Greg Sargent: Senate documents and interviews undercut ‘bombshell’ lawsuit against Obamacare: “Documents from the Senate committees…
…that worked on versions of the bill in 2009–combined with a close look at the history of the phrase itself, and interviews with staffers directly involved in the drafting of the statutes–strongly undercut the argument that the law did not intend or provide subsidies to those on the federal exchange…
Should-Reads:
David Beckworth: The Other Important Legacy of World War One: “An important point I… could not find…. WWI shattered the classical gold standard of 1870-1914, which had worked relatively well, and replaced it with an incredibly flawed one to which many attribute… the severity and global reach of the Great Depression in the 1930s. And the Great Depression… brought the Nazis to power…. Barry Eichengreen and Peter Temin…. ‘At some level… the Nazis were the party of the Depression. They were a fringe group in the 1920s and grew to electoral prominence only in 1930 when economic conditions deteriorated. They gained even more seats in the Reichstag in the first election of 1932, but lost seats in the second election later that year as economic conditions appeared to improve…. Almost any model would say that better economic conditions would have decreased political support for the Nazis and therefore the probability that Hindenburg would have asked Hitler to be chancellor.’ So far all the problems WWI created, the flawed interwar gold standard was probably one of the the more important ones. It led to the Great Depression which, in turn, guaranteed the rise of the Nazis and another world war. The big lesson, then, is getting the international monetary system right matters a lot.”
Walter Shapiro: Hillary for Liberals: “Hillary has been through two disastrous disorganized White Houses under Bill Clinton and Obama…. She would come into the White House with a greater understanding of White House dysfunction than anyone in Democratic Party history… steel you against creating a White House where people believe they’ve invented the wheel, that they’re geniuses…. At this point, NSA spying and drone attacks are just not voting issues for liberals. Getting tough with Wall Street–like single-payer health insurance–was something much more likely to trigger an adrenaline rush for the left in 2009 than in 2016…”
Jonathan Chait: I Have Mocked Ross Douthat One Time too Many: “for his fatal flaw of detecting signs of ideological moderation in a succession of Republican figures like Sarah Palin, Eric Cantor, Tim Pawlenty, and others. Now he has finally snapped…. My piece notes that Douthat praises Ryan for his moderation, while dismissing the 2012 GOP ticket as hopelessly plutocratic, yet he defended Romney and Ryan against exactly this charge at the time. Douthat points out that he also devoted numerous items to complaining about Romney’s upper-class tilt. And yeah, he certainly did…. I argued… with Douthat–me insisting Romney’s plan cut taxes for the rich; he insisting it did not…. [And] the situations are fairly analogous. Ryan now, like Romney-Ryan then, is making a series of irreconcilable promises. Douthat is treating the more mainstream version of those premises as binding, and the more extreme promises as null and void…. What he calls ‘cherry-picking’, I call ‘condensing’. But a less patient person would have lashed out years ago…”
Kevin Kelly: You Are Not Late: “Can you imagine how awesome it would have been to be an entrepreneur in 1985 when almost any dot com name you wanted was available? All words; short ones, cool ones. All you had to do was ask. It didn’t even cost anything to claim…. Thirty years later the internet feels saturated, bloated, overstuffed…. Even if you could manage to squeeze in another tiny innovation, who would notice it?…. But, but… here is the thing. In terms of the internet, nothing has happened yet…. Most of the greatest products running the lives of citizens in 2044 were not invented until after 2014…. Here is the other thing the greybeards in 2044 will tell you: Can you imagine how awesome it would have been to be an entrepreneur in 2014? It was a wide-open frontier! You could pick almost any category X and add some AI to it, put it on the cloud. Few devices had more than one or two sensors in them, unlike the hundreds now. Expectations and barriers were low. It was easy to be the first. And then they would sigh, ‘Oh, if only we realized how possible everything was back then!’ So, the truth: Right now, today, in 2014 is the best time to start something on the internet…. Today truly is a wide open frontier. It is the best time EVER in human history to begin. You are not late.”
