Sep 12, 2011

Robert Barro 1 - Paul Krugman 0

Greg Mankiw argues:
Paul's comment on Robert's latest column confuses me.  Paul shows a graph establishing that the investment share of GDP is procyclical, as if that refutes Robert's viewpoint about what ails the economy.  But that fact is hardly a surprise.  As I put it recently, "the most volatile component of G.D.P. over the business cycle is spending on investment goods."  Moreover, I know Robert well enough, having been his colleague for about a quarter century, to know that he knows the macroeconomic time series as well as anyone. Keep reading . . .  

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