The Recalculation Story, Brad DeLong Version
By Arnold Kling
After the most recent downturn, however–and to a lesser extent after its two predecessors–things have been different. The downturn was not caused by a liquidity squeeze. The Federal Reserve cannot wave is wand and return asset prices to their pre-downturn configuration. The entrepreneurial problems of recovery are much more complex: not to recall what it used to be profitable to produce but rather to figure out what new things it will be profitable to produce in the future.