Paul Krugman: How Prophets Get Lonely: “At Bloomberg View, Leonid Bershinksy weeps over the cruel world that for some reason isn’t listening to Jaime Caruana of the BIS, who warns that we must raise interest rates now now now. Why is this prophet so lonely? Well, it might have something to do with the fact that three years ago Caruana and the BIS warned that interest rates must rise to avert a surge of inflation. That didn’t happen…. Now, everyone gets things wrong sometimes. But when that happens, you’re supposed to think about why you were wrong, and reconsider your policy views. If the BIS did any soul-searching, nobody else noticed…. Why, exactly, should anyone take its views seriously?… But being a hard-money guy seems to mean never having to reconsider…”
And:
Should Be Aware of:
Philippa Skett: Ebola outbreak: What you need to know about its spread: “The recent Ebola epidemic in West Africa has so far claimed more than 670 lives…. Now it has reached Lagos in Nigeria…. Ebola… causes extensive internal bleeding, and can lead to those infected dying from shock. Initially, those infected experience a sudden onset of fever, muscle pain, weakness, headaches, a sore throat and vomiting and diarrhoea…. Ebola is highly contagious and can be transmitted even after those infected have died, because the virus is transmitted via bodily fluids. It has a 90% fatality rate…. Bausch thinks it is unlikely that the outbreak will spread through Europe or the US if someone infected gets on an international plane…. Currently there is no cure…”
Lars Syll: What to do to make economics a relevant and realist science: “What shall neoclassical economists do when the modeling assumptions made are shown to be harmful and not even remotely matching reality?… (1) Stop pretending that we have exact and rigorous answers…. (2) Stop the childish and exaggerated belief in mathematics…. (3) Stop pretending that there are laws…. (4) Stop treating other social sciences as poor relations…. (5) Stop building models and making forecasts of the future based on totally unreal microfounded macromodels with intertemporally optimizing robot-like representative actors equipped with rational expectations. This is pure nonsense. We have to build our models on assumptions that are not so blatantly in contradiction to reality. Assuming that people are green and come from Mars is not a good–not even as a ‘successive approximation’–modeling strategy.”
Tim Pawlenty (2011): US headed for double-dip: “I think we’re headed for a double-dip. That’s my personal view…. It may look like there is temporary improvement because they have artificially infused the economy with government money, but the consequences of that will, as sure as we’re sitting here, will rear its head…”
Emily Badger: How big cities that restrict new housing harm the economy: “For the last couple of years San Francisco has been erupting with periodic protests aimed, rather imprecisely, at a nexus of grievances related to gentrification, affordable housing, transportation, the tech industry, newcomers to the city, its changing skyline and Silicon Valley to the south. The city is screaming, although at what its protestors seem a little confused. ‘In my view, the whole debate here misses the point’, says Enrico Moretti…. ‘People are marching against Google buses when they should be marching for more housing permits.’ At the root of San Francisco’s tension is a mismatch of supply and demand: Affluent workers have been flocking to the area for its tech jobs, but as the number of jobs in the region has grown, the number of housing units to accommodate people taking them hasn’t remotely kept pace. As a result, rents are going up. Low-income residents are pushed out. Landlords who see more lucrative opportunity in condo conversions have ramped up evictions. ‘Once I started seeing what was going on in the San Francisco public debate, I got appalled by the lack of understanding of basic economics among the general public, the protesters’, Moretti says. ‘And it’s even more problematic among policymakers.’ The culprit here isn’t really the tech industry. It’s much-harder-to-protest land-use policy. And from Moretti’s point of view, the rest of us should care… because the economic repercussions of such local decisions stretch nationwide…”
Paul Gigot (2009): The Bond Vigilantes: “The disciplinarians of U.S. policy makers return. They’re back…. The vigilantes… appear to be returning with a vengeance now that Congress and the Federal Reserve have flooded the world with dollars to beat the recession. Treasury yields leapt again yesterday at the long end, with the 10-year note climbing above 3.7%…. Investors are now calculating the risks of renewed dollar inflation. They have cause to be worried, given Washington’s astonishing bet on fiscal and monetary reflation…. Chinese and other dollar asset holders are nervous. They wonder–as do we–whether the unspoken Beltway strategy is to pay off this debt by inflating away its value…. The Fed is desperate to keep mortgage rates low to reflate the housing market, and last week it promised to inject hundreds of billions of dollars…. This week the bond vigilantes are showing what they think of that offer, bidding up yields even higher. It’s not going too far to say we are watching a showdown between Fed Chairman Ben Bernanke and bond investors, otherwise known as the financial markets. When in doubt, bet on the markets.”
