Art Carden  

Macroeconomic Theory, Evidence, and Changed Minds: A Bleg

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Without digging deeply into the conversation, my sense is that a lot of economists and public intellectuals saw the financial crisis and the slow recovery as a confirmation of a lot of things they already believed. For textbook Keynesians, it was a vindication of textbook Keynesianism. For Austrians, it was a vindication of Mises and Hayek and evidence that theirs should be a textbook theory, too.

Where are there examples of people changing their minds as a result of the events of the last 5-7 years? Richard Posner is probably the most prominent example of someone who changed his mind. Where are there other examples of scholars and public intellectuals who have changed their minds in response to the financial crisis and ensuing recovery?


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CATEGORIES: Macroeconomics



COMMENTS (21 to date)
TravisV writes:

"Larry Kudlow Makes A Stunning Admission About Changing His Mind On Bernanke"

Read more: http://www.businessinsider.com/larry-kudlow-says-bernanke-may-have-gotten-it-right-2013-3#ixzz2igEAAMsZ

MingoV writes:

Paul Krugman changed his mind and became more Keynesian.

Mark_H writes:

The market monetarist crowd comes to mind, especially since that term was coined after the great recession started.

Nick Rowe said somewhere that he changed his opinions when the inflation target failed to stabilize NGDP in Canada. If you include journalists as "public intellectuals" then Matt Yglesias and Ryan Avent seem to have endorsed MM ideas since the crisis began. Lots of left-leaning bloggers were been bent on the idea that 0% interest means that monetary policy has no traction in 2008 and many seem to have changed their minds, at least to some degree (see DeLong's writings at the beginning of the crisis compared to now, although I'm sure he would never admit to any contradiction).

David R. Henderson writes:

I think Richard Posner is extreme and he changed his mind because he spends so little time thinking and researching relative to writing, that he changes in mind as thoughtlessly as he made it up in the first place.

But to your question: I think I'm an example on the margin. I thought at first that government intervention was virtually the only cause. Now I think it was a major cause and that private financial firms made way worse mistakes than I would have ever imagined, only some of those mistakes being due to government regulation, too big to fail, etc.

TravisV writes:

Former Keynesians Matt Yglesias and Ryan Avent are now Market Monetarists. They believe the Sumner Critique (therefore Krugman is wrong).

Sumner and Beckworth also made Ramesh Ponnuru and Jim Pethokoukis Market Monetarists.

And Pethokoukis has gotten Larry Kudlow to accept some Market Monetarist insights.

TravisV writes:

By the way, Avent is a former lefty big-wig at The Economist. He's used Market Monetarism to criticize Krugman numerous times.

Josh Barro:

"market monetarism is the shining success of the conservative reform movement......the reformists were able to get a hearing from the Republicans who count: the ones at the Fed, including Ben Bernanke."
http://www.businessinsider.com/the-reformists-and-me-2013-6

Also:

"Larry Kudlow Makes A Stunning Admission About Changing His Mind On Bernanke"
http://www.businessinsider.com/larry-kudlow-says-bernanke-may-have-gotten-it-right-2013-3

TravisV writes:

Tyler Cowen? Bryan Caplan?

Tony writes:
I think Richard Posner is extreme and he changed his mind because he spends so little time thinking and researching relative to writing, that he changes in mind as thoughtlessly as he made it up in the first place.

This seems strangely harsh. Posner writes a great deal and often expresses strong opinions, but to say his opinions (either before or after) were thoughtless is plainly off-base. If Posner's opinions are thoughtless, who else's might be?

But then again you're an example of someone who changed their mind. What a surprising coincidence!

Alan Greenspan claims to have changed his mind about banks regulating themselves out of self interest, but it's hard to see why. So, it's pretty funny that there are currently eight(!) posts at Semi-Daily Journal attacking Greenspan's new book.

Methinks the professor doth protest too much.

JLV writes:

Is Kocherlakota prominent enough? Although his turnaround on QE happened well after the crisis.

