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Scott Sumner: January 2014

An Author Archive by Month (14 entries)

Keynesian confirmation bias

Monetary Policy
Scott Sumner
When you read Keynesian blogs you get the impression that Keynesians think their model has been somehow confirmed by the events of the last few years. And yet figuring out what their model actually predicts can be maddeningly difficult, like... MORE

Why so glum?

Income Distribution
Scott Sumner
America's pretty much the same place as it was 6 years ago. If you drive around the country you see the same sorts of neighborhoods you saw 6 years ago. Incomes haven't changed very much. But Kevin Drum has a... MORE

Over at TheMoneyIllusion I used to do occasional stories on why China will not get stuck in the middle income trap. Here's another interesting piece of evidence: BEIJING (Reuters) - Zhong Jian and his wife are willing to pay... MORE

NGDP isn't "the economy"

Central Planning vs. Local Knowledge
Scott Sumner
Which of the following three concepts is the outlier, i.e. very different from the other two? 1. Real GDP 2. Nominal GDP 3. The $/pound exchange rate ($ price of pounds = E) I'd guess most econ students would say... MORE

I'm associated with the "pro-inflation" crowd because of my advocacy of monetary stimulus over the past 5 years.  This is actually sort of ironic because I'm an inflation hawk who was trained at the University of Chicago in the late... MORE

Imagine there's no economic inequality

Income Distribution
Scott Sumner
Now let's see why there would still be enormous income inequality. 1.  Suppose everyone had identical lifetime wage income and inherited no money.  Also assume all investments were risk-free.  Incomes would still vary greatly due to different preferences regarding... MORE

Back in 1933 the US had experienced years of deflation and nominal interest rates were close to zero.  FDR sharply devalued the dollar over a period of 10 months, and stock prices closely tracked the value of foreign exchange during... MORE

Why are Keynesians so far-sighted?

Economic History
Scott Sumner
I recently did a post pointing out that higher interest rates don't reduce AD.  Indeed even higher interest rates caused by a decrease in the money supply don't reduce AD. Rather the higher rates raise velocity, but that effect is... MORE

Do barriers create "bubbles?"

Scott Sumner
Ryan Avent discusses a recent speech by Larry Summers:The basic set-up of his narrative remained unchanged from last year. Imagine a world, he said, in which resources are increasingly concentrated in the hands of those with high propensities to save and... MORE

Market monetarism in 2013

Monetary Policy
Scott Sumner
Yes, it's been a very good year. Of course what's been getting all the attention is that the year began with our opponents saying that 2013 would be the test of market monetarism. Then when we passed with flying... MORE

Here's Larry Summers: Last month I argued that the U.S. and global economies may be in a period of secular stagnation; in which sluggish growth and output, and employment levels well below potential, might coincide for some time to come... MORE

In a recent post I discussed how Keynesians like Mike Konczal began the year claiming that we were going to have a test of market monetarism, and specifically the doctrine of "monetary offset."  [As recently as 2007, monetary offset (roughly zero fiscal... MORE

Keynesianism: It's not just resting

Scott Sumner
During late 2012, market monetarists like myself argued that fiscal austerity in 2013 would not slow growth.  We based that on an idea that was relatively uncontroversial as late as 2007 (even among New Keynesians)---monetary offset.  If the central bank... MORE

Don't follow the money

Scott Sumner
I'd first like to thank David for his very kind introduction.  It's an honor to be invited to do a stint as a guest blogger at one of my favorite blogs.  I do plan to keep my other blog ( MORE

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