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.