tag:blogger.com,1999:blog-6837159629100463303.post8557350126099177150..comments2023-06-18T01:25:08.748-07:00Comments on Information Transfer Economics: Modus omnia facereJason Smithhttp://www.blogger.com/profile/12680061127040420047noreply@blogger.comBlogger12125tag:blogger.com,1999:blog-6837159629100463303.post-33920561005185265592015-06-24T12:49:15.568-07:002015-06-24T12:49:15.568-07:00Hi James,
I don't think it was hyperbole -- e...Hi James,<br /><br />I don't think it was hyperbole -- even by Sumner's own definition of a liquidity trap, he included countries that weren't in a trap in the plots. Additionally the y-values and x-values end up making the analysis demonstrate something entirely separate from Sumner's point. The analysis as shown basically comes up with an inconclusive result that 'austerity' doesn't cause secular stagnation (or 'the great stagnation'). Sumner drew the conclusion that monetary offset exists, which just doesn't follow from the data as presented.<br /><br />Sumner either doesn't understand the liquidity trap argument or is being deliberately obtuse. As an economics professor he should understand that the ZLB is about nominal rates that can't go (sufficiently) negative than it is about nominal rates being at some specific value. It is his lack of understanding brings up the point that the language gets oversimplified in normal discourse. People often talk about "the money supply" without specifying which measure (M1, M2, MZM, etc) -- sloppy language, but sloppy language doesn't make it garbage analysis.<br /><br />Incorrectly displaying data and incorrectly inferring conclusions from it makes it garbage analysis.Jason Smithhttps://www.blogger.com/profile/12680061127040420047noreply@blogger.comtag:blogger.com,1999:blog-6837159629100463303.post-7263741951637265972015-06-23T10:30:49.992-07:002015-06-23T10:30:49.992-07:00Jason, I don't think it makes sense to respond...Jason, I don't think it makes sense to respond to Scott as you do here without acknowledging the level of hyperbole in your original post. <br /><br />Now you say, "The entire econoblogosphere should be much more careful about what is meant by the "zero lower bound" (ZLB) -- I am as guilty of being sloppy here, too."<br /><br />Is your analysis also "garbage analysis"?Jameshttps://www.blogger.com/profile/11016802159573871360noreply@blogger.comtag:blogger.com,1999:blog-6837159629100463303.post-67620110165089744782015-06-21T11:43:09.828-07:002015-06-21T11:43:09.828-07:00 Thanks for the response Ken Duda. It was cons... Thanks for the response Ken Duda. It was constructive. <br /><br />http://diaryofarepublicanhater.blogspot.com/2015/06/ken-duda-resonds-with-possible-way.htmlMike Saxhttps://www.blogger.com/profile/01360689916550576484noreply@blogger.comtag:blogger.com,1999:blog-6837159629100463303.post-70111385158157750542015-06-21T10:59:01.741-07:002015-06-21T10:59:01.741-07:00I don't think Sumner will do anything ... this...I don't think Sumner will do anything ... this was mainly advice to everyone else. If you create language that allows misunderstanding, then opponents will seize on it. That kind of willful misreading is harder to combat leading to more people falling for it. In any case, it's more political messaging than science. Like the silly: "if global warming is true, why did it snow so much in Boston?" That's why scientists talk about "climate change". It's just messaging.<br /><br />I'm pretty sure Krugman thought Sumner's entire line about the ECB and the ZLB was just dumb -- he's never engaged it as far as I can tell.Jason Smithhttps://www.blogger.com/profile/12680061127040420047noreply@blogger.comtag:blogger.com,1999:blog-6837159629100463303.post-64364800734041754552015-06-21T10:13:56.686-07:002015-06-21T10:13:56.686-07:00Ok I admit this conversation has got me on a roll.... Ok I admit this conversation has got me on a roll. Which I'm grateful for. <br /><br /> http://diaryofarepublicanhater.blogspot.com/2015/06/ken-duda-asks-why-cant-market.htmlMike Saxhttps://www.blogger.com/profile/01360689916550576484noreply@blogger.comtag:blogger.com,1999:blog-6837159629100463303.post-43261950127234719342015-06-21T09:26:37.658-07:002015-06-21T09:26:37.658-07:00 This discussion has led me to write a post
... This discussion has led me to write a post <br /><br /> http://diaryofarepublicanhater.blogspot.com/2015/06/scott-sumner-mark-sadowski-jason-smith.html<br /><br /> I think this is a good and important debate to have whoever is right. Mike Saxhttps://www.blogger.com/profile/01360689916550576484noreply@blogger.comtag:blogger.com,1999:blog-6837159629100463303.post-23606730581896888652015-06-21T08:24:09.268-07:002015-06-21T08:24:09.268-07:00"The ZLB language is problematic and we can p... "The ZLB language is problematic and we can probably fault Paul Krugman for popularizing it, especially when he says "at the zero lower bound". While that language is true for the US, it obviously leads to misinterpretations (even by trained economists like Scott). The liquidity trap language is better -- it implies an entire model, but tends to be too technical. Brad DeLong's "shortage of safe assets" version is good, but also a bit technical. This lowly blog isn't going to change the language by itself. I could suggest a minor tweak from "at the ZLB" to "because of the ZLB".<br /><br /> I think you give Scott too much credit. What are the chances you think he's going to incorporate this more expanded definition of a LT into his analysis? It's not convenient so it won't make the cut. <br /><br /> As for Krugman you can't fault him unless you know whether he like you yourself do said ZLB while knowing that a LT could come at any interest rate. He might just as assumed this is understood. <br /><br /> Mike Saxhttps://www.blogger.com/profile/01360689916550576484noreply@blogger.comtag:blogger.com,1999:blog-6837159629100463303.post-36299006341207978632015-06-21T08:19:32.411-07:002015-06-21T08:19:32.411-07:00Hi, Ken.
