Results for “age of em”
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The labor market ran hot, real wages fell

You may remember that I’ve been predicting that repeatedly, while much of “Twitter economics” was suggesting that “running the labor market hot” would boost real wages, I was claiming it was far more likely that rising employment would be correlated with falling real wages.  (Try here.)  This did not represent any great insight on my part, rather I was simply refusing to make the mood affiliation move of denying the tradeoff, and I had read Keynes’s General Theory.  Here is the latest:

Companies big and small are raising wages to attract workers and hold onto employees as the economy revs back into gear.

But those fatter paychecks aren’t going as far, thanks to rising inflation.

In fact, compensation is now lower than it was in December 2019, when adjusted for inflation, according to an analysis by Jason Furman, an economics professor at Harvard University.

The Employment Cost Index — which measures wages and salaries, along with health, retirement and other benefits — fell in the last quarter and is 2% below its pre-pandemic trend, when taking inflation into account. (Wages and salaries are growing at a faster pace than benefits.)

Score one for Keynesian economics > Twitter economics.

Or maybe they didn’t run the labor market hot enough.

VTEKL.

The performance of the NIH during the pandemic in 2020

“A new research study by one of us and his Johns Hopkins colleagues found that of the $42 billion the National Institutes of Health spent on research last year, less than 2% went to Covid clinical research…

Here is the WSJ source.  Here is the full report from Johns Hopkins, and here is the executive summary:

● Of the $42 Billion 2020 NIH annual budget, 5.7% was spent on
COVID-19 research
● Public health research was underfunded at 0.4% of the 2020 NIH
budget
● Only 1.8% of the 2020 NIH budget was spent on COVID-19 clinical
research
● Average COVID-19 NIH funding cycle was 5 months
● Aging was funded 2.2 times more than COVID-19 research
● By May 1, 2020, 3 months into the pandemic, the NIH spent 0.05%
annual budget on COVID-19 research
● Of the 1419 grants funded by the NIH:
• NO grants on kids and masks specifically
• 58 studies on social determinants of health
• 57 grants on substance abuse
• 107 grants on developing COVID-19 medications
• 43 of the 107 medication grants repurposed existing drugs

Ouch.  Here is a not entirely random sentence from the report:

The COVID-19 pandemic has only exacerbated the NIH institutional challenges and inability to reallocate funds quickly to
critical research.

Here is another damning sentence, though it damns someone other than the NIH:

…to date, no research has investigated NIH COVID-19 funding patterns to the best of our knowledge.

Double ouch.  Might the NIH have too much influence over the allocation of funds to be investigated properly?  Rooftops, people…

The American Academy of Pediatrics Tells the FDA to Speed Up and Stop Endangering Patients

The American Academy of Pediatrics has written a stunning letter to the FDA:

We understand that the FDA has recently worked with Pfizer and Moderna to double the number of children ages 5-11 years included in clinical trials of their COVID-19 vaccines. While we appreciate this prudent step to gather more safety data, we urge FDA to carefully consider the impact of this decision on the timeline for authorizing a vaccine for this age group. In our view, the rise of the Delta variant changes the risk-benefit analysis for authorizing vaccines in children. The FDA should strongly consider authorizing these vaccines for children ages 5-11 years based on data from the initial enrolled cohort, which are already available, while continuing to follow safety data from the expanded cohort in the post-market setting. This approach would not slow down the time to authorization of these critically needed vaccines in the 5–11-year age group.

In addition, as FDA continues to evaluate clinical trial requirements for children under 5 years, we similarly urge FDA to carefully consider the impact of its regulatory decisions on further delays in the availability of vaccines for this age group. Based on scientific data currently available on COVID-19 vaccines, as well as on 70 years of vaccinology knowledge in the pediatric population, the Academy believes that clinical trials in these children can be safely conducted with a 2-month safety follow-up for participants. Assuming that the 2-month safety data does not raise any new safety concerns and that immunogenicity data are supportive of use, we believe that this is sufficient for authorization in this and any other age group. Waiting on a 6-month follow-up will significantly hinder the ability to reduce the spread of the hyper infectious COVID-19 Delta variant among this age group, since it would add 4 additional months before an authorization decision can be considered. Based on the evidence from the over 340 million doses of COVID-19 doses administered to adults and adolescents aged 12-17,as well as among adults 18 and older, there is no biological plausibility for serious adverse immunological or inflammatory events to occur more than two months after COVID-19 vaccine administration.

