"I'm only joking" and "She wasn't joking". Why is the verb to joke used in the present continuous, instead of the present simple tense? Is it because it's a dynamic verb?
The past tense typically describes an action at a particular time in the past. So you might expect to hear, for example, We joked about it at the time, but it was really very serious.
The past continuous construction makes no such link with a particular time, even though we may know in general terms that the action did take place at a particular time. It emphasises the continuing nature of the action, regardless of how long it actually lasted and may sometimes provide a background to something else happening. For example, We were joking about the clothes she was wearing when suddenly she walked in.
In the Madonna incident, She wasn't joking describes her continuing state, however short, in reaction to the colour of the room.
I expected to find lots of answers to differenciate Present Simple and Present Continuous, but I've found but a few, and not real duplicates to your question, so I'll try to reply.
According to Michael Swan in his Practical English Usage,
He also provides the following examples :
Hurry up! We're all waiting for you!
"What are you doing?" "I 'm writing letters."
He then points out :
There's plenty more examples, but I hope this clarifies your doubts.
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I think the answer is that be joking is functionally a different verb from joke.
To joke is to perform an action: that of telling a joke, or saying something funny.
To be joking is to be in a certain mental state, of intending to make people laugh or (more often) to fool people.
They will often go together, but not always. In particular, if you joke, it is usually intended to be obvious to the hearers that that is what you are doing, but if you are joking it may or may not be obvious.
So we may take it for granted that Madonna did not joke (say something obviously and intentionally funny), but somebody may have thought that she was joking (saying something with the intention of amusing or fooling somebody).