Daniel asks, Brad DeLong delivers, Krugman elaborates.
This is also a good post recently from Brad:
"From my perspective, the strange thing is that people kept trying to prove uniqueness and stability of general equilibrium. Simply look at:
and try to avoid the conclusion that to first order the U.S. economy can be in at least meta-stable equilibrium with an adult employment-to-population ratio of about 63% or with an adult employment-to-population ratio of 58.5%--and probably anywhere in between as well.
Proposing that economists pursue the research program of demonstrating that the economy has a unique stable equilibrium has thus always seemed to me to be like proposing that physicists pursue the research program of demonstrating the feathers fall unusually rapidly..."
Lions are not better than tigers
2 hours ago