Still on the light blogging/hiatus, but I am having trouble parsing this sentence from Scott Sumner:
I am increasingly confident that [the neo-Fisherites] have stumbled on something important, a serious flaw in the [New Keynesian] model.
Is the flaw the ability to get any result you want just by making different assumptions about expectations? Isn't that flaw in every macroeconomic model of expectations? Rational expectations just shifts that ability to get any result to the mechanics of the model itself (i.e. you just take off the E's in a ratex model).
Scott changes a sentence from Noah Smith to better get as his (Scott's) point at the link at the top. I'll do the same here; I'd rather Scott had said:
I am increasingly confident that [the neo-Fisherites] have stumbled on something important, a serious flaw in macroeconomics.
In the information transfer framework, I take expectations to be part of the so-complicated-it-looks-effectively-random theory of agent behavior (more about this in the context of a traffic model here).