Tim Pawlenty (2011): US headed for double-dip: “I think we’re headed for a double-dip…
…That’s my personal view…. It may look like there is temporary improvement because they have artificially infused the economy with government money, but the consequences of that will, as sure as we’re sitting here, will rear its head…
Paul Gigot (2009): The Bond Vigilantes: “The disciplinarians of U.S. policy makers return…
They’re back…. The vigilantes… appear to be returning with a vengeance now that Congress and the Federal Reserve have flooded the world with dollars to beat the recession. Treasury yields leapt again yesterday at the long end, with the 10-year note climbing above 3.7%…. Investors are now calculating the risks of renewed dollar inflation. They have cause to be worried, given Washington’s astonishing bet on fiscal and monetary reflation…. Chinese and other dollar asset holders are nervous. They wonder–as do we–whether the unspoken Beltway strategy is to pay off this debt by inflating away its value…. The Fed is desperate to keep mortgage rates low to reflate the housing market, and last week it promised to inject hundreds of billions of dollars…. This week the bond vigilantes are showing what they think of that offer, bidding up yields even higher. It’s not going too far to say we are watching a showdown between Fed Chairman Ben Bernanke and bond investors, otherwise known as the financial markets. When in doubt, bet on the markets.
The odd person out is Alberto Alesina.
The interesting thing is that two years earlier, Alberto Alesina agreed that “because of the American Recovery and Reinvestment Act of 2009, the U.S. unemployment rate was lower at the end of 2010 than it would have been without the stimulus bill.”
I do wonder what pieces of evidence could possibly have made him more pessimistic about the effects of the ARRA on unemployment over the past 30 months. What do people think?
Back in February 2012, it was Caroline Hoxby who strongly disagreed with the statement that the ARRA had reduced the unemployment rate; Ed Lazear who disagreed; and Ken Judd who was uncertain. This time Hoxby does not answer, Lazear is off the panel, and Judd agrees that the ARRA lowered unemployment.
Today at The Upshot, David Leonhardt has a piece showing the importance of looking at the tuition actually paid when calculating the value of a college degree. Once the value of aid is included, the return on a college degree still appears to be substantial. But that calculation might not come out the same way for proprietary, or for-profit, universities. Research indicates that the high costs incurred by students attending for-profit schools outweigh the benefits of a degree. These low returns on investment from these universities amplify rates of default and student debt, contributing to the growing national accumulation of student debt.
A paper by Harvard University professors of economics David J. Deming, Claudia Goldin, and Lawrence F. Katz finds that the marginal returns of for-profit universities are outweighed by the high rates of default and long-term burdens of student debt, compared to community colleges and non-profit universities. They determine that in 2009, 26 percent of students with $5,001 to $10,000 in cumulative federal student loans came from for-profit universities, as opposed to 10 percent of students from community colleges and 7 percent of students from four-year public and nonprofit schools. Similarly, students from for-profits were more likely to be unemployed and experience lower earnings six years after starting college than observationally-similar students from public and non-profit institutions.
Another study by Stephanie Riegg Cellini, an associate professor of public policy and economics at George Washington University, and Latika Chaudhary, a professor of economic history at Scripps University, calculates the exact return on investment for students enrolled in proprietary universities. Cellini and Chaudhary find that students who complete an associate’s degree at a for-profit institution receive a 4-percent return per year of education. This return on investment falls below estimates of the returns of public community colleges, yielding a return estimated to range between 5 to 8 percent, and traditional four-year colleges, which yield an estimated return of between 10 to 15 percent. Incidentally, returns to for-profit universities also fall below the returns needed to offset the costs incurred by students attending these institutions.
Despite attempts to open doors to higher education for non-traditional students, research finds that degrees from for-profit institutions yield a poor return on investment. That’s also why policy initiatives to address issues of student debt and default were recently enacted. In 2011, the “gainful employment” rule implemented federal restrictions to student-aid eligibility for students attending for-profit institutions. Central to this policy was the regulation that after three consecutive years of student rates of default reaching 30 percent or more, the program would be ineligible to apply for federal aid for at least three years.
On March 24, 2014, the regulations for this policy were revised and re-introduced by the U.S. Department of Education, allotting 60 days for the public to provide feedback. In the following months, the department will finalize the regulation and a second attempt will be made to tackle the growing national student debt. Understanding the rate of return for institutions of higher education remains essential for addressing issues of default and student debt, as well as for confronting the broader ties between education and human capital.
