Archive for November 3rd, 2010

Fiscal Multipliers – How big or small?

November 3, 2010

Tyler Cowen points to an interesting paper by Ethan Ilzetzki, Enrique Mendoza, and Carlos Vegh. There are multiple options to read the paper:

Here is a new paper (gated) on fiscal multipliers (shorter, ungated version here, powerpoints here, slides here, ungated but slightly older version here

I read the ungated shorter version (:-)). The authors look at fiscal multipliers across 45 countries (20 developed and 25 developing) and divide these economies further into different types. The findings are:

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Was Fed completely clueless in Great Depression?

November 3, 2010

Milton Friedman said that Fed created Great Depression. There is a lot of fireworks  going around in blogosphere with respect to Friedman’s ideas in great depression, Japan and now. No second guesses for who is involved in the debate. On one side is Krugman (see this, this and this) who says Friedman’s monetary analysis does not work in a liquidity trap and other side we have Scott Sumner, David Beckworth etc who say it is not as bad (am still to read the details).

Mark Carlson, Kris James Mitchener, Gary Richardson have written a superb paper which kind of shows both sides of the story. They point to an event study around April 1929 just before the beginning of the great depression. State of Florida is known for its oranges and around 1929 the crop was impacted because of fruit fly infestation. As a result, large % of orange crop was destroyed and threatened to spread to other regions as well.

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