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 . . .