I was lucky enough to get assigned to coteach a macro course (with Charles Engel) this semester. However, as time passed, it seemed strange to go through the models without referring to current events — in my half of the course, I got to teach one lecture in person, and then had to switch to remote teaching –, so here is my digression from the syllabus, talking about — among other things — why a “V” recovery is not likely, contra Larry Kudlow, Stephen Moore, et al.
Source: Deutsche Bank, March 30, 2020.
Today’s presentation is here (I’m afraid narrated lecture restricted to enrolled students). Next lecture will go over recent models of the crisis.
Webpage for my half of the course, with link to first half.
Larry Kudlow: Very possible for ‘V-shaped’ recovery by Summer
This is from the fool who told us that we had COVID-19 under control!
I started to listen to that interview with John Catsimatidis and Stephen Moore from 4 weeks ago but I had to immediately stop when I heard John Catsimatidis’s incredibly loud voice. This fellow ran a really stupid campaign to be our mayor a few years ago, which only reminded me why competition for groceries in Manhattan does not exist. Three grocery store chains two of them owned by the fat and loud pirate. No wonder this bozo thinks Moore is one of this nation’s “leader economists”. BTW – CATS got very few votes as we New Yorkers are not THAT stupid.
Brian Kilmeade interviewed Kudlow? He is one of the two clowns on Fox and Friends who routinely lie to their listeners as they likely sexually harass the blond girl in the middle. Yea – this is the garbage Trump loves this garbage.
Thank you for this Menzie. It’s very kind of you to share this material which is so relevant right now, which I know as you are very conscientious towards preparing your students for their futures, the relevancy of the topic was paramount.
Courtesy of an NYT story which had the link:
https://cid.utexas.edu/sites/default/files/cid/files/covid-risk-maps_counties_4.3.2020.pdf?m=1585958755
This gets to asymptomatic carrying of the virus, and “undetected” outbreaks in counties, which are shown to have very few documented cases at any moment. It’s strongly implying once you have one case actually documented, your chances of outbreak in that particular county (I think sometimes read “rural area” here) are quite high.
Dear Folks,
Just a little information to supplement Menzie’s. The National Association of Business Economists (NABE) had a webinar yesterday on the use of high-frequency data to track the effects of the virus. Adobe, the firm with the .pdf files, is coming out with a new data set of online transactions, which have been aggregated and made anonymous. The set has information from 2014 for the U.S., and a little bit for the UK. Computer hardware and software have dropped in price, so that $1 now buys what would have cost $1.03 in 2014. Offline prices have increased, to counterbalance that. As you can imagine, online virus protection purchases are way up, as are purchases of OTC drugs, but apparel sales are also up. Google Trends can also be used to track the effects of the virus, including searches for unemployment claims, which are reported to be good real-time predictors of claims filed. No prediction was made of any possible recovery trajectories, but a thorough explanation of how a V-shaped recovery trajectory could occur is still lacking. It may be the case that it will occur, but how it would is not obvious from the data.
J.
For just a moment, I thought “Online virus protection purchases are way up because we are on the internet so much during the quarantine?” Oh, wait, Julian is writing actual English.
Dear Mr. Silk:
In reference to your V-shaped recovery inquiry, you’d have to access the part of Lawrence Kudlow’s “mind” which powers his imagination.
From the powerpoint, it looks like the textbook model predicts we’ll get back to the same full employment equilibrium. But the lecture itself questions that because workers and firms will disappear (if I interpret correctly). Maybe we need better textbook models? That include multiple equilbria and path dependence.
Tom: Yes, that’s my ad hoc modification to the textbook model. But in point of fact, even what Krugman calls “paleo-Keynesian” models will have potential GDP fall relative to baseline over time as lagging investment results in a smaller capital stock…
I protest!!!!! I demand explanation!!! When is Professor Chinn getting his own cartoon rendering??
https://www.youtube.com/watch?v=Edc2fDXnDCU
Here’s one of my nonsense questions that Menzie usually wisely ignores (but I always hope he’ll make the rare exception and answer when I attempt it)
Menzie, if someone had come up to you in 1985 and said that “Ron Vara” was going to be portrayed as a literal animated cartoon character on a popular late night talk show in the year 2020, what would you have said to that person??