tag:blogger.com,1999:blog-2499715909956774229.post1628324685120856084..comments2024-03-22T22:37:02.639-07:00Comments on Stephen Williamson: New Monetarist Economics: Ricardian Equivalance HeatStephen Williamsonhttp://www.blogger.com/profile/01434465858419028592noreply@blogger.comBlogger114125tag:blogger.com,1999:blog-2499715909956774229.post-54736288683883582342012-01-13T06:18:42.661-08:002012-01-13T06:18:42.661-08:00CA
"not mine" theory
and what theory w...CA<br /><br />"not mine" theory<br /><br />and what theory would that be?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2499715909956774229.post-49189751202387897602012-01-11T06:27:45.594-08:002012-01-11T06:27:45.594-08:00You might wanna read Chapter 19 of the General The...You might wanna read Chapter 19 of the General Theory and educate yourself, Keynes did not blame sticky wages pr prices at all.<br />Ehm, didn't I just say that I prefer New Keynesian models that explains stickiness and model credit markets instead of liquidity preferences? Yet for an analysis of a liquidity trap like right now the IS-LM model totally suffices. We gotta spend like drunken sailors to increase aggregate demand as long as liquidity is trapped. Or do you seriously advocate expansionary monetary policy right now ? The balance sheet of the Fed was trippled!<br /><br />Europe does not conduct expansionary fiscal policy since the eighties anymore. We Germans are the most hardcore austerity freaks in the world. So much about how certain economists are connected with the real-world.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2499715909956774229.post-88484257028930514452012-01-09T12:48:55.200-08:002012-01-09T12:48:55.200-08:00Anonymous,
who said that "it is all dubious...Anonymous, <br /><br />who said that "it is all dubious heterodox nonsense" about the IS-LM? The problem is that the IS-LM is NOT a good apparatus. By failing to examine the reasons behind the stickiness (by the way, isn't inflation evidence that prices are NOT sticky, but rather the change in prices?), the role of expectations, and by lacking well defined credit markets it eliminates a lot of possible policies that may be much better at dealing with the situation than spending like drunken sailors, a tool rather crude (because it rewards both the productive and unproductive segments) and potentially cotstly (look at Europe). <br /><br />John D,<br /><br />You seem to have no understanding of what you read. Sticky wages was Keyne's theory for explaining recessions, not mine. You have a problem with that, take it with the advovates of the IS-LM model, not me.CAhttp://www.hofstra.edu/search/hofstra_search.cfm?q=Alexandrakis&site=default_collection&btnG=Google+Search&client=www_frontend&output=xml_no_dtd&proxystylesheet=www_frontend&sort=date:D:L:d1&oe=UTF-8&ie=UTF-8&ud=1&exclude_apps=1noreply@blogger.comtag:blogger.com,1999:blog-2499715909956774229.post-64563363674323366772012-01-07T17:34:23.056-08:002012-01-07T17:34:23.056-08:00CA
You seem to have no understanding of the priva...CA<br /><br />You seem to have no understanding of the private debt bubble Lesser Depression that we entered in 2007, if not before (Stiglitz dates to 2005). I date to 9/11/01.<br /><br />Wages are not "sticky;" workers aren't stark raving mad; they understand, which you do not, that falling wages means an increasing debt ratio making a bad situation worse.<br /><br />Repeat after me. When the cause of Depression is private (mostly consumer debt), falling wages can never lead to either a bottom or recovery and growth. We are getting buy on 1/10th the stimulus we needed.<br /><br />Today's Baron's had a good back of envelope estimate of 9 more years.JLDhttps://www.blogger.com/profile/02186957841091998126noreply@blogger.comtag:blogger.com,1999:blog-2499715909956774229.post-31329361479628210192012-01-07T01:54:58.354-08:002012-01-07T01:54:58.354-08:00Your ship was sunk during Blog War III
