Via The Browser, I came across a very good article on the differing post-crisis outcomes of the U.S. and European economies in The New Yorker by John Cassidy (and in the process became newly acquainted with the term ordoliberalism). As an aside, Cassidy is author of “How Markets Fail: The Logic of Economic Calamities”, one of the better books analysing the makings of the Great Recession. In the New Yorker article, Cassidy blames austerity in Europe and lauds the quasi-Keynesian fiscal and monetary policies in the U.S. Personally, I think Europe’s woes are equally due to the straightjacket that is the euro (which has prevented the periphery more easily adjusting to the credit crisis shock) and an intrinsically lower potential growth rate owing to demographics and a tighter energy resource constraint.
And while we are on the question of austerity and debt, Reinhart and Roghoff have mounted a blistering attack on Paul Krugman in the form of an open letter. I think there is a genuine sense of hurt here since Krugman in the past recognised their academic credentials and integrity before declaring open warfare over the past few months. And here is Krugman’s rejoinder.
Of course, economists rarely agree on anything. For example, Iceland has been held up as the poster child of a successful adjustment in the wake of the credit crisis. But this is just not true, according to Jon Danielsson of the London School of Economics (via Naked Capitalism).
In three weeks time, I am off to Greece as part of a political tour organised by the former New York Times journalist Nicholas Wood. I hope the trip will spawn a series of the on-the-ground blog posts, but in the meantime I am reading Yanis Varoufakis insightful blog on Greece’s travails.
Enough of economics. Here is Martin Wolf following up last week’s Financial Times article on the critical issue of climate change.
And last but not least, the most important publication of the last week or so is an academic paper in Nature Geoscience by Otto et al. Unfortunately, it is behind a paywall, but a good synopsis can be found here. The paper argues that the climate sensitivity to a doubling of CO2 is somewhat below that advanced in the last assessment report of the Intergovernmental Panel on Climate Change (IPCC) published in 2007. This is undoubtedly good news, but not quite as good as many would believe. I intend to blog on this soon.