This is a powerful empirical piece of evidence that it is much harder to summon the Inflation Expectations Imp than economists like Greg Mankiw had thought. It is a point for the expansionary fiscalists in their debate with the expansionary monetarists.
And it is a smackdown of me for my fit of enthusiastic expansionary monetarism last December, when I wrote: Brad DeLong: The Federal Reserve's Shift from a Time- to a State-Based Policy Rule: Will It End Our "Lost Decade"?.Grasping Reality with Both Invisible Hands
Monday Delong-Being-Stupid Self-Smackdown Watch: Expansionary Fiscalists Vs. Expansionary Monetarists And The Federal Reserve's Shift From A Time- To A State-Based Policy Rule: Will It End Our "Lost Decade"?
J. Bradford DeLong | Professor Economics, UCAL, Berkeley
5 comments:
What is Mr. DeLong trying to say? I'd like to understand, but the writing leaves something to be desired.
De Long is admitting that he was wrong in previously assuming that monetary policy would work through expectations as a causal transmission mechanism. The Expectations Imp is as mythical as the Confidence Fairy that is supposed to make expansionary fiscal austerity work.
Kudos to him for being one of the few economists that will admit it and change their position when they make a mistake.
"Well when events change, I change my mind. What do you do?" is apparently misattributed to Keynes. It was Samuelson that said it, and attributed it to Keynes. But there is no definitive evidence of Keynes having said this. There's an interesting historical analysis here.
I heard DeLong on Bloomberg today. He was advocating NGDP targeting and said nothing about increased fiscal stimulus. I was extremely unimpressed...
Very Serious People will say what the other VSP's are saying regardless of what they think.
De Long is now on record for saying he is a fiscalist if and when the VSP's finally throw the towel in on monetarism. Then De Long can say — See, I told you so. Here's the post.
Steve Randy Waldman is getting hit pretty bad in the comments for his post praising a "fantastic piece" by David Beckworth. Winterspeak hit the nail on the head as follows:
'It’s quite remarkable that you can write a piece this long and never mention MMT at all. Maybe when “monetary” has been completely redefined as “fiscal”, MMT will have finally won with their name never being uttered by mainstream economists.
And I take issue with your characterization that “It’s all very fun to draw lines and spit across them. But letting differences divide “monetarists” and “fiscalists” is letting divergent conceptions of perfect become the enemy of the good.” That’s a cheap (shot). There is a true vs false element here, and academmic macro (Sumner, Krugman etc.) just have it wrong.'
Post a Comment