http://www...Your ship was sunk during Blog War III<br /><br />http://www.whataboutstlouis.com/?p=49JLDhttps://www.blogger.com/profile/02186957841091998126noreply@blogger.comtag:blogger.com,1999:blog-2499715909956774229.post-79189117761542806932012-01-06T01:44:58.489-08:002012-01-06T01:44:58.489-08:00Of course we need Neo-Keynesian models in order to...Of course we need Neo-Keynesian models in order to explain this very price and wage stickiness and to model credit. Keynes' liquidity preferences story is hardly believable.<br />Nonetheless the IS-LM model is good for starters or to say it with Tobin, "its simple apparatus is the trained intuition of many of us". And if you actually red Hicks you will realize that IS-LM is pretty classical. You cannot play this stupid "it is all dubious heterodox nonsense" game.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2499715909956774229.post-64144011355714769122012-01-05T13:38:06.957-08:002012-01-05T13:38:06.957-08:00Anonymous,
sticky prices does not mean fixed pric...Anonymous,<br /><br />sticky prices does not mean fixed prices. It may mean slow-changing prices. Well how slow-changing? How short is the short-run? What is causing prices to be sticky, and can that cause change in response to policy (see the Lucas critique)? These are all questions one needs to answer to designe good policy responses. Saying ok, we observe that some prices are sticky so we are going to assume that they are fixed without asking why, and design policies that work well under this assumption is just not good economics. Do you really believe there is a static trade-off between inflation and unemployment? Are new-Keynesian models a waste of time because a simple IS-LM will do? Where is the earth flat in any of what I wrote?<br /><br />In any case, you asked before what makes the IS-LM non-classical, and that was what I was trying to answer. The notion that markets can be stuck in dissequilibrium and that the supply side does not matter. Now maybe these are appropriate assumptions, but they are non-classical.CAhttp://www.hofstra.edu/faculty/fac_profiles.cfm?id=26noreply@blogger.comtag:blogger.com,1999:blog-2499715909956774229.post-33092265458231014922012-01-05T07:40:49.076-08:002012-01-05T07:40:49.076-08:00If you assume sticky prices, which is by the way a...If you assume sticky prices, which is by the way an empirical fact in the short run, and an excess supply on the product market only demand matters, at least until you are back to full employment.<br />What is non-classical about acknowledging empirical facts, including them in a short-run model and further acknowledging that most recessions, including the current one, are demand-side caused?<br /><br />This feels like having to argue with one of those folks who still believe the Earth is flat.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2499715909956774229.post-13413063441685341492012-01-04T14:44:54.453-08:002012-01-04T14:44:54.453-08:00Anon
I do love the statement "If I [have to...Anon <br /><br />I do love the statement "If I [have to] pay the $1,000, now: (1) I might not have the $1,000..<br /><br />I have corrected the typo and am sorry that I have a handicap that restricts use of fingers<br /><br />Since you are so smart, let's have your answerAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-2499715909956774229.post-61984759510060237952012-01-04T12:37:36.612-08:002012-01-04T12:37:36.612-08:00Anon 3:58 really doesn't get it. I do love th...Anon 3:58 really doesn't get it. I do love the statement "If I pay the $1,000, now: (1) I might not have the $1,000". If I pay it, don't I have to have it?<br /><br />Stupid can be spotted, you know.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2499715909956774229.post-35786469324083070982012-01-04T11:40:25.414-08:002012-01-04T11:40:25.414-08:00The IS-LM model imposes a perfectly elastic aggreg...The IS-LM model imposes a perfectly elastic aggregate supply curve. Output is completely determined by aggregate demand and the costs or expectations of producers do not matter AT ALL. "Classical thinking"?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2499715909956774229.post-7439468877598239572012-01-04T11:28:41.025-08:002012-01-04T11:28:41.025-08:00Anonymous again,
