tag:blogger.com,1999:blog-2499715909956774229.post3546469657110965120..comments2024-03-22T22:37:02.639-07:00Comments on Stephen Williamson: New Monetarist Economics: Monetary Policy: The Naive ViewStephen Williamsonhttp://www.blogger.com/profile/01434465858419028592noreply@blogger.comBlogger35125tag:blogger.com,1999:blog-2499715909956774229.post-39113176497330704862012-06-20T08:29:17.288-07:002012-06-20T08:29:17.288-07:00Pro tip: Ctrl + c/v allows you to copy and paste k...Pro tip: Ctrl + c/v allows you to copy and paste key words into a search engine, like www.google.com, in order to find any relevant information you need:<br /><br />www.mpls.frb.org/research/qr/qr2511.pdfAndy from UMN, TCnoreply@blogger.comtag:blogger.com,1999:blog-2499715909956774229.post-68109299718705649752012-06-15T08:49:44.704-07:002012-06-15T08:49:44.704-07:00Naive
I think that is about the nicest think one ...Naive<br /><br />I think that is about the nicest think one could say, under the circumstances.<br /><br />Ms. Romer had the wheel, so to speak, in her own hands. It seems to me that her bias justifies paying no attention to her remarks now, whatsoever. <br /><br />That SW is willing to consider the merits of her arguments shows something.<br /><br />But, the old SW emerges at the end. "The relationship between monetary policy and real economic activity is imperfectly understood." <br /><br />Wouldn't it be more accurate to say, "The relationship between either macroeconomic or monetary policy and real economic activity is not understood at all and thus no consensus is possible."<br /><br />Doesn't this follow from the fact that we have no consensus?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2499715909956774229.post-6200891923005675492012-06-15T08:38:18.950-07:002012-06-15T08:38:18.950-07:00" make people LESS nervous, that's a huge..." make people LESS nervous, that's a huge real effect"dwbnoreply@blogger.comtag:blogger.com,1999:blog-2499715909956774229.post-86777241875079873342012-06-15T07:22:36.114-07:002012-06-15T07:22:36.114-07:00here are 600 Bn reasons why you should believe in ...here are 600 Bn reasons why you should believe in the wealth effect.<br /><br />1. state and local tax revenues have mostly gone up and are slightly higher than 2008.<br />2. state employment has gone down.<br /><br />huh? why is that?<br /><br />the answer: state and local pensions lost 621 Bn dollars in 2009 from 2008 (see below, you can check the tax receipts which i pasted below). contributions in 2010 were about 125 Bn. <br /><br />this is just a microcosm. govts and corporations have had to cut back employment and such to fund pensions, and many people are nervous about their 401k. Even if the only effect of QE is for the stock market to go up to the point where retirement and other obligations make people nervous, that's a huge real effect.<br /><br /><br /><br /> Total State and local tax receipts<br />2011 1,345,339<br />2010 1,287,025<br />2009 1,265,020<br />2008 1,319,551<br />2007 1,274,824<br /><br />(census)<br /><br />http://www.census.gov/govs/retire/historical_data_2009.htmldwbnoreply@blogger.comtag:blogger.com,1999:blog-2499715909956774229.post-25839269641161178982012-06-14T04:00:37.723-07:002012-06-14T04:00:37.723-07:00That second rude anonymous is not me (first anonym...That second rude anonymous is not me (first anonymous). I still think your rhetoric is overly heated here though.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2499715909956774229.post-41048656338902867382012-06-13T15:11:53.776-07:002012-06-13T15:11:53.776-07:00Thanks for your time anyways. Posting all these co...Thanks for your time anyways. Posting all these comments got me to think a bit more about interest rate forward guidance, which has helped in my writing (http://bit.ly/M38A6u).<br /><br />I hope I haven't put too many leeches on you (aspirin is probably better for pain anyways), and I'll be sure to be back the next time a monetary policy op-ed pops up.Yichuan Wanghttps://www.blogger.com/profile/15398092824604478764noreply@blogger.comtag:blogger.com,1999:blog-2499715909956774229.post-69802814483407059872012-06-13T13:24:19.038-07:002012-06-13T13:24:19.038-07:00Keep waiting, I'll get back to you when you sh...Keep waiting, I'll get back to you when you show you know something.