Edward Conard

Top Ten New York Times Bestselling Author

  • “…a must-read for serious students of economic policy.” - Glenn Hubbard, Dean, Columbia Business School, and former Chairman of the Council of Economic Advisers
  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “…a comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
  • “Unintended Consequences offers deep and well-argued analyses on almost every issue.” - The New York Times
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
  • “Unintended Consequences is far smarter and more thought-provoking than most economics written for the general public” - Greg Mankiw, Harvard University, Former Chairman of the Council of Economic Advisors
  • “…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “A full-throated defense of economic dynamism.” - The Wall Street Journal
  • “…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
  • “…a very valuable contribution.” - Larry Summers, former Secretary of the Treasury and director of the National Economic Council, president emeritus, Harvard University
Upside of Inequality Oxford Unintended Consequences

Macro Roundup


Tuesday, July 1, 2014

AI Summary. Turnover among the largest 500 companies has accelerated: in 1960 it took 20 years for one-third of the list's constituents to change, while the same degree of turnover now occurs in about four years.

Economist Staff Fortune
Date Posted:
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The turnover rate of the Fortune 500 has accelerated dramatically, reflecting the dynamic nature of modern economies. In 1960, it took 20 years for one-third of companies to change, now it takes just 4 years @TheEconomist

Has turnover among the largest companies accelerated?

Core argument: Turnover of one-third of the Fortune 500's constituent companies took 20 years as of 1960 but now occurs in four years.

The turnover rate of the Fortune 500 has accelerated dramatically, reflecting the dynamic nature of modern economies. In 1960, the list's composition was so stable that it took 20 years for one-third of the companies to change. Today, this level of turnover occurs in just four years, highlighting the rapid pace of innovation and competition in the global market. This shift underscores the increasing volatility and adaptability required for companies to maintain their positions. The faster turnover rate suggests that businesses must continuously innovate and adapt to survive, as technological advancements and globalization intensify competition. This trend has significant implications for economic policy and corporate strategy, as it emphasizes the need for agility and resilience in an ever-evolving economic landscape.

Takeaways by Macro Roundup® AI

  1. Turnover of one-third of the Fortune 500's constituent companies took 20 years as of 1960 but now occurs in four years.
  2. The faster Fortune 500 turnover rate suggests that companies must continuously innovate and adapt to hold their positions as technological advancement and globalization intensify competition.
  3. The accelerated turnover of the Fortune 500 carries implications for economic policy and corporate strategy, emphasizing agility and resilience for firms in an evolving economic landscape.

"Back in 1960 the composition of theFortune500 was so stable that it took 20 years for a third of the constitutent companies to change. Now it takes only four years." Economist Staff, "Global Heroes" The Economist, March 12, 2009. Available at:http://www.economist.com/node/13216025

Tuesday, July 15, 2014

AI Summary. Most recessions are attributed to inadequate demand, and evidence that prices and wages are sticky in the short run implies expansionary policy in a depressed economy is unlikely to be inflationary, with fiscal policy more effective than monetary expansion when interest rates are at zero. Inflation remaining positive despite high unemployment points to downward wage rigidity and anchored expectations.

Paul Krugman New York Times
Date Posted:
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Keynesians have accurately predicted the effects of monetary and fiscal policy, contrasting with equilibrium macroeconomic theories that have often been incorrect.

Does wage stickiness make expansionary policy noninflationary in a depressed economy?

Core argument: Most recessions are attributed to inadequate aggregate demand, and the IS-LM model illustrates how monetary and fiscal policy affect that demand, while aggregate supply lacks a comparably robust model.

Most recessions are attributed to inadequate demand, and the IS-LM model effectively illustrates how monetary and fiscal policy influence this demand. While aggregate supply lacks a robust model, evidence shows prices and wages are sticky in the short run. This suggests expansionary policies in a depressed economy are unlikely to be inflationary, and fiscal policy is more effective than monetary expansion at the zero lower bound. Since 2008, traditional Phillips curves have been challenged as inflation remained positive despite high unemployment, indicating downward wage rigidity and anchored expectations. Despite these challenges, Keynesians have accurately predicted the effects of monetary and fiscal policy, contrasting with equilibrium macroeconomic theories that have often been incorrect.