In my many years of writing about the FDA, I can’t recall a single instance in which a major medical organization told the FDA to use a smaller trial and speed up the process because FDA delay was endangering the safety of their patients. Wow.

The invisible graveyard is invisible no more.

*Home in the World: A Memoir*

That is the new Amartya Sen autobiography, and it is well…a biography.  You learn that he loves Sichuan duck and “hilsha fish” (if done properly with the mustard), his thoughts of enduring military service, Sen’s study of Sanskrit, his self-description as a hypochondriac, his bout with mouth cancer at a young age, and that Calcutta (!) is a great walking city, at least when Sen lived there in the 1950s, among other matters.  The readers definitely gets his or her “biography money’s worth.”

But should you care?

The name “Tagore” appears so many times in the text that it takes up 3/4 of a page in the index.  This is very much a Bengali memoir.

I learned that Sen’s family lived for a few years with him in Burma, he is sympathetic to Buddhism, he was ten at the time of the Great Famine and it had a major impact on his thinking, and that Sen was greatly influenced by Maurice Dobb and thought Marx was unjustly excluded from the economics curriculum.  Piero Sraffa was his Director of Studies at Cambridge, and introduced Sen to the wonders of ristretto.  Sen also stresses the import of Sraffa for converting the early Wittgenstein into the later Wittgenstein.  He has great praise for P.T. Bauer, both as a thinker and as an instructor.  He describes Buchanan as a “…very agreeable but rather conservative economist” who got him thinking about whether the notion of collective preference made sense at all.

This doesn’t have enough coherence to be a great book, but there is enough in here of interest to satisfy anyone curious about Sen.

You can pre-order here, I got my copy from the UK.

America’s Covid policy remains largely a train wreck

That is the topic of my latest Bloomberg column, or use this link https://www.bloomberg.com/opinion/articles/2021-07-27/america-s-covid-policies-are-a-contradictory-mess, some of it you already have heard here from me and from Alex.  Excerpt:

The delta variant is sweeping the U.S., and it is significantly more infectious, yet the Centers for Disease Control doesn’t have the data tools to know whether this is an early, middle or late stage of an outbreak. This is after a year and a half of a pandemic that has killed more than 600,000 Americans.

Have you ever wondered whether the U.S. will do better “next time”? Well, the next time is now — and the country is still flailing across some significant dimensions. The inability to do the simple “right thing” is troubling for a number of reasons.

First, when it comes to vaccines, these are bad decisions in their own right — and they are costing human lives, jobs, and economic output.

But the problems run even deeper. In some ways the U.S. is like a basketball player who cannot make a shot from 10 feet. That is almost always a sign that more complex plays are also going awry, even if this can’t always be spotted by outsiders.

And:

Perhaps most important, there is a cascading effect: If you can’t get the simple things right, your capabilities are likely to deteriorate even further. The smartest people in the government lose their morale and move on. For those who remain, self-fulfilling feelings of defeat set in. The U.S. government also loses credibility abroad, in this case most notably with European governments that are (with possible restrictions) letting U.S. citizens into their countries.

Alas.

They modeled this — why women might see fewer STEM ads

Women see fewer advertisements about entering into science and technology professions than men do. But it’s not because companies are preferentially targeting men—rather it appears to result from the economics of ad sales.

Surprisingly, when an advertiser pays for digital ads, including postings for jobs in science, technology, engineering and mathematics (STEM), it is more expensive to get female views than male ones. As a result, ad algorithms designed to get the most bang for one’s buck consequently go for the cheaper eyeballs—men’s. New work illustrating this gap is prompting questions about how that disparity may contribute to the gender gap in science jobs.

…As a result of that optimization, however, men saw the ad 20 percent more often than women did…

Tucker ran $181 worth of advertising via Google, for example, saying she was willing to pay as much as 50 cents per click. It ended up costing 19 cents to show the ad to a man versus 20 cents to show that same ad to a woman. These investments resulted in 38,000 “impressions”—industry-speak for ad views—among men, but only about 29,000 impressions among women.

Similarly, on Twitter it cost $31 to get about 52,000 impressions for men but roughly $46 to get 66,000 impressions for women. And on Instagram it cost $1.74 to get a woman’s eyeballs on the ad but only 95 cents to get a man’s.