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2499715909956774229.post-67978569433221760052012-06-13T12:10:56.988-07:002012-06-13T12:10:56.988-07:00If you're evaluating what weight to place on p...If you're evaluating what weight to place on people's opinions based on their age and academic credentials, then you don't have a good method of evaluation.<br /><br />I could turn your question around and ask why I should give your opinion any weight. I'm not sure who you are or what your credentials are (you don't seem interested in attaching your name to these posts). You could be Bob Lucas posting anonymously, but ultimately I just don't care. <br /><br />Welcome to the internet, where your years of research, your many advanced degrees from prestigious institutions, your long track record of academic publication, and your nobel prize -- all put together -- mean exactly nothing. The only importance your many accolades have, in this context, are in how they inform your arguments. Wang has staked out views based on analysis in this comment thread and in cited blog posts and papers. If Wang's opinions deserve no weight, it should be apparent from simple logical flaws in that analysis. Kindly highlight those flaws with analysis of your own and support your analysis with empirical evidence. I'm still waiting for you to say something more substantial than "you don't deserve to argue with me because I'm older than you".JSRhttps://www.blogger.com/profile/09614849295823728127noreply@blogger.comtag:blogger.com,1999:blog-2499715909956774229.post-65272177171845147752012-06-13T10:59:41.388-07:002012-06-13T10:59:41.388-07:00Of course I knew that, and I also know the identif...Of course I knew that, and I also know the identification schemes used to extract these facts from the data, as well as how to interpret the confidence intervals and so on and so forth. But my point is that Wang doesn't, so why should we accord his opinion -- yes, it is an opinion -- any weight at all? He might as well be advocating we bleed the humors, for all the scientific evidence behind his statements, and that goes for the other kid too.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2499715909956774229.post-66169824206167666492012-06-13T10:35:10.603-07:002012-06-13T10:35:10.603-07:00Hamilton and Bernanke can both be right -- it'...Hamilton and Bernanke can both be right -- it's not contradictory to state that oil shocks have been significant contributors to past downturns AND a different monetary regime would have mitigated these shocks.<br /><br />But I'm sure you know that already, and that's beside the point. If you spent more time discussing the facts and less time trying to brand Yichuan as unfit for discussion, maybe you would be contributing to a productive conversation, rather than 'contributing to the noise'.JSRhttps://www.blogger.com/profile/09614849295823728127noreply@blogger.comtag:blogger.com,1999:blog-2499715909956774229.post-49969111253241384902012-06-13T07:57:20.685-07:002012-06-13T07:57:20.685-07:00"Our lack of technical genius shouldn't p..."Our lack of technical genius shouldn't prevent us from understanding the fundamentals."<br /><br />But you don't understand the fundamentals, and therein lies the problem. Can you compare and contrast the Bernanke paper you cited with Jim Hamilton's arguments about the importance of oil shocks? No? Then why are you asserting Bernanke is right and Hamilton is wrong?<br /><br />You may well be smart, and you may well be interested, but so are a lot of other people whose opinions on economics should also be ignored. Get yourself educated, stay interested, and come back armed with tools. Otherwise, you're just contributing to the noise.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2499715909956774229.post-64409155733467302342012-06-13T06:08:17.617-07:002012-06-13T06:08:17.617-07:00It is hard to be sillier than assuming Barro-Ricar...It is hard to be sillier than assuming Barro-Ricardian equivalence. <br /><br />First, that only holds for models with immortal agents or even sillier, models with agents that behave as if they are immortal. <br /><br />Second, it requires that taxes be lump-sum, which is silly. <br /><br />Finally, it goes against all, I mean, ALL empirical evidence.<br /><br />In summary, to say that "A" does not hold because of Barro equivalence ==> to admit that one failed to make an argument that "A" does not hold."O" Anonimohttps://www.blogger.com/profile/07896236826318022479noreply@blogger.comtag:blogger.com,1999:blog-2499715909956774229.post-72200482022086727062012-06-13T05:09:22.989-07:002012-06-13T05:09:22.989-07:00Hello Stephen Williamson,
