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Scott Sumner: February 2014

An Author Archive by Month (16 entries)

Does happiness cause income?

Cross-country Comparisons
Scott Sumner
Bryan Caplan has a post that discusses the research of Daniel Sacks, Betsey Stevenson, and Justin Wolfers, on the correlation between income and happiness. I'm no expert on this subject, but it seems to me that researchers seem to assume... MORE

Williamson pulls rank on Yglesias

Monetary Policy
Scott Sumner
I've often argued that the Fed made a mistake holding rates at 2% at their meeting of September 16, 2008 (right after Lehman failed.) Matt Yglesias has a new piece that is also critical of this decision, and Steve Williamson... MORE

Australia's auto industry collapses as America's booms

Regulation and Subsidies
Scott Sumner
From the Economist: Toyota's announcement on February 10th that it would join Ford and Holden in pulling out of carmaking in Australia, closing its assembly line in 2017, was greeted with commensurate dismay. Yet beneath the obligatory political blame-mongering was... MORE

Was Mishkin the Benjamin Strong of 2008?

Monetary Policy
Scott Sumner
Benjamin Strong headed the Fed during the Roaring 20s, and used countercyclical monetary policy to try to stabilize prices and output (which is roughly equivalent to NGDP targeting.) He died in 1928 and the new leaders of the Fed switched... MORE

The Keynesian information bubble

International Macroeconomics: Exchange Rates, International Debt, etc.
Scott Sumner
Paul Krugman likes to brag that he doesn't read conservative bloggers, as they have nothing useful to say. And certainly the world is full of conservatives making sloppy arguments. But the downside of that strategy is that when he makes... MORE

The 2008 transcripts: The real issues

Monetary Policy
Scott Sumner
The Fed releases the detailed minutes of its meetings with a 5 year lag. Bloggers that follow monetary policy closely have been eagerly awaiting the 2008 minutes, expecting all sorts of revealing (and perhaps embarrassing) quotes. Although I haven't yet... MORE

Bastiat just rolled over in his grave

Fiscal Policy
Scott Sumner
The Administration has released a report defending the ARRA program, and it's every bit as embarrassing as you might expect. Where to begin . . . 1. The report seems to ignore the fact that fiscal stimulus failed to produce... MORE

But now we know the actual problem was tight money, which caused NGDP to fall in half. Here's Noah Smith: This seems to be the overwhelming consensus in academic macro these days. It seems obvious to most people that the... MORE

Questions that have no answer

Monetary Policy
Scott Sumner
There are some questions that have no answers. One example is the question: "Was monetary policy too expansionary during the housing boom?" The only sensible answer is "it depends." It's not clear what the Fed was trying to do during... MORE

Paul Krugman was upset over a recent column by Casey Mulligan. Here's Krugman: Jonathan Gruber is mad as hell, and he's not going to take it anymore. The eminent health care economist and health reform architect is annoyed at Casey... MORE

Never reason from a price change, example #305

International Macroeconomics: Exchange Rates, International Debt, etc.
Scott Sumner
Over at TheMoneyIllusion I have a series of posts exposing the common fallacy of "reasoning from a price change." (Trademark) This occurs when people assume that consumers will buy less oil when the price is high, or there will be... MORE

Immaculate inflation and immaculate growth

Fiscal Policy
Scott Sumner
Here's Paul Krugman: Barry Ritholtz reminds us that we've just passed the third anniversary of the debasement-and-inflation letter -- the one in which a who's who of right-wing econopundits warned that quantitative easing would have dire consequences. As Ritholtz notes,... MORE

Why do booms feel good?

Labor Market
Scott Sumner
The answer to this question might seem obvious, but it isn't. Yes, booms feature lots of jobs and income, but most standard macro models suggest that booms feature "excesses," with too much employment and perhaps over-investment too. In the... MORE

Here's an imaginary dialogue: Student: So the central bank sets the level of interest rates, right? Professor: Not really. It would be more accurate to say that interest rates mostly reflect the condition of the economy. Higher inflation and/or higher... MORE

Here's Paul Krugman suggesting that the ECB has been in a liquidity trap for years: And yes, Europe is very much in a trap. Inflation is falling because the economy is weak, and the economy is being weakened in part... MORE

Where the Stress Falls

Monetary Policy
Scott Sumner
Marcus Nunes has a highly critical post contrasting Paul Krugman's views on Argentina in 2012 and today. I won't be quite as critical. As is often the case with Krugman it's almost impossible to figure out what he is "really... MORE

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