Please try to understand! The RE...Anonymous again,<br /><br />Please try to understand! The RE is based on the (debatable) premise that people base their current consumption on the income they expect to earn during their lifetime. If your income is presently low because your are, say, in college then rather than skipping meals or hanging out with your friends or buying clothes you will finance your education by borrowing (e.g., student loans) in expectation of the higher income you will earn after you graduate. And since you are already consuming just the "right amount" given your lifetime income, your consumption can only be affected by a change in your LIFETIME income. Shuffling the same income around over time will make no difference because of your ability to borrow from or lend to credit markets. So if the government borrows on your behalf and pays for your tuition now (so that you don't have to get that student loan) with the plan of taxing you later to pay back its lenders this is not going to make any difference to you whatsoever unless a) you were cut off from credit markets so without the government's assistance you would not have been able to pay for your tuition, b) the government can borrow at a lower rate than you, or c) as Lucas said the government printed the money (borrowed it from the Fed) so it will not need to tax you (directly) to pay you back. <br /><br />But this is not what Krugman said. Krugman's example makes no sense!CAhttp://www.hofstra.edu/faculty/fac_profiles.cfm?id=26noreply@blogger.comtag:blogger.com,1999:blog-2499715909956774229.post-38356520449321882162012-01-04T10:52:25.822-08:002012-01-04T10:52:25.822-08:00Anonymous,
"Paul understood what Mankiw had ...Anonymous,<br /><br />"Paul understood what Mankiw had written but you did not"<br /><br />Can you point out how?CAhttp://www.hofstra.edu/faculty/fac_profiles.cfm?id=26noreply@blogger.comtag:blogger.com,1999:blog-2499715909956774229.post-50523179722559560452012-01-04T07:03:52.546-08:002012-01-04T07:03:52.546-08:00The IS-LM model describes a short-run equilibrium ...The IS-LM model describes a short-run equilibrium on the goods, money and bonds market. Its implicit assumptions are that there is an excess supply on the product market and that prices are sticky (respectively an excess supply on the labour market plus stick wages).<br /><br />This is not funky "heterodox" but entirely classical thinking. You Chicago boys really gotta try harder.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2499715909956774229.post-48698916821760415612012-01-03T16:01:16.580-08:002012-01-03T16:01:16.580-08:00CA wrote...
I must therefore wonder, did Paul rea...CA wrote...<br /><br />I must therefore wonder, did Paul read only <br /><br />CA, you left out the correct answer:<br /><br />Paul understood what Mankiw had written but you did notAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-2499715909956774229.post-4173219304219507332012-01-03T15:58:32.181-08:002012-01-03T15:58:32.181-08:00whether you tax today or tomorrow doesn't chan...whether you tax today or tomorrow doesn't change the outcome<br /><br />BS<br /><br />first, read Krugman, but what you are talking about its not RE<br /><br />If I borrow $1,000 to buy a car today, I might be able to repay at $20.00 a week, for the next year.<br /><br />If I pay the $1,000, now: (1) I might not have the $1,000 or (2) if I did, I would have to forego spending the $1,000 on something else.<br /><br />The premise of your argument is unstated---that the Fed has to agree to the Gov't going to the bank and borrowing the $1,000<br /><br />If the Fed permits the gov't to borrow the $1,000, through the creation of money, the outcome is changed.<br /><br />IOW your reply is just more of the same intellectual dishonesty as LucasAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-2499715909956774229.post-81987423127653298292012-01-03T11:52:56.050-08:002012-01-03T11:52:56.050-08:00I found it interesting that Paul Krugman attacked ...I found it interesting that Paul Krugman attacked the so-called Chicago guys for missing the "revival of Keynesian economics" by making reference to Greg Mankiw's article here: http://www.iisec.ucb.edu.bo/amercado/clases/macroeconomia_maestria/lecturas/The_reincarnation_of_keynesian_economics.pdf<br />Except Greg makes very clear that this is a reincarnation and NOT REVIVAL. To explain why he lists what he calls "six dubious Keynesian propositions" embedded in the traditional Keynesian models PK wants us to go back to. In fact, he attributes the differences in thinking between the old and new Keynesians to the insights offered by new Classical economists. I must therefore wonder, did Paul read only the tile of Greg's article, or did he hope that no one would click on the link and actually read the thing?CAhttp://www.hofstra.edu/faculty/fac_profiles.cfm?id=26noreply@blogger.comtag:blogger.com,1999:blog-2499715909956774229.post-86757119268405751842012-01-03T11:12:41.399-08:002012-01-03T11:12:41.399-08:00cranky anonymous, I think you are very confused. r...cranky anonymous, I think you are very confused. ricardian equivalence doesn't say anything about the profitability of government spending. it is saying that the method of finance is irrelevant. whether you tax today or tomorrow doesn't change the outcome. I'm not sure in what context you want to apply this to private borrowing. It certainly doesn't say that government spending is a "bad thing".