Here is the full Scientific American article, via Luke Froeb, and do note those differentials may vary considerably over time.  Gender issues aside, I would say this reflects a broader problem with having a very high value of time — it becomes harder to maintain a relatively high proportion of people showing you valuable things you wish to see (as opposed to people bugging you, grifting you, etc.).

In which ways are Democratic economists Democrats? (or not)

In a series of tweets (try this one), Matt Yglesias has been arguing that academic economists are far more Democratic than the U.S. population as a whole, though less left-wing than most other academics.  I agree with his claims, which are backed by plenty of data, but I wish to add some further thoughts.

Very often political views follow our socioeconomic class and the peer groups we are trying to impress or join.  Thus those claims from Matt are true for American policies only.  If you took a leftish (but not Marxist radical) Democratic U.S. economist, and asked that person what Mexico should do to improve, I think the answers would include the following:

1. Build state capacity to win the drug war, legalize or decriminalize some drugs too.

2. Make it easier for firms in the informal sector to enter the formal, taxed sector, and thus make it easier for them to grow.

3. Invest more in education for underprivileged Mexican youth.

4. End the state monopolies in industrial products.

5. Do something about corruption (but what?).

6. Diversify the economy away from Pemex and fossil fuels.

7. Maintain NAFTA and try to maintain and indeed rebuild the health of the earlier democratization.

Now, that is pretty much the same as my list!  To be sure, the rhetoric on some of these proposals, such as #2 and #3, would be different coming from this imaginary leftish Democratic economist.  (Lots more talk about “inequality” on #2 and more about the benefits of regulation on #3, for instance, whereas I would stress the benefits of firm growth.)  But I don’t think the substance of the proposals would be all that different.

Whether you wish to say the leftish economist has a right-wing perspective on Mexico, or vice versa, is a moot point.  Or are we all centrists on Mexico?  There is in any case a reasonable coincidence of policy recommendations once you remove people from their immediate socioeconomic environment.  And surely that makes the Democratic economists just a little suspicious to the non-economist intellectual Democrats, as you can see from the Twitter fury directed at Matt Y. for what were purely factual claims.

There is a reason why they call it “the Washington Consensus.”  I can assure you that the World Bank and IMF economists are not a bunch of Republican wanna-bees.  But the Washington Consensus works, at least on average.

If you asked a non-economist Democratic voter what Mexico should do, I am not sure what answers you would get.  But it is hardly obvious you would get the above list (I’d love to see this done as a study and compared to the Republican answers).  Maybe the non-economist would talk about foreign aid more?  Immigration more?  I really don’t know.  But they probably are not very aware of the dismal productivity performance of Mexican SMEs and what a problem that is, and probably not very aware of the various state monopolies.  They probably would mention corruption, however, and also public safety and winning the fight against the drug gangs.

When it comes to U.S. disputes, the Democratic economist probably would be more “off the rails” than the typical Democratic voter (sorry, you’ll have to find your own links here, there are plenty), if only because that person is more aware of the socioeconomic conflicts and more aware of what one is supposed to believe.  The more symbolic the dispute, the further from the median voter the Democratic economist is likely to be.  But that is the education doing the work, not the economics background.

If you want to get a Democratic economist making sense, just get that person talking about some other country, follow most of the policy advice, and remove the word “inequality” and a few other catch phrases.

Interestingly, there is a subset of Republican economists who don’t talk sense no matter what the country under consideration.  For instance, they might think that “income tax cuts for Mexico” would do a lot of good.  In this sense they are the more consistent “cosmopolitan ideologues,” taking that phrase as a truly joint concept.  Since most economists are Democrats, perhaps examining “the remnant Republicans” is selecting for excessively consistent ideology.  The remnant Republicans are less likely to insist that “every country is different,” a’ la Dani Rodrik.  If they were so flexible, they probably wouldn’t still be Republicans.

As a final note, I fear we are entering a world so “well-informed” about affective polarization, and with Woke concepts so globalized, that at some point the majority of the Democratic economists won’t talk sense on Mexico any more either.  But we are not yet there — maybe in five to ten years?  Maybe never?  And where will the Republican remnant end up?

Which media have proven sticky as pandemic has diminished?

