who exhaust their Unemployment Insurance (UI) benefits use DI as a form of extended benefits[?] We exploit the haphazard pattern of UI benefit extensions in the Great Recession to identify the effect of UI exhaustion on DI application…. We find no indication that expiration of UI benefits causes DI applications… [and] rule out effects of meaningful magnitude…”
3. Mike Konczal: Given the Myth of Ownership, is the Idea of Redistribution Coherent?: “Given that all property rights are a creation of the state, is it possible to refer to ‘redistribution’ without reifying a notion of ‘everyday libertarianism’? I believe so. However, Matt Bruenig, over at our neighbors Demos, disagrees, and is slowly picking off liberal wonks on this topic. Given that I’m likely on the kill list, I might as well play offense…”

Should Reads:

1. Marshall Fitz: Don’t Believe the Boobirds: “Another day, another ‘Immigration Reform is Dead’ pronouncement. Now that declaration is being coupled with the jaw-dropping claim that both parties share the blame for the putative demise. Neither assertion holds up to scrutiny…”
2. Joe Gagnon: Stabilizing Properties of Flexible Exchange Rates: evidence from the Global Financial Crisis: “There is little difference… with respect to the growth rate of GDP or the inflation rate. However… the change in the unemployment rate and the variability of growth, inflation, and unemployment… outcomes are always better for inflation targeters. The better performance of inflation targeters is even clearer when one controls for other factors that affect economic performance and when one defines the group of hard fixers more appropriately…”
3. Robert Waldmann: Why does Fiscal Stimulus Work?: “Cochrane’s fantasy has so little connection with reality that it is hard to discuss… like expecting a reasoned critique of 2+2=5…. How does he manage such regular howlers? Well we have the ambiguity of “no spending multiplier”: here this ambiguously means that the… multiplier is 1 (there is no effect on private consumption); there it means that it is 0…. Argu[ing] that the multiplier… is 0… and then [that] a model or data which suggests that it is 1 is… proof that they were right…”
4. John Quiggin: Wall Street Isn’t Worth It: “Can Wall Street, in its present form, be justified? That is, does the share of income flowing to corporations and professional workers in the financial sector reflect their marginal contribution to the total value of social output?… I argue that society as a whole would be better off if the financial sector were smaller, and received much smaller returns. A political strategy based on cutting the financial sector down to size… is a necessary precondition for a broader attempt to make the distribution of wealth and power more equal…”

Things You Should Be Aware of:

Susan Houseman et al.: Measuring Manufacturing: Problems of Interpretation and Biases in the U.S. Statistics | ThinkUp | Stephen Broadberry: Accounting for the great divergence |

Henry Aaron: Obamacare Policy Jiu-Jitsu | Barry Ritholtz: 2010 Reminder: QE = Currency Debasement and Inflation | James Besson: Technology isn’t taking all of our jobs | Annie Lowrey: The Inequality of Climate Change | Jason Sattler: Early Medicaid Success Is A Victory Against Inequality | Lydia DiPillis: The real loser of the recession is rural America |