Takeaways by Macro Roundup® AI

  1. Most recessions are attributed to inadequate aggregate demand, and the IS-LM model illustrates how monetary and fiscal policy affect that demand, while aggregate supply lacks a comparably robust model.
  2. Evidence that prices and wages are sticky in the short run suggests expansionary policy in a depressed economy is unlikely to be inflationary, and that fiscal policy is more effective than monetary expansion at the zero lower bound.
  3. Inflation has remained positive despite high unemployment since 2008, challenging traditional Phillips curves and pointing to downward wage rigidity and anchored inflation expectations.

"...most recessions are the result of inadequate demand. And we have a pretty good model of aggregate demand, and of how monetary and fiscal policy affect that demand. That model is IS-LM, with endogenous money as appropriate. You can, for some purposes, usefully think of the IS curve as derived from inter temporal optimization...We do not have an equally good model of aggregate supply. What we have, instead, is an observation: prices and wages clearly are sticky in the short run, and maybe for longer than that.....The thing is, for many purposes this slightly vague notion of aggregate supply is enough; we can, for example, be fairly sure that expansionary policies in a depressed economy won’t be inflationary, and we can use the pretty good demand side model to tell us that monetary expansion won’t work but fiscal policy will when we’re at the zero lower bound....Practicing Keynesians have tended to rely on “accelerationist” Phillips curves in which unemployment determined the rate of change rather than the level of inflation. So what has happened since 2008 is that both of these approaches have been found wanting: inflation has dropped, but stayed positive despite high unemployment. What the data actually look like is an old-fashioned non-expectations Phillips curve. And there are a couple of popular stories about why: downward wage rigidity even in the long run, anchored expectations....And it remains true that Keynesians have been hugely right on the effects of monetary and fiscal policy, while equilibrium macro types have been wrong about everything."
Aggregate Demand, Aggregate Supply, and What We Know (Wonkish)

JULY 14, 2014 10:44 AMJuly 14, 2014 10:44 am

Brad DeLong finds Chris House taking me to task for failing to “own up” to the puzzling failure of deflation to emerge despite years of depression, and is baffled — because I have in fact repeatedlyacknowledged the puzzle, and talked about it a lot.

Partly this is House once again desperately seeking false equivalence; he starts from the proposition that everyone must be equally at fault, and that I must therefore be as unwilling to acknowledge wrong predictions as the equilibrium macro types — no need to check what I actually wrote. (I’m still waiting for examples of things I’ve said that are as crazy as Prescott’s insistence that there is no evidence that monetary policy matters.)

But let’s leave that stuff aside; there’s a point I think needs making about how a Keynesian (or if you like, a Hicksian — let’s not get into the question of What Keynes Really Meant) thinks he knows.

As I see it, we have a general proposition — most recessions are the result of inadequate demand. And we have a pretty good model of aggregate demand, and of how monetary and fiscal policy affect that demand. That model is IS-LM, with endogenous money as appropriate. You can, for some purposes, usefully think of the IS curve as derived from intertemporal optimization, but that’s a metaphor rather than a principle.

We do not have an equally good model of aggregate supply. What we have, instead, is an observation: prices and wages clearly are sticky in the short run, and maybe for longer than that. There’s overwhelming evidence for that proposition, but in trying to justify it we engage in various kinds of hand-waving about menu costs and bounded rationality.

The thing is, for many purposes this slightly vague notion of aggregate supply is enough; we can, for example, be fairly sure that expansionary policies in a depressed economy won’t be inflationary, and we can use the pretty good demand side model to tell us that monetary expansion won’t work but fiscal policy will when we’re at the zero lower bound.

Still, we try. New Keynesians do stuff like one-period-ahead price setting or Calvo pricing, in which prices are revised randomly. Practicing Keynesians have tended to rely on “accelerationist” Phillips curves in which unemployment determined the rate of change rather than the level of inflation.

So what has happened since 2008 is that both of these approaches have been found wanting: inflation has dropped, but stayed positive despite high unemployment. What the data actually look like is an old-fashioned non-expectations Phillips curve. And there are a couple of popular stories about why: downward wage rigidity even in the long run, anchored expectations.

The point, however, is that the price-setting side of the models has never been an integral part of Keynesian doctrine, and the surprising resilience of inflation hasn’t undermined the core insights.

And it remains true that Keynesians have been hugely right on the effects of monetary and fiscal policy, while equilibrium macro types have been wrong about everything. Krugman, Paul, "Aggregate Demand, Aggregate Supply, and What We Know (Wonkish)" The New York Times, July 15, 2014. Available at:http://krugman.blogs.nytimes.com/2014/07/14/aggregate-demand-aggregate-supply-and-what-we-know-wonkish/