Philippa Skett: Ebola outbreak: What you need to know about its spread: “The recent Ebola epidemic in West Africa…
…has so far claimed more than 670 lives…. Now it has reached Lagos in Nigeria…. Ebola… causes extensive internal bleeding, and can lead to those infected dying from shock. Initially, those infected experience a sudden onset of fever, muscle pain, weakness, headaches, a sore throat and vomiting and diarrhoea…. Ebola is highly contagious and can be transmitted even after those infected have died, because the virus is transmitted via bodily fluids. It has a 90% fatality rate…. Bausch thinks it is unlikely that the outbreak will spread through Europe or the US if someone infected gets on an international plane…. Currently there is no cure…
Over at Project Syndicate Ten years ago we had ridden the bust of the internet bubble, picked ourselves up, and continued on. It was true that it had turned out to be harder than people expected to profit from tutoring communications technologies. That, however spoke to the division of the surplus between consumers and producers–not the surplus from the technologies. The share of demand spent on such technologies looked to be rising. The mindshare of such technologies looked to be rising much more rapidly.
Thus a decade ago we—or at least I—could look forward semi-confidently to more of the measured North Atlantic prosperity-frontier productivity growth rates characteristic of the 1950s, 1960s, and 1990s, and the fading of the anemic Nixonian 1970s and Reaganite 1980s into memory. Virtual experiences and information would become an increasing part of what we cared about and become essentially free. Stuff would become hyper-cheap. And capabilities would be pulled along in the gravity of the other two. Nearly all citizens of the North Atlantic would then find the material world, at least, to be a cornucopia.
How have we gone awry?
First, the virtual-experiences-and-information part is coming true. Gossiping with and about our imaginary friends, frenemies, and enemies; voyaging to and seeing things that may or may not exist; protecting our imaginary allies; and vanquishing our imaginary enemies–all of these dreams are becoming not just easier and cheaper to dream but the talent, skill, energy, and technology equipping us to dream more interesting dreams inspires and will continue to inspire ever-more awe. I have put it in a way to make you ask: “So what?” But since before Homer began to sing around the hearthfire about the wrath of Akhilleus and what followed therefrom, our dreams have been our primary recreation. It is one of the major things that wealth is for.
Second, the stuff-becoming-hyper-cheap part is coming true. Simply go to a WalMart, or a CostCo, or any of their analogues outside the United States and compare to a generation or two ago. The first consequence of the computer and communications revolution was to put every factory in the world cheek-by-jowl with its market, and thus to allow workers very far from California or New York State or Britain or Germany to bid for the business of making even sophisticated manufactures for the consumers of Los Angeles and New York City and London and Frankfurt. And the next consequence Will be the robotization of global manufacturing.
But even as the real prices of virtual experiences, information, and stuff have collapsed and continue to collapse relative to other scarce and desired commodities, value of human labor located in the North Atlantic has been going down as well. North Atlantic labor is and will be no longer valued so much for its location, its ability to move things with large muscles, its ability to manipulate things with small muscles, and even the ability of the half-a-shoebox 50-watt supercomputer that are human brains to serve as basic cybernetic components in process control loops. And this has meant that capabilities–in many cases the capabilities that are in the sea of middle-class status–appear and are increasingly out of reach for what may be becoming the bulk of the North Atlantic population. A job in which one is a valuable part of the useful production team that fits into a career. The ability to keep medical catastrophes from also becoming household financial catastrophes. A dwelling place that does not transform getting where you need to go into a huge shlepp. Affordable education for your children then give them opportunity for upward mobility. The bulk of the population, especially in the United States, greatly feels that our economy is vastly underperforming along this dimension of providing capabilities relative to what we confidently expected two generations ago.
For those who primarily value the virtual experiences, the information, and the stuff, modern North Atlantic society is a cornucopia, a paradise. And the same is true for those lucky enough to have been able to capture an inordinate share of the value created as abundance and politics have put enormous downward pressure on the rewards of labor. But for everybody else who primarily value the capabilities that are the indicia of what they used to think of as middle-class status? What they want to demand–although they really do not know it–is that their politicians and plutocrats figure out a way to connect and use hyper-cheap stuff and effectively-free information and virtual experiences to provide what are the key middle-class capabilities.
