David R. Henderson  

How Romers' Research Undercuts Obama's Fiscal Policy

It's Funny Because It's True... The Stimulus and the Somme...

Forbes.com just published my article, "Will the Real Christina Romer Please Stand Up?" I'm not thrilled with the title because it seems to hint that Professor Romer has been hypocritical and, as far as I know, she hasn't been. But as anyone knows who has published in any popular magazine or newspaper, the author rarely gets to choose the title. Indeed, in over 200 articles and book reviews that I've published in such venues, I can count on the fingers of one hand the number of times the title I've chosen has been the one used. And I don't count a thumb as a finger. That's why I never criticize an author for the title of a work in a magazine or newspaper.

My preferred title would have been the line underneath: "Her research rejects a fiscal stimulus." That's the real news. One of the leading researchers on fiscal policy has come up with results that undercut President-elect Obama's proposals. Notice also that I point out that Greg Mankiw and Larry Lindsey misused Christina's and husband David's research. It doesn't say about countercyclical fiscal policy what they say it says. Incidentally, Greg, Larry, Paul Krugman, Larry Summers, and I were all economists together at the Council of Economic Advisers in the 1982-83 academic year. Of the five of us, only Larry Lindsey and I stuck around for the double feature. I guess we're slow learners.

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Steve Roth writes:

Yeah I read that paper a while back and came away seriously underwhelmed. While all the statistical legwork is impressive, I found the underlying premise to be weak, at best.

Their basic theory: by deducing the intention behind various tax changes, they could establish some kind of control against which those changes--and ensuing events--could be measured and gauged.

I won't go into all the reasons that this premise might be incorrect. Nor will I question the validity of their "intent" deductions--they're probably as good as anyone could expect.

Just to say that the analytical premise should looked at very carefully before giving much weight to the resulting conclusions.

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