The single biggest new media habit to be formed during the pandemic appears to be gaming. The extra hour per week that people spent gaming last year represented the largest percentage increase of any media category. And unlike other lockdown hobbies, it is showing no sign of falling away as life gets back to normal. It has become “a sticky habit”, says Craig Chapple of Sensor Tower. He finds that last year people installed 56.2bn gaming apps, a third more than in 2019 (and three times the rate of increase the previous year). The easing of lockdowns is not denting the habit: the first quarter of 2021 saw more installations than any quarter of 2020. Roblox, a sprawling platform on which people make and share their own basic games, reported that in the first quarter of this year players spent nearly 10bn hours on the platform, nearly twice as much time as they spent in the same period in 2020.

And:

…whereas all other generations of Americans named television and films as their favourite form of home entertainment, Generation Z ranked them last, after video games, music, web browsing and social media.

Here is more from The Economist.

Nematodes Maximize Expected Utility

https://upload.wikimedia.org/wikipedia/commons/2/28/Soybean_cyst_nematode_and_egg_SEM.jpgHot on the heels of the new paper showing that the trading behavior of mycorrhizal fungi is consistent with the predictions of general equilibrium theory we have that nematodes obey the generalized axiom of revealed preference. It would be amusing if economics turns out to work well everywhere except for humans.

Abstract: In value-based decision making, options are selected according to subjective values assigned by the individual to available goods and actions. Despite the importance of this faculty of the mind, the neural mechanisms of value assignments, and how choices are directed by them, remain obscure. To investigate this problem, we used a classic measure of utility maximization, the Generalized Axiom of Revealed Preference, to quantify internal consistency of food preferences in Caenorhabditis elegans, a nematode worm with a nervous system of only 302 neurons. Using a novel combination of microfluidics and electro-physiology, we found that C. elegans food choices fulfill the necessary and sufficient conditions for utility maximization, indicating that nematodes behave exactly as if they maintain, and attempt to maximize, an underlying representation of subjective value. Food choices are well-fit by a utility function widely used to model human consumers. Moreover, as in many other animals, subjective values in C. elegans are learned, a process we now find requires intact dopamine signaling. Differential responses of identified chemosensory neurons to foods with distinct growth potential are amplified by prior consumption of these foods, suggesting that these neurons may be part of a value-assignment system. The demonstration of utility maximization in an organism with no more than several hundred neurons sets a new lower bound on the computational requirements for maximization, and offers the prospect of an essentially complete explanation of value-based decision making at single neuron resolution.

Photo Credit: By Agricultural Research Service – http://emu.arsusda.gov/typesof/pages/soybeanOriginal source (15016 KB); Description page, Public Domain, https://commons.wikimedia.org/w/index.php?curid=646062

Hat tip: Derek Lowe.

The Premonition

In The Premonition Michael Lewis brings his cast of heroes together like the assembling of the Avengers. In the role of Captain America is Charity Dean, the CA public health officer who is always under-estimated because she is slight and attractive, until she cracks open the ribcage of a cadaver that the men are afraid to touch. Then there is Carter Mecher, the redneck epidemiologist who has a gift for assembling numbers into coherent patterns. And Richard Hatchett the southern poet who finds himself at the head of The Coalition for Epidemic Preparedness (CEPI), the world’s most important organization during the pandemic; and Joe DiRisi the brilliant, mad scientist picked by the Chan Zuckerberg Initiative as the person most likely to cure disease…all of them. As you might expect from Michael Lewis, it’s all terribly well done, albeit formulaic and  sometimes over-the-top, e.g.

Charity’s purpose was clear….she was put on earth to fight battles, and wars, against disease. To save lives and perhaps even an entire country. p. 200-201

But Lewis has a bigger problem than over-the-top writing.

The heroes were defeated. Lewis likes to tell stories of brilliant mavericks like Billy Beane and Michael Burry who go against the grain but eventually, against all odds, emerge victorious. But six hundred thousand people are dead in the United States and whatever victory we have won was ugly and slow. Indeed, Lewis assembles his mighty team but then The Premonition trails off as the team is defeated by bureaucracy, indecision, complacency and malaise before they even have a chance to enter the real battle against the virus. It’s telling that none of Lewis’s heroes are even mentioned in Andy Slavitt’s Preventable (about which I will say more in a future post).

