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Scott Sumner: March 2014

An Author Archive by Month (16 entries)
There's a vigorous debate about the money multiplier taking place in the blogosphere. On one side is everyone from MMTers, to new monetarists, to market monetarists. On the other is Nick Rowe. And I'm sort of in the middle, but... MORE

The Wall Street Journal has an article entitled; "Gas Boom Rejuvenates Manufacturing." There certainly are some manufacturing sectors that will be helped by the energy boom. However people shouldn't expect too much from this development. In a recent post I... MORE

Central banks do not deserve our respect

Monetary Policy
Scott Sumner
Nor (in my view) do they deserve our contempt. They should be viewed skeptically. They are trying to do a good job, but often fall well short. One such occasion occurred in 2011 when the ECB tightened monetary policy. Prior... MORE

Jeremy Stein gave a speech that advocated adding financial risk to the Fed's traditional dual mandate. Or at least targeting risk in the hope that it makes it easier to fulfill its traditional mandate. I see lots of potential problems,... MORE

Endless bubbles?

Finance: stocks, options, etc.
Scott Sumner
I distinctly recall that Robert Shiller did not recommend that people buy stocks in 2009. That made me wonder when Robert Shiller did say it was a good time to buy stocks. Stephen Kirchner pointed me to an Alan Reynolds... MORE

Are ZMP workers uneducated or unmotivated?

Labor Market
Scott Sumner
This is a touchy subject, so let's begin with an analogy to clarify things. Years ago I read that drunk drivers were involved in 1/2 of all traffic fatalities. I'd guess the ratio was also high for accidents that put... MORE

Why we debate the unimportant issues

Regulation and Subsidies
Scott Sumner
Alex Tabarrok has a post discussing the laws protecting auto dealers from competition. One thing I notice is that when I discuss this sort of crazy law in the faculty dining room, many non-economists will tell me that they have... MORE

The Legacy of Milton Friedman

Monetary Policy
Scott Sumner
Last month I attended a conference on Milton Friedman, in Austin, Texas. The final session discussed his legacy, and I thought I'd share a few of my remarks. I argued that Friedman and Schwartz's Monetary History of the United States... MORE

Evan Soltas has an excellent new post explaining why the Fed is likely to raise interest rates in late 2015. He thinks this policy is appropriate, but I'd like to focus on a different issue---whether this rate increase caused the... MORE

Economics must be harder than it looks

Economic Philosophy
Scott Sumner
Mark Sadowski sent me this paper from Paul Davidson, which he thought was hilarious: There are two different major economic theories that attempt to explain the operation of the money using, entrepreneurial economy that we call capitalism and its financial... MORE

During the days of William Jennings Bryan it was pretty well understood that deflationary monetary policies helped bondholders and inflationary monetary policies helped debtors. That's why the rich favored the gold standard and lots of indebted farmers and small merchants... MORE

Krugman slides deeper into old Keynesianism

Monetary Policy
Scott Sumner
Those of us who liked the 1990s vintage Paul Krugman have been able to hold on to a few stands of hope. At least he still supports free trade. At least he only applies the old Keynesian model to the... MORE

There's a lot of discussion about the natural rate of unemployment. Some think we are already close to the natural rate. Others think the labor market is much weaker than the official 6.6% figure would suggest. Evan Soltas has what... MORE

NGDP targeting is not a "fragile" policy

Monetary Policy
Scott Sumner
This post tries to tie together some diverse observations about the sticky wage/NGDP shock model. The motivation for this (unfortunately long) post was the observation that many non-economists seem to find the sticky wage/NGDP shock model to be appealing. I... MORE

Is Abenomics working?

Macroeconomics
Scott Sumner
Tyler Cowen recently linked to an interesting post by Edward Hugh. Hugh argues that much of the recent uptick in Japanese inflation is due to the recent depreciation of the yen. That may be true in an accounting sense, but... MORE

The mysterious rise in youth unemployment

Labor Market
Scott Sumner
There's a new piece in The Economist discussing the disturbing rise of youth unemployment all over the world. Oddly there is no mention of minimum wage laws. When supply doesn't equal demand, shouldn't artificial price floors be the first place... MORE

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