Monday, September 26, 2011

Cole and Ohanian

Some interesting reading for today is Cole and Ohanian's piece in the WSJ. At the minimum, this is a reminder that there is more to life than aggregate demand. Here's the conclusion:
Policy can also improve today. The bipartisan Joint Select Committee on Deficit Reduction will make a recommendation by Nov. 23 to deal with future deficits. It has an outstanding opportunity to initiate broad-based tax reform that adopts the recommendations of most bipartisan tax reform commissions of the last 20 years: a simpler tax code that improves the incentives to hire and invest, broadens the tax base, lowers the corporate income tax, and also eliminates loopholes to equalize tax treatment of capital income. Sensibly addressing our long-run challenges will do more for the economy than continuing the stop-gap measures that have dominated policy-making for the last three years.
The Joint Select Committee on Deficit Reduction has an opportunity to tackle tax reform in a serious way - to make the tax code much more efficient while also closing the gap between tax revenue and outlays. Likely the Committee will be dysfunctional, but hoping does not hurt.

8 comments:

  1. Cole gave an interview with a Colombian journal a few years ago which is quite interesting, where he compares the outdated macro still taught in the US with Colombia:

    "What strikes me is the extent to which people seems to be conversant with the
    current debate in economics. For example, if you look at undergraduate textbooks in the
    U.S. in macroeconomics, the pervasive paradigm is the static IS-LM model. You might
    come to Colombia thinking, well I’m going to be talking to a bunch of people where the
    pervasive paradigm is going to be the static IS-LM, and you know, no one has that
    paradigm! Everyone has moved on not just to the next generation of theories and models,
    but to the generation after that."

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  2. David Glasner accuses Cole and Ohanian of blatant misrepresentation of the data. Is this really science by these 2 guys or ideology?
    http://uneasymoney.com/2011/09/26/misrepresenting-the-recovery-from-the-great-depression/

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  3. "David Glasner accuses Cole and Ohanian of blatant misrepresentation of the data. Is this really science by these 2 guys or ideology?"

    Science by Lee and Hal, and crackpottery by some moron named David Glasner.

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  4. Well there's a Keynesian literature - Eichengreen comes to mind - that sees the international monetary arrangements ie the Gold Standard - as key to understanding the Great Depression. So for them the US going off the GS was a big AD shock that got the economy growing. Looks like Glasner feels Cole & Ohanian have slighted this literature on which so many monetarist/Keynesians reputations have been made.

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  5. "Likely the Committee will be dysfunctional"

    appears the politicians are trying to ensure that outcome:

    http://www.bloomberg.com/news/2011-09-26/debt-accord-already-at-risk-as-u-s-lawmakers-target-supercommittee-s-cuts.html

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  6. @Hooka Cat: Yes, it certainly looks like "science" to ignore, as Cole & Ohanian do, the double dip in IP after the trough in 1932. To say "it's science" ad nauseum doesn't make it so.

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  7. "@Hooka Cat: Yes, it certainly looks like "science" to ignore, as Cole & Ohanian do, the double dip in IP after the trough in 1932. To say "it's science" ad nauseum doesn't make it so."

    Keep trying, eventually you'll make sense.

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  8. DeLong smacks down williamson.

    http://delong.typepad.com/sdj/2011/09/yes-recovery-in-the-great-depression-started-with-roosevelt-stephen-williamson-takes-to-his-fainting-couch-department.html

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