To be fair, Lewis’s heroes are fascinating, brilliant people who did some good. As part of the Kremer team I interacted a bit with Richard Hatchett and CEPI. Hatchett headed CEPI and understood the danger of SARS-COV-II before anyone else and with Bill Gates’s support started funding vaccine production and shoring up supply lines before anyone else was off the starting line. CEPI was magnificent and their story has yet to be told in full measure. Had Lewis’s heroes been in charge I have no doubt that many lives could have been saved but, for the most part, the heroes were sidelined. Why and how that happened is the real question but Lewis’s story-telling skills aren’t the right skills to answer that question.

If there is one central villain in The Premonition, it’s the CDC. Lewis acknowledges that his perspective has changed. In The Fifth Risk, the system (the “deep state” used non-pejoratively if you will) is full of wisdom and power but it’s under threat from Trump. In The Premonition, Trump is an after-thought, at best a trigger or aggravating factor. Long before Trump or the pandemic:

Charity had washed her hands of the CDC. “I banned their officers from my investigations,” she said. The CDC did many things. It published learned papers on health crisis, after the fact. It managed, very carefully, public perception of itself. But when the shooting started, it leapt into the nearest hole, while others took fire. “In the end I was like ‘Fuck you’, said Charity. “I was mad they were such pansies. I was mad that the man behind the curtain ended up being so disappointing.” p. 42

As the pandemic starts the CDC fails repeatedly. At the beginning of the pandemic on January 29 the government had started to repatriate Americans from Wuhan bringing some of them to a National Guard base just outside of Omaha. But shockingly the CDC doesn’t test them for the virus.

Never mind that every single one of the fifty-seven Americans in quarantine wanted to be tested: the CDC forbade it. And [James] Lawler [US Naval Commander and national security coordinator on pandemic response] never understood the real reason for the CDC’s objections…Whatever the reasons, fifty-seven Americans spent fourteen days quarantined in Omaha, then left without having any idea of whether they’d been infected, or might still infect others. “There is no way that fifty-seven people from Wuhan were not shedding virus,” said Lawler. p. 176

Many of the people brought home from China are not even quarantined just told to self-quarantine:

…When local health officers…set out to find these possibly infected Americans, and make sure that they were following orders to quarantine, they discovered that the CDC officials who had met them upon arrival had not bothered to take down their home addresses.

…[Charity] posed a rude question to the senior CDC official moved on the call: How can you keep saying that Americans are at low risk from the virus if you aren’t even testing for the virus. She’d been answered with silence, and then the official move on to the next topic. [p.206-207, italics in original]

And all of this is before we get to the CDC’s famously botched test an error which was amplified by the FDA’s forbidding private labs and state governments to develop their own tests. Charity Dean wanted California to ignore the CDC and FDA and, “blow open testing and allow every microbiology lab to develop its own test.” But Dean is ignored and so by as late as February 19, “Zimbabwe could test but California could not because of the CDC. Zimbabwe!” p. 223. The failure of testing in the early weeks was the original sin of the crisis, the key failure that took a containment strategy ala South Korea and Taiwan off the table.

Lewis’s most sustained analysis comes in a few pages near the end of The Premonition where he argues that the CDC became politicized after it lost credibility due to the 1976 Swine Flu episode. In 1976 a novel influenza strain looked like it might be a repeat of 1918. Encouraged by CDC head David Sencer, President Ford launched a mass vaccination campaign that vaccinated 45 million people. The swine flu, however, petered out and the campaign was widely considered a “debacle” and a “fiasco” that illustrated the danger of ceding control to unelected experts instead of the democratic process. The CDC lost authority and under Reagan the director became a political appointee rather than a career civil servant. Thus, rather than being unprecedented, Trump’s politicization of the CDC had deep roots.

Today the 1976 vaccination campaign looks like a competent response to a real risk that failed to materialize, rather than a failure. So what lessons should we take from this? Lewis doesn’t say but my colleague Garett Jones argues for more independent agencies in his excellent book 10% Less Democracy. The problem with the CDC was that after 1976 it was too responsive to political pressures, i.e. too democratic. What are the alternatives?

The Federal Reserve is governed by a seven-member board each of whom is appointed to a single 14- year term, making it rare for a President to be able to appoint a majority of the board. Moreover, since members cannot be reappointed there is less incentive to curry political favor. The Chairperson is appointed by the President to a four-year term and must also be approved by the Senate. These checks and balances make the Federal Reserve a relatively independent agency with the power to reject democratic pressures for inflationary stimulus. Although independent central banks can be a thorn in the side of politicians who want their aid in juicing the economy as elections approach, the evidence is that independent central banks reduce inflation without reducing economic growth. A multi-member governing board with long and overlapping appointments could also make the CDC more independent from democratic politics which is what you want when a once in 100 year pandemic hits and the organization needs to make unpopular decisions before most people see the danger.

