Economics, global development,current affairs, globalization, culture and more rants on the dismal science, and the society. "As usual, it's like being a kid in a candy store. I'm awed by the volume of high-quality daily links in general. Thanks!" - Chris Blattman
Any attempt to deal with the full range of structural changes while also trying to manage a short-term recovery from the crisis put severe strains on government competence that made economic recovery and foreign debt negotiations more difficult.
Three different statistical procedures for measuring average share price appreciation tell about the same story. NYSE shares rose little in price for forty years. This is because most stocks paid out profits in dividends, rather than retaining earnings. Share prices got a big lift from the Civil War, and the market was about as volatile as in the 1900s. The more things change, the more they stay the same.
Paul Krugman, an economist at the Massachusetts Institute of Technology, recalls in his excellent new book, ''The Return of Depression Economics,'' that Guillermo Calvo, a prominent economist then at the World Bank, kept telling people after the Mexican crisis that while Mexico had made mistakes, the important question was, ''Why was so large a punishment imposed for so small a crime?''
The answer is neither simple nor certain. Part of it surely lies in the way the world's financial system has evolved in recent decades, with big flows of capital moving into countries that are popular with investors and then moving back out again very rapidly. As Krugman notes, countries with controls on capital movements have tended to do better in the crisis environment than those without. That is a long way from conventional economic wisdom, and is one reason that reading Krugman as he glances over the economic history of the past several decades is both enjoyable and thought-provoking.
