Wednesday, April 04, 2001

The New Macroeconomy Here's a great article by economist J Bradford DeLong that talks about why there really might be a new economy and how it might effect the business cycle. This has important repercussions for how long the current US economic slowdown might last.

In particular, DeLong notes that traditional business cycles have been created by excess inventory. Whatever the Internet may or may not have done, it has reduced the amount of inventory that companies have to carry. Therefore, this low point in the business cycle should be shorter than previous ones.

Additionally, DeLong suggests that there will also be more stock market volatility, and that equities are still over-valued. So, little hope there for investors.


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