Economists need to improve their stimulus story

The stimulus theory we debate in the blogosphere is a limited case, the case of central government responding to a general slowdown. Economists need to expand the general case to one of a large market player responding to a shock in its sector. Expanding the case set gives a larger N and more variations, especially historical technology shocks to transportation, print, and money industries.

My model tells me that the depression of the 1820s was likely caused by the rotary press in England, which suddenly required the need for a futures market that didn't exist, and put stress on transportation to maintain inventory. Government could do very little except adapt to a more efficient futures market and research faster transportation.

My model tells me the broadcast radio made our surface transportation out of date, overnight in many large cities. In America the citizens turned to central government to build 500,000 miles of asphalt roads.

My model also tells me that IBM adopted an open hardware architecture, and overnight, changed the computing world.

Stimulus theory and monopoly theory are connected, and more subtle then our debate.