"Words ought to be a little wild, for they are the assault of thoughts on the unthinking" -JMK
- It's not every week that you get two different references to Frank Knight's Risk, Uncertainty, and Profit (1921) in the popular press. Here, Lane Wallace discusses Knightian uncertainty and its relation to the way NASA deals with risk vs. how BP deals with risk. Here, Mark Thoma links to Peter Dizikes talking about uncertainty vs. risk and investment. Knight is a fascinating figure, and his book is a good reminder of how important the idea of uncertainty about the future was to economists in this period. It came out around the same time that Keynes wrote his Treatise on Probability, which covered similar issues of human uncertainty that would later be featured prominently in the General Theory.
- Yglesias reviews the vast chasm between journalists who write about politics and political scientists who write about politics. The point is well taken, and the chasm is even wider for economics. This is one reason why I think blogging is so important.
- Jonathan Catalán has a good post up on the gold standard and bubbles. The gold standard elicits some weird reactions from people. In researching my 1920-21 depression paper I had the opportunity to read a piece by Hayek from 1925 about American monetary policy in the 1920s, and Keynes's Tract on Monetary Reform. Hayek didn't gush about the gold standard and acknowledged it for what it was - a human institution. Keynes had his critiques and a flair for the dramatic (i.e. - "the gold standard is already a barbarous relic"), but he highlighted several positive elements of the gold standard and especially praised it's role historically. Somehow, in the late 20th century with the reality of the gold standard several decades removed, we've gone insane about it. For some people "barbarous relic" is all they associate with it. For others, it's the panacea that we've abandoned. Jonathan has one of the good, sober approaches to understanding what the gold standard was that approaches it on its own terms.
- The NEP-DGE blog has a new paper up demonstrating that the size of the multiplier you get is very closely tied to your assumptions about Ricardian equivalence.
- Mickey Edwards distinguishes between "limited government" and "small government". The Constitution mandates a government whose powers are limited, but the size of the government is a policy question to be decided by the people. I think it's a very good distinction to make.
- My 1920-21 paper is almost ready for submission! I heard back from a colleague of mine that was reviewing it. Unfortunately I think I need to cut it down dramatically, including some of the more interesting but more tangential sections. However, I should be able to spin off at least one of them into another short article some time in the future. Very exciting stuff! After all this background reading and realizing that there's so much more to talk about, I feel like I could write a book on the episode... perhaps some day I will. I always thought writing a book seemed like such a monumental task, but I can understand now how people do it. There's a point where you get so immersed that you can just keep writing, and writing, and writing.
The Federal Reserve: I Repeat Myself
16 minutes ago