Giant Thursday Roundup (4/26/2012)

Work is getting more demanding again, as I teach myself how to teach finance classes. Thursday Roundup will have to take a break in the month of May. But in the meantime...

1. Simon Wren-Lewis has a great piece about modern macro methods and publication bias, and by "great" I naturally mean "agrees with stuff I've said in the past"...check out this money quote he pulls from John Muelbauer:

While DSGE models are useful research tools for developing analytical insights, the highly simplified assumptions needed to obtain tractable general equilibrium solutions often undermine their usefulness. As we have seen, the data violate key assumptions made in these models, and the match to institutional realities, at both micro and macro levels, is often very poor.

I feel like I've been saying this for quite some time...good to see I'm not alone...

2. Go read this great piece in The Atlantic on why we need more high-skilled immigration, and we need it NOW! If you still are afraid that high-skilled immigrants will TAKE YER JERBS, do a big and immediate rethink! High-skilled immigrants will CREATE YER JERB.

3. JW Mason argues against Roger Farmer's assertion (on this blog) that disequilibrium dynamics should be ignored.

4. Tyler Cowen has more on Baby Boomer retirement and the labor force participation rate. Still doesn't seem to explain the bulk of the current unemployment, but could make a difference as the economy recovers.

5. John Cochrane explains how a run on a money market fund works. A money market fund is not really "money"!

6. Mark Thoma and Tim Taylor point out something incredibly important that few people realize: U.S. government purchases have been going down, down, down. What has been going up are transfer payments.

7. Matt Yglesias attempts a rebuttal of my grandadvisor Greg Mankiw on the notion that rich people move to flee high taxes.

8. Paul Krugman argues that no, printing money doesn't distribute money away from the middle class.

9. Krugman also referees an Yglesias/Avent debate on the Zero Lower Bound, and concludes that the ZLB is not just psychological.

10. The Economist magazine has a neato series on the rise of 3D printing and what it means for manufacturing.

11. Tyler Cowen on Japan's cursed financial equilibrium. Someday it will end in a Japanese default. That day is likely to come within the decade. I may be the only person on the planet who thinks this will be a good day for the Japanese economy...

12. Frances Woolley does a great (and lengthy) Econ 101 explanation of why tax cuts are unlikely to increase government revenues. I expect every Republican and supply-sider out there to read it immediately, be convinced, and change their policy stance on this important issue .

13. Calculated Risk shows us the updated state of the housing bubble, in pictures. Noah summary: the bubble has entirely deflated, but "undershoot" may still push prices a bit lower before they bottom.

14. Joseph Stiglitz, Nobel Prize-winning economist and former physics major, blames the economics discipline for the global financial crisis.

15. Brad DeLong: What the world needs is for the "strong dollar" policy - in other words, the dollar's reserve currency status - to end, and end now.

16. Guess which sector has been responsible for the bulk of the job losses during this unusually weak recovery? Construction? No. Finance? Ha. It's government, yo. Paul Krugman has more. This of course reflects on the (lack of) wisdom of austerity. But it also makes me wonder if the real wages of government workers should be made more flexible...

17. Mike the Mad Biologist unleashes Philosophy of Science against Zombie Milton Friedman. Black box models are not enough!

18. Paul Krugman discusses how slowly "internal devaluation" takes effect. This is something I've argued with JW Mason about in the past. I still maintain that internal devaluation is better than nothing, especially when other countries peg their exchange rates to yours. But I of course agree that other countries not pegging their exchange rates to yours is the best solution, if you can make it happen.

19. Julian Sanchez argues that libertarians shouldn't use meritocracy as an argument for their ideology, and I agree. I also think, incidentally, that maybe they should reconsider the perfection and rightness of their ideology...