Lewis hasn’t lost his ability to write exhilarating prose about heroic oddballs. Page by page, The Premonition is a good read but the heroes in Lewis’s story were overshadowed by politics, bureaucracy and complacency–systems that Lewis’s doesn’t analyze or perhaps quite understand–and as a result, his hero-centric story ends up unsatisfying as story and unedifying as analysis.

A problem in nuclear waste semiotics

Via Richard Harper, this thread asks how you might warn very future people away from a nuclear waste site. Alexandra Erin wrote:

An easy way to understand the problem of nuclear waste storage semiotics is to imagine what kind of warning could have been on an Egyptian tomb that would have kept Howard Carter from robbing it.

Here is some background material on how people are thinking about the problem at Yucca Mountain.  Here is a Wikipedia page on different signs and options.  Alex suggests color-changing cats.

I would think the question of how to inform a super-advanced civilization is a manageable one, at least if they have any patience at all.  Simply explain the whole truth in plain English, and give them enough English text, in durable micro form if needed, so they can unlock the secrets of English.  Also put up some images of radioactive decay.  Skull and crossbones may not mean so much to them.

What about our possible “Mad Max” descendants?  Of course that scenario means our own civilization has in some manner perished, so it is not a totally optimistic prognosis for human prudence.  So why think some silly red signs will make much of a difference?  After all, just try today to talk people out of alcohol.  Good luck.

So instead my mischievous thoughts turn to finance theory and portfolio diversification.  If the nuclear waste site is truly remote and previously unobserved and undiscovered, why not put something really good in there as recompense?

A seed bank.  Copies of The Great Books.  The text of the United States Constitution.  Proofs of Newton’s Laws.  Einstein’s theory of relativity (maybe wait on that one?…)  Design for a better medieval water wheel.  Compositions of Beethoven and Mozart.  Translation advice, some of it pictorial.  And so on.  Surely some of it will be useful, sooner or later.

Which is further reason why all of your ideas are less likely to work.  You can’t credibly commit to not giving people insurance against their bad decisions — just ask the Fed!

The Pandemic JOLTS

The 2009 recession was big but it followed a very familiar pattern–job separations were a little bit larger than job hires and this lasted for a little less than year which drove up unemployment rates. Unemployment rates then declined slowly as hires became a little bit larger than separations. Now look at the pandemic recession! Separations triple from normal–absolutely unprecedented. Hires then rebound at a slower rate than separations but at a much faster rate than in any previous recession (I haven’t bothered correcting for population since the differences are so large.)

I don’t know entirely what to make of this but we are still debating the Great Depression and the Great Recession so the Pandemic Recession will provide data and questions for a generation of economists. Why, for example, are supply shocks seemingly so much easier for an economy to handle than demand shocks? And why are some demand shocks worse than others? The dot com bust was at least as big a decline in wealth than the housing bust in 2009 but the latter resulted in a much bigger recession. How much was due to policy? How much was due to the fact that the financial system wasn’t so involved in the dot com bust or the pandemic recession? Finance often seems like it doesn’t do so much but why then do things go so badly when the financial system is impeded?

Basil Halperin on sticky wage vs. sticky price models

Here is a long post, full of insight and citations, basically arguing that sticky wage models are better for macro than sticky price models.  Sticky wage models had been deemphasized because real wages seemed to be acyclical, but sticky prices can’t quite do the work either.  The post is hard to summarize, but my reading of it is a little different than what the author intends.  My takeaway is “Sticky wages for new hires are the key, and we didn’t have real evidence/modeling for that until 2020, so isn’t this all still up in the air?”  I am a big fan of the Hazell and Taska piece, which I consider to be one of the best economics contributions of the last decade, but still…I don’t exactly view it as confirmed and all nailed down.  I do believe in nominal stickiness of (many not all) wages, but I still don’t think we have a coherent model matching up the theory and the empirics for how nominal stickiness drives business cycles.  I thus despair when I see so many dogmatic pronouncements about labor markets.

For the pointer I thank João Eira.