<br /><br />Before going off on the honestly of others, ask yourself if you've honestly understood those you seem bent on slandering.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2499715909956774229.post-52409842560214460472012-01-03T06:53:14.830-08:002012-01-03T06:53:14.830-08:00Anonimo
those of us not in the profession know it...Anonimo<br /><br />those of us not in the profession know its has no intellectual honesty, including this blog, which refuses to answer the most simple of questions<br /><br />If it is a good thing, from the POV of the economy for students to borrow money to pay to "learn," from Williamson, why would it be a "bad thing" for the gov't to borrow the money and pay Williamson?<br /><br />If the answer is the truth---there is no difference---then Lucas is a lying, disingenuous AH and Williamson ought to say so, rather than suck up to the guy<br /><br />Same for the Catoist Cochrane, in spadesAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-2499715909956774229.post-24505538706872356572012-01-02T23:19:07.100-08:002012-01-02T23:19:07.100-08:00Anonimo: I'm ashamed that Cain killed Abel.Anonimo: I'm ashamed that Cain killed Abel.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2499715909956774229.post-34308365899967719602012-01-02T22:21:34.422-08:002012-01-02T22:21:34.422-08:00I thought Steve's point was that whether Ricar...I thought Steve's point was that whether Ricardian Equivalance holds or not is a red herring. But then, why get in the way of a good soap box. Tell us how you really feel Anonimo.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2499715909956774229.post-33123261548073626772012-01-02T21:20:36.505-08:002012-01-02T21:20:36.505-08:00But the problem, Steve, is that what Lucas was say...But the problem, Steve, is that what Lucas was saying is wrong, as in claiming that driving a car at 100 miles per hour against a wall does not increase the probability of death of the driver. Any economist worth his or her salt must know that Ricardian equivalence is an intellectual curiosity that does not hold on the real world; and that debt financed government expenditure has real effects IN THE REAL WORLD (and in any model economy any intelligent economist would care about). <br /><br />My reaction to Lucas' speech is one of shame: I am ashamed that Bob Lucas was a Nobel prize recipient; I am ashamed that the standards of intellectual honesty in my profession allows Bob Lucas to feel like a respected economy."O" Anonimohttps://www.blogger.com/profile/07896236826318022479noreply@blogger.comtag:blogger.com,1999:blog-2499715909956774229.post-53385815697056565472012-01-02T13:44:19.196-08:002012-01-02T13:44:19.196-08:00heterodox people look like the wingbat cranks--
t...heterodox people look like the wingbat cranks--<br /><br />truth, like art, is in the eye of the beholder.<br /><br />we are still waiting for the answer to today's question, which we will update and reframe<br /><br />Cochrane, Catoist, why do we permit private borrowing, since such does not lead to economic growth (per your reply to Krugman)Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2499715909956774229.post-50896630134408400602012-01-02T13:01:05.756-08:002012-01-02T13:01:05.756-08:00Here is the blog post of J. Cochrane on RE:
http:...Here is the blog post of J. Cochrane on RE:<br /><br />http://johnhcochrane.blogspot.com/2011/12/krugman-on-stimulus.htmlMetenoreply@blogger.comtag:blogger.com,1999:blog-2499715909956774229.post-36599812542598293012012-01-02T11:41:19.533-08:002012-01-02T11:41:19.533-08:00He's likely doing some kinda pointless false f...He's likely doing some kinda pointless false flag trolling to make heterodox people look like the wingbat cranks most everyone thinks they are.Jaynoreply@blogger.com