Monday, April 11, 2011

Larry Summers is a New Monetarist

In this discussion, which Mark Thoma links to, you can see Larry Summers talking with Martin Wolf about the current state of macroeconomics. Summers professes an interest in academic papers that use words like "leverage, liquidity, deflation, and depression." Excellent! We like those words too. Summers also expresses some admiration for intermediation theory and, in particular, the Diamond-Dybvig model (he doesn't name it, but it's clear that is what he is referring to). Very good, we use that thing too. He also likes Tobin's ideas, some of which I certainly find interesting. He also claims to shy away from papers that use words like "choice theoretic" and "optimizing model of..." Surely we would think of Tobin-Markowitz as choice-theoretic, and everyone is optimizing in a Diamond-Dybvig model. Seems that Larry is confused.

8 comments:

  1. Why "New Monetarism?" Neo-Monetarism has more of a ring to it, no?

    ReplyDelete
  2. Well, we're stuck with it now. There are New Keynesians, so we thought we would be New Monetarists.

    ReplyDelete
  3. How about "New Pythagoreans?" I will stipulate that Pythagoras didn't have an interest in economics -- that I know of -- but he did like math and his followers had some good insights into triangles.

    And Pythagoras didn't have any economic beliefs that proved misplaced --- that I know of -- so the name comes with no baggage, unlike New Keynesians or New Monetarists.

    ReplyDelete
  4. Yes, there is that baggage issue. I have to keep explaining why I'm not so interested in M1 or M2.

    ReplyDelete
  5. Maybe, a la Post-Keynesians, you could call yourselves Post-Monetarists.

    ReplyDelete
  6. Or we could be Deconstructionist Keynesian Post-Colonial Monetarists.

    ReplyDelete
  7. Just call yourselves Manchester United. They get better looking chicks.

    ReplyDelete