Here is the blog post y...Hello Stephen Williamson,<br /><br />Here is the blog post you are looking for, where Scott Sumner details how to create an NGDP futures market that guides the daily Treasuries trading activities of the Fed.<br /><br />http://www.themoneyillusion.com/?p=1184<br /><br />All best,<br />Jason OdegaardAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-2499715909956774229.post-78170922926075083892012-06-12T19:58:22.231-07:002012-06-12T19:58:22.231-07:00I admit, I'm no expert in economics, but I don...I admit, I'm no expert in economics, but I don't think my substantive points on joint conditions and forward looking policies are that out of line. <br /><br />Perhaps "chunks" was not the best noun to use (partially? components?), but I was talking about looking at the aspects that Evan mentions piece by piece. There was the Bernanke paper on oil price shocks that showed a lot of the harm from supply shocks came from the IT monetary policy. On his point about growth there was the recent NBER working paper http://www.nber.org/papers/w18072.<br /><br />No, you shouldn't let high school physics students design bridges. But it doesn't take a physics whiz to understand that suspension bridges are good for wide rivers. Our lack of technical genius shouldn't prevent us from understanding the fundamentals.Yichuan Wanghttps://www.blogger.com/profile/15398092824604478764noreply@blogger.comtag:blogger.com,1999:blog-2499715909956774229.post-30855105470024910092012-06-12T14:49:55.789-07:002012-06-12T14:49:55.789-07:00Oh Steve, for a man of oh-so-few citations, you su...Oh Steve, for a man of oh-so-few citations, you sure have a big mouth.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2499715909956774229.post-47514684211226998262012-06-12T12:53:06.015-07:002012-06-12T12:53:06.015-07:00Assume it is a "silly assumption". So a...Assume it is a "silly assumption". So are you arguing that QE is effective monetary policy or effective fiscal policy? Seems to me its the latter.Anon1noreply@blogger.comtag:blogger.com,1999:blog-2499715909956774229.post-27549142553055398322012-06-12T11:38:15.600-07:002012-06-12T11:38:15.600-07:00You should listen to them if their arguments have ...You should listen to them if their arguments have merit. If you don't actually care about changing anyone's mind, here's a hint: don't laugh off people's reasoning because they are young, or inexperienced, or lack tenure, or because you think they smell bad. Just engage with their reasoning.<br /><br />As a disinterested observer, I find the arguments Evan Soltas espouses are usually just as convincing as the ones Steve Williamson puts forward. Why should I care if he's in high school?JSRhttps://www.blogger.com/profile/09614849295823728127noreply@blogger.comtag:blogger.com,1999:blog-2499715909956774229.post-21047041553250086172012-06-12T07:18:11.520-07:002012-06-12T07:18:11.520-07:00I think Yichuan Wang ought to learn a little econo...I think Yichuan Wang ought to learn a little economics before he opens his mouth again. By the way Steve, he's a high school student too. Do we listen to high school physics students when we build bridges?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2499715909956774229.post-78539355210253754702012-06-12T04:49:51.590-07:002012-06-12T04:49:51.590-07:00Steve: Your killing me with the monkey and inflati...Steve: Your killing me with the monkey and inflation forecasting. My eyes are so watered up I can't see the screen when typing. Wasn't Bonzo in a movie with Ronald Reagan called "Bedtime for the Phillips Curve"?Randall Parkerhttps://www.blogger.com/profile/10027493610187640456noreply@blogger.comtag:blogger.com,1999:blog-2499715909956774229.post-52135600973314762792012-06-11T21:57:41.656-07:002012-06-11T21:57:41.656-07:00But Scott Sumner has predicted that this high scho...But Scott Sumner has predicted that this high school student will be the winner of the 2030 John Bates Clark award! So buck up and start learning how to 'model in chunks.'