Ryan Murphy writes:

This isn't about public intellectuals per se, but a very substantial proportion of Austrian-leaning people under 30 changed their affiliation to market monetarism. Many, many people in this age cohort moved to the "left" since 2007. Rothbardians shifted to free banking and free banking advocates shifted to market monetarism.

The fact that so many people across the political spectrum have moved in that direction since the crisis makes me more confident in it, though that is probably confirmation bias.

Enial Cattesi writes:

@Ryan Murphy:

Rothbardians shifted to free banking and free banking advocates shifted to market monetarism.

Any examples?
The fact that so many people across the political spectrum have moved in that direction since the crisis makes me more confident in it, though that is probably confirmation bias.

Or wishful thinking.

Nick Rowe writes:

I used to think that inflation targeting was probably roughly the best policy. Now I think that NGDPLT is probably roughly the best policy.

I used to think that IS curves sloped down, now I think they slope up sometimes.

There is something wrong with how I used to think about Phillips Curves, but I'm not quite sure what it is.

There are probably other cases where I have changed my mind, but where I have carefully "forgotten" my old views, erasing them from the old photos in my memory bank.

Nick Rowe writes:

And I used to be more New Keynesian/Neo-Wicksellian than I am now. Because having central banks set interest rates seemed to work OK in practice, despite what theory said, until it didn't. I have now reverted more to some sort of monetarism.

And I used to think that booms and recessions were roughly equal-sized, but now I think booms are small and rare, compared to recessions. Friedman's plucking model looks good now.

Shane L writes:

(As a side point, I noticed that not just economists and intellectuals said "I told you so". Indeed religious extremists, communists, environmentalists, nationalists and the like all chimed in: an interesting phenomenon in itself.)

David R. Henderson writes:

@Tony,
This seems strangely harsh. Posner writes a great deal and often expresses strong opinions, but to say his opinions (either before or after) were thoughtless is plainly off-base.
In what I wrote, "thoughtlessly" is the wrong word. You're right that that's too harsh. "Carelessly" is a better word. And notice that I didn't say he was thoughtless or wrote thoughtlessly. Read my criticism again. And if you substitute "carelessly" for "thoughtlessly, you'll see what I'm saying.

Aidan writes:

I think a lot of the mainstream Keynesians started embracing Minsky much more than they used to.

Bill Conerly writes:

I have changed: I'm far less confident that we know much about macro; I'm far less confident as a forecaster; I talk a lot more about dealing with uncertainty.

Brian writes:

Everyone I can think of is young and not that "public" of an intellectual. I think this is across common history.

Once economists are established enough to be in the spotlight, it is very costly to admit you were wrong, especially in an area that made your career.

The exception is admitting you were not (fill in the blank) enough. Krugman has doubled down on his fiscal Keynesianism. Russ Roberts has become more Hayekian in my eyes. John Taylor is more vocal than ever about the needs for rules based policy following his formula

They maybe didn't change their mind, but are more confident in what they argue.

Martin writes:

David,

"In what I wrote, "thoughtlessly" is the wrong word. You're right that that's too harsh. "Carelessly" is a better word. And notice that I didn't say he was thoughtless or wrote thoughtlessly. Read my criticism again. And if you substitute "carelessly" for "thoughtlessly, you'll see what I'm saying."

I thought that your criticism was spot on. Posner is brilliant no doubt about that, but I have also read some articles and books by him of which I am sure I nor anyone else not named Richard Posner would be able to get away with. I believe that this was one of those books.

Solow was a lot nicer to Posner in his review of the book, but there also you see this criticism returning:

"Judge Posner evidently writes the way other men breathe. I have to say that the prose in this book often reads as if it were written, or maybe dictated, in a great hurry. There is some unnecessary repetition, and many paragraphs spend more time than they should on digressions that seem to have occurred to the author in mid-thought. If not exactly chiseled, the prose is nevertheless lively, readable, and plainspoken. The haste may have been justified by the pace of the events he aims to describe and explain. Posner has an extraordinarily sharp mind, and what I take to be a lawyerly skill in argument. But I also have to say that, in some respects, his grasp of economic ideas is precarious."

http://www.nybooks.com/articles/archives/2009/may/14/how-to-understand-the-disaster/

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