Unfortunately for the un- and under-empl...Hi, Ken.<br /><br />Unfortunately for the un- and under-employed, as you indicate, new fiscal stimulus or monetary policy would probably come too late, as a practical matter. OTOH, if we indeed find ourselves in a second long depression or having a couple of lost decades, then it is not too late to act.<br /><br />My impression from what I have read in the economics blogosphere is that NGDP targeting is gaining adherents. Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6837159629100463303.post-82684351230402687822015-06-21T06:33:27.916-07:002015-06-21T06:33:27.916-07:00Jason I don't know if you read this piece of S...Jason I don't know if you read this piece of Sumner over at Econolog. <br /><br />http://www.themoneyillusion.com/?p=29692<br /><br />Maybe you've already responded to this-I haven't read all your posts on Sumner yet. I actually am catching up now. <br />Mike Saxhttps://www.blogger.com/profile/01360689916550576484noreply@blogger.comtag:blogger.com,1999:blog-6837159629100463303.post-6239038535756693492015-06-20T19:37:05.398-07:002015-06-20T19:37:05.398-07:00Hi Bill,
In a fantasy world where I had enough mo...Hi Bill,<br /><br />In a fantasy world where I had enough money to put up a real fight in Congress, I'm not sure I know what I'd do if we won that fight. There's no reason to think fiscal stimulus would be needed at that particular future point. What we need to do is put a system in place ahead of time for dealing with it. I'm not sure what that system would look like on the fiscal side (some sort of automatic stabilizer?) So I've shied away from that path.<br /><br />But no, I don't think there's much chance of getting the Fed to adopt NGDPLT near term, but I do think the Fed could/should be convinced to take a few modest steps, such as:<br /><br />1) publish an NGDP forecast; and/or,<br /><br />2) publish a forecast of how policy instrument settings would affect NGDP, i.e., "we're predicting NGDP to be X, but if we were to raise the Fed Funds target to Y, or set IOR to Z, then we’d expect the NGDP level to be X-prime"; and/or,<br /><br />3) publish a forecast of how the NGDP level is expected to correlate with unemployment and inflation, that is, forecast the connection between NGDP and the Fed's dual mandate, as in, "if NGDP is X, we expect unemployment to be Y; if NGDP is X-prime, then we'd expect unemployment to be Y-prime"; and/or,<br /><br />4) operate a prediction market for any/all of the three forecasts above.<br /><br />As I'm sure you can see, all of these ideas are designed to explore the extent to which NGDP, NGDP forecasts, and ultimately NGDP level targeting could help the Fed conduct monetary policy and better achieve its dual mandate.<br /><br />Meanwhile, if we can shift the consensus among macroeconomists in the direction of NGDPLT, that would also help. The Fed is fundamentally a conservative (in the classic sense) organization --- it will not move far afield from the academic/professional consensus. If NGDPLT became more accepted as probably better than IT within that consensus, that would really help the Fed adopt NGDPLT.<br /><br />So these things can be done in parallel, at far lower cost than trying to influence Congress directly. Or at least that's the way it looks to me.<br /><br /> -Ken<br /><br />Kenneth Dudahttps://www.blogger.com/profile/10593455504357461005noreply@blogger.comtag:blogger.com,1999:blog-6837159629100463303.post-6439982687672070142015-06-20T17:33:31.328-07:002015-06-20T17:33:31.328-07:00Ken, which do you think more likely in the near te...Ken, which do you think more likely in the near term, getting the Fed to adopt a plausible, but unproven monetary policy? Or getting governments to implement proven fiscal policy? Even Congressional Republicans voted for economic stimulus and bailouts during Bush's term.<br /><br />Would you be willing to fund efforts to unseat obstructionist members of Congress in the next election?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6837159629100463303.post-49509140391493409642015-06-20T15:49:31.649-07:002015-06-20T15:49:31.649-07:00Hi Jason,
At the risk of annoying you, I hope you...Hi Jason,<br /><br />At the risk of annoying you, I hope you'll take a look at my comment on your prior post:<br /><br />http://informationtransfereconomics.blogspot.com/2015/06/this-analysis-is-so-bad.html?showComment=1434810938507#c8995347856842309730<br /><br />It's really driving me nuts that legitimate objections to Sumner's attacks on Keynesianism is obscuring the larger issue, which is that we have an opportunity of a lifetime to improve the lives of millions of people through better monetary policy. I think all of us should join Sumner in pushing the Fed for NGDPLT.<br /><br />I am prepared to fund efforts to do so that I find credible.<br /><br /> -Ken<br /><br />Kenneth Duda<br />Menlo Park, CA<br />kjd@duda.org<br />Kenneth Dudahttps://www.blogger.com/profile/10593455504357461005noreply@blogger.com