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Scott Sumner: April 2014

An Author Archive by Month (13 entries)
Even before Mark Carney took over as Governor of the Bank of England, he showed signs of independent thinking. Most famously, he came close to endorsing NGDP targeting at a speech in Toronto during early 2013. More recently, he hinted... MORE

A pragmatic view of causation

Monetary Policy
Scott Sumner
I'm not trained in philosophy, but I do regard myself as a philosophical pragmatist. So when I grapple with issues of causality I try to imagine which definition of 'causation' is the most useful. Consider two possible causes of WWII:... MORE

Consumption is the bedrock upon which essentially all of economics is built. We assume that all economic activity is aimed at creating consumption (defined broadly to include the value of leisure time, and non-market factors such as clean air.) Of... MORE

German success is surprisingly recent

Labor Market
Scott Sumner
Many people assume that Germany has long been an economic success story. It was certainly successful back in the 1950s and 1960s. But as recently as 2004 it was widely viewed as the "sick man of Europe" despite all those... MORE

Why the EMH is truer than supply and demand

Finance: stocks, options, etc.
Scott Sumner
My previous post discussed the strangeness of the efficient markets hypothesis. Here I'll defend its utility. In the field of economics, all models represent simplifications of reality. Thus when we consider whether the EMH is true, it makes no sense... MORE

Quantum finance

Scott Sumner
The New York Review of Books has a very interesting interview of George Soros. At one point he is asked about the recent revolution in the Ukraine. Here is part of his response, and then a follow-up question: [Soros] Contrary... MORE

Bad news; industrial production is soaring

Scott Sumner
TravisV sent me to the following graph of industrial production: That looks like good news. To see why it is bad news, we need to take a brief digression. The recent recession has been rather unusual. RGDP fell sharply between... MORE

Larry Summers is persuasive

Economic Philosophy
Scott Sumner
Tyler Cowen directed me to a long interview of Larry Summers. I have two general impressions after listening to the interview: 1. Larry Summers seems brilliant. 2. I disagree with him on just about everything. That got me wondering why... MORE

Germany's mysterious recovery

Labor Market
Scott Sumner
In the past 10 years Germany as gone from being the "sick man of Europe" to the star of the eurozone. This partly reflects the strong job creation that preceded the recession, perhaps due to the labor market reforms of... MORE

Inequality among doctors

Income Distribution
Scott Sumner
The following graph perked my interest: I notice that the inequality of Medicare payments mirrors the overall income inequality in American society. (Which is ironic as Medicare is a socialist program beloved by pundits like Paul Krugman.) I don't know... MORE

Never reason from an inflation rate change

Scott Sumner
In a new post, Tyler Cowen is skeptical of Paul Krugman's claim that higher inflation hurts the rich. Brad DeLong also expresses some skepticism. I agree with Cowen and DeLong, but would like to quibble with this comment in... MORE

What we are up against

Scott Sumner
The Great Recession led to a lot of "if only" comments. If only we could charge a negative interest rate on reserves, to discourage banks from hoarding excess reserves. If only we had had more regulation back during the housing... MORE

I don't generally get into debates over monetary "disequilibrium," as I don't find the concept to be particularly useful. It's too vague. But against my better judgment I'm going to take a stab at the debate between David Glasner and... MORE

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