Emily Badger: How big cities that restrict new housing harm the economy: “For the last couple of years…
…San Francisco has been erupting with periodic protests aimed, rather imprecisely, at a nexus of grievances related to gentrification, affordable housing, transportation, the tech industry, newcomers to the city, its changing skyline and Silicon Valley to the south. The city is screaming, although at what its protestors seem a little confused. ‘In my view, the whole debate here misses the point’, says Enrico Moretti…. ‘People are marching against Google buses when they should be marching for more housing permits.’ At the root of San Francisco’s tension is a mismatch of supply and demand: Affluent workers have been flocking to the area for its tech jobs, but as the number of jobs in the region has grown, the number of housing units to accommodate people taking them hasn’t remotely kept pace. As a result, rents are going up. Low-income residents are pushed out. Landlords who see more lucrative opportunity in condo conversions have ramped up evictions. ‘Once I started seeing what was going on in the San Francisco public debate, I got appalled by the lack of understanding of basic economics among the general public, the protesters’, Moretti says. ‘And it’s even more problematic among policymakers.’ The culprit here isn’t really the tech industry. It’s much-harder-to-protest land-use policy. And from Moretti’s point of view, the rest of us should care… because the economic repercussions of such local decisions stretch nationwide…
Should-Reads:
Yuriy Gorodnichenko: MH17: “The separatists, or more appropriately terrorists, have by now killed hundreds of people in Slovyansk, Kramatorsk, Donetsk, Luhansk and many other cities in Eastern Ukraine. And their violence and brutality has only been escalating…. The separatists firmly believed that they had shot down another military airplane and quickly claimed credit for it in social media. However, slowly they realized that the airplane was a civilian one…. This would have never happened if Russia’s President Vladimir Putin did not give BUKs, tanks, guns and other arms to the terrorists…. This would also never have happened if the international community had not been so complacent about Putin’s aggression against Ukraine…. The time has come for the international community to show leadership and put together a united front to stop this evil. It could not be any more black and white than it is now.”
David Atkins: The four basic American reactions to record inequality: “Those on the progressive left understand that at some level the takings of the top 4% constitute a theft from the other 96% who have lost over a third of their net worth…. Those in the neoliberal/center-left camp do believe that modern inequality is a problem, but that this too shall pass and we can trudge along as usual after a recovery…. Then you have the center-right. They take rational market theory as an article of faith, believing with religious fervor that if the labor and capital markets are allowed to act unimpeded, then both labor and capital will find a comfortable, fair and balanced price. No amount of evidence can convince them that both human life and dignity are priced incredibly cheap on the open market, or that that late 19th century was not, in fact, the model of a moral or economically functional society…. Finally, there is the far right. These are the True Believers: the ones who not only buy into the center-right line, but also the raw Objectivism of Ayn Rand and Fox News that says that the only economic injustice in society is the one being perpetrated by the government itself, taking money from the ‘deserving’ and giving it to the ‘undeserving’. In this view, the only inequality that matters to them is redistributive taxation to “others” in society…”
Danny Vinik: Richard Fisher Has Wrongly Warned of Inflation 5 Times Since 2011: “This isn’t the first time Fisher has been at odds with his colleagues. When the Fed undertook ‘Operation Twist’ in 2011, Fisher was one of three members of the Federal Open Market Committee… to dissent. He’s… been the committee’s staunchest inflation hawk… Monday’s… was just the latest of many warnings…. April 8, 2011: ‘Having done our job, I see many risks to the Federal Reserve overstaying its position…’ September 27, 2011: ‘I might conclude by sharing my concerns about the prospect of temporarily allowing more inflation as a means of unlocking expansion in final demand…. [O]nce unleashed, inflation combines with stagnation to make stagflation…’ April 10, 2012: ‘I’m just reporting what I hear on the street, which is a real concern that with our expanded balance sheet, we are just a little bit in an ember of what could become an inflationary fire.’ September 20, 2012: ‘I do not see an overall argument for letting inflation rise to levels where we might scare the market…’ 5. June 4, 2013: ‘I argue that the Fed is, at best, pushing on a string and, at worst, building up kindling for speculation and eventually, a massive shipboard fire of inflation.’ So take Fisher’s predictions with a grain of salt. More than anyone else on the FOMC, he has been wrong about the economic implications of Fed policy…
And:
Should Be Aware of:
Peter Beinart: Paul Ryan and the Cycle of Compassionate Conservatism: “1. A Democrat wins the presidency and expands the size of government. 2. Republicans mobilize to prevent big government from destroying the American way of life. 3. Republicans take Congress. 4. Congressional Republicans battle the Democratic president over the size of government. They cut spending and reduce the deficit, but in the process become wildly unpopular. 5. The Democratic president uses the unpopularity of the Republican Congress to help win reelection. 6. Republican presidential candidates ditch their assault on big government and become compassionate conservatives. We’re now back at Stage Six…. Potential GOP presidential candidates are falling over one another to run as Bush did in 2000: as compassionate conservatives. Rand Paul is arguing for shorter prison sentences. Republican Governors John Kasich and Mike Pence are expanding Medicaid. Marco Rubio recently said it was time for Republicans to stop trying to balance ‘the budget by saving money on safety-net programs’. Even budget cutter extraordinaire, Paul Ryan, wants to ‘remove it [the fight against poverty] from the old-fashioned budget fight’…. If history is any guide, stage seven of the Republican cycle is that a presidential candidate professing compassionate conservatism loses the popular vote by a half-million votes but is handed the presidency by the Supreme Court…”
D.R. Tucker: Tyson’s Knock-Out: “Tell me, what did Neil DeGrasse Tyson do to be targeted by the wingnuts at National Review?… Cooke’s demonization of Tyson is reminiscent ‘of recent remarks by Jeb Bush that scientists and those that believe in what science says, are “sanctimonious”‘. Of course, there’s another pretty influential motivating factor. For years, National Review has been heavily dependent on advertising from the fossil fuel industry…”
Maria Grazia Attinasi and Alexander Klemm: The Growth Impact of Discretionray Fiscal Policy Measures: “18 EU countries… 1998-2011… a dataset of fiscal measures based on the yield of actual legislative and budgetary measures, rather than approximations…. We find that fiscal consolidation can be a drag on economic growth in the short-term… expenditure-based adjustment tends to be less harmful than revenue-based adjustment…. Reductions in government investment and consumption are found to be growth reducing… indirect tax increases are found to have a particularly strong negative impact…”
Walter Jon Williams: Amazonia: “Now remember that Amazon’s business plan is to Conquer the World. And once they’ve succeeded… you won’t be nearly as useful…. They could chop your royalty from 70% to 35% (which they’ve already done in Japan and India)…. If you’re in the writing business, you should be aware that it’s a business. Amazon doesn’t love you any more than Macmillan or Hachette or HarperCollins. They’re in business to make money for stockholders, or to Rule the World, or for some other reason that seems logical to them. So it behooves us to make ourselves useful to as many publishing titans as possible…. Variety is good, options are good, competition is good. And our decisions on which options to take should be as ruthless and rational as those of anyone else in the business, because that’s in our interest, not in theirs…”
Gabriel Chodorow-Reich: Financial stability and monetary policy: “In the winter of 2008, the Federal Reserve began an unprecedented campaign to combat the economic downturn…. A near zero federal funds rate, explicit communication regarding the forward path of the funds rate, and a balance sheet that ballooned to more than $4 trillion as of this writing. With memories of the 2008-09 financial crisis still fresh, the policies have prompted concern for their effect on financial stability…. The policies pursued by the Federal Reserve since late 2008 have… [had a] cumulative effect on life insurance companies appears to have been stabilising, as the benefit to legacy asset values and demand for new products outweighed any reaching for yield. While some money market funds did engage in reaching for yield in 2009-11, the compression in spreads in recent months has sharply limited the scope for such behaviour…. Financial-stability concerns for monetary policy should not stem from concerns about the riskiness of these sectors.”
Simon Wren-Lewis: Synthesis!? David Beckworth’s Insurance Policy: “I really like David Beckworth’s insurance proposal against ‘incompetent’ monetary policy. Here it is…. 1) Target the level of nominal GDP (NGDP). 2) ‘The Fed and Treasury sign an agreement that should a liquidity trap emerge… they would then quickly work together to implement a helicopter drop. The Fed would provide the funding and the Treasury Department would provide the logistical support to deliver the funds to households. Once NGDP returned to its targeted path the helicopter drop would end and the Fed would implement policy using normal open market operations. If the public understood this plan, it would further stabilize NGDP expectations and make it unlikely a helicopter drop would ever be needed.’… Jonathan Portes and I proposed something very like it…. Now this does not mean that Market Monetarists and New Keynesians suddenly agree about everything…. For David this is an insurance against incompetence by the central bank, whereas Keynesians are as likely to view hitting the ZLB as unavoidable if the shock is big enough. However this difference is not critical…”
Fabian Pfeffer et al.: Wealth Levels, Wealth Inequality, and the Great Recession