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Scott Sumner: November 2014

An Author Archive by Month (19 entries)
Rising oil production is likely to lead to faster global growth. Falling oil production is likely to lead to slower global growth. That's because oil is an important input into the production process. However falling oil prices have no implications... MORE

Neo-Fisherism converges on market monetarism

Monetary Policy
Scott Sumner
Here's the latest from John Cochrane: To send you off with some more Thanksgiving good cheer, here is another out of the box Neo-Fisherian idea. Perhaps the Fed (or the Treasury) should target the spread between real and nominal interest... MORE

The Piketty Path to Riches

Income Distribution
Scott Sumner
This post is meant to be a sort of opening inquiry into what might become an important issue in the 21st century. I don't have strong views on the question. You may recall that Thomas Piketty assumed that savers can... MORE

A few thoughts on free banking

Scott Sumner
Izabella Kaminska has a few thoughts on free banking: This week I strayed into the absolutist world of free-banking enthusiasts. Now, it's not like I haven't come across these guys before -- they lurk everywhere -- but this week I... MORE

David Henderson and Tyler Cowen have linked to an interesting interview with Jean Tirole, the newest Nobel laureate in economics: "We haven't succeeded in France to undertake the labour market reforms that are similar to those in Germany, Scandinavia and... MORE

The smart against the dumb: The new Cold War

Cross-country Comparisons
Scott Sumner
Consider the following story: A suicide bomber has killed at least 48 students at a high school assembly in northeastern Nigeria, witnesses say. . . . The region has been in the grip of fighting between government forces and Boko... MORE

Sticky wages and sticky fed funds rates

Monetary Policy
Scott Sumner
Here's another post in my favorite theme, cognitive illusions. Let's start with sticky wages, the easier concept. Suppose hourly nominal wage rates for many workers are renegotiated every 12 months. Also suppose the economy is in equilibrium and nominal wages... MORE

No matter how hard I try, I can't stop economists from reasoning from price changes. Now I'm seeing more and more economists claiming that at low interest rates we should do more public investment. In fact, there is no necessary... MORE

I'm not "the NGDP guy"

Scott Sumner
When I was much younger, right wing macroeconomists like me used to think we were smarter than left wing macroeconomists. The old Keynesian model ran into some pretty severe problems during the 1970s, and the monetarist critique of the model... MORE

Public choice theory teaches us that small, well-organized special interest groups can often enact legislation that benefits them at the expense of the broader public. The examples are endless; teachers unions, farmers, bankers, taxi companies, auto dealers, lawyers, doctors, etc.... MORE

Let me get my biases out of the way right up front: 1. I strongly disagree with Gruber's views on health economics, for reasons discussed by Bryan Caplan in a recent post. 2. I opposed Obamacare, albeit not quite as... MORE

The "War on Drugs" and crime rates

Economics of Crime
Scott Sumner
Bryan Caplan has a new post discussing the impact of drug legalization on the overall crime rate. In the absence of the War on Drugs, many non-drug offenses would never have been committed. Without prohibition, gang-related violence - and related... MORE

George Selgin recently quoted Keynes, from late 1933: "Rising output and rising incomes will suffer a set-back sooner or later if the quantity of money is rigidly fixed. Some people seem to infer from this that output and income can... MORE

The problem of population

Labor Mobility, Immigration, Outsourcing
Scott Sumner
Tyler Cowen has a column in the New York Times that discusses the issue of population. I mostly agree with his policy recommendations, but what interests me is the underlying assumptions. What is the optimal global population? What is the... MORE

Here's Brad DeLong on June 30th 2008, commenting on the Bush administration's decision to enact an emergency unemployment insurance program when the unemployment rate was at 5.5%, roughly the current estimate of the natural rate: The rule of thumb, IIRC,... MORE

How Europe did a "1937"

Monetary Policy
Scott Sumner
In macroeconomics, "1937" is a metaphor for tightening too soon, before an economy has recovered from a deep slump, and falling back into another downturn. Here's the