<br /><br />http://www.themoneyillusion.com/?p=14337Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2499715909956774229.post-36429757023691403362012-06-11T18:23:32.364-07:002012-06-11T18:23:32.364-07:00All of this gets into issues of what is fiscal pol...All of this gets into issues of what is fiscal policy and what is monetary policy. In the models we write down, there is a sequence of consolidated government budget constraints, and then we have to start making assumptions about what piece of policy is passive. The exogenous-primary-surplus assumption is what I used to get an interesting notion of what monetary policy does in one of the papers I wrote recently.Stephen Williamsonhttps://www.blogger.com/profile/01434465858419028592noreply@blogger.comtag:blogger.com,1999:blog-2499715909956774229.post-80804857977507070972012-06-11T15:55:55.562-07:002012-06-11T15:55:55.562-07:00I agree with you on FTPL, which is why if there ca...I agree with you on FTPL, which is why if there can be said to be a strong form of FTPL that proclaims not to be model free it gets accused of all kinds of problems in various models suchs as an overdetermined price level (I think in CIA models) or turning money into phlogiston in a supposedly cashless model (this is what Buiter said I think). Back in I think 2009ish Nick Rowe on WCI wrote a post about Cochrane's money as stock piece that I think used almost the same words you just did to describe its limitations. But as far as I can tell (which may not be all that far), at least people like Sims and Woodford mostly talk and write like they are aware of these limitations.<br /><br />The reason I thought it was important to assume the primary surplus was exogeneous is because otherwise the duration risk just looks like a temporary fiscal action that might get reversed through larger primary surpluses (higher T or lower G) if instead the net deficit and not the primary surplus was exogenous. Maybe even then would turn more on whether that reversal was expected to come while the Fed was still in a liquidity trap (so the effect is truly nullifed) or once it was out (then just as good as a non-ricardian FTPL policy bc the Fed is able to offset the late reversal once again with normal monetary policy). I am in no way saying this effect is likely to be important at the levels of QE or twist I am more just trying to talk through it because I feel shaky on it.emuhdnoreply@blogger.comtag:blogger.com,1999:blog-2499715909956774229.post-19642119711332581212012-06-11T13:53:31.621-07:002012-06-11T13:53:31.621-07:00"... if you were willing to assume the primar..."... if you were willing to assume the primary surplus was exogenous or passive within some range."<br /><br />Why do you think that matters?<br /><br />Not related to what we're discussing exactly: I was thinking at one time that the fiscal theory equation that, for example, Cochrane is fond of writing down, is not model-free. I can think of simple monetary models where it does not hold - e.g. a pure currency model with a fixed money supply. I think it's because valued money is essentially a bubble.Stephen Williamsonhttps://www.blogger.com/profile/01434465858419028592noreply@blogger.comtag:blogger.com,1999:blog-2499715909956774229.post-21342660198001150762012-06-11T13:18:22.245-07:002012-06-11T13:18:22.245-07:00Yes, exactly. I was thinking of a Christopher Sim...Yes, exactly. I was thinking of a Christopher Sims story but with the idea that even a mere increase in the duration risk retained by the government (as opposed to a change in taxing or spending plans) could be enough to reduce the budgetary NPV if you were willing to assume the primary surplus was exogenous or passive within some range. Is something more needed for this to make sense?emuhdnoreply@blogger.comtag:blogger.com,1999:blog-2499715909956774229.post-75787424700924842082012-06-11T11:39:46.792-07:002012-06-11T11:39:46.792-07:00Are you thinking of a fiscal-theory-of-the-price-l...Are you thinking of a fiscal-theory-of-the-price-level equation that uses the present value of primary surpluses to determine the price level?Stephen Williamsonhttps://www.blogger.com/profile/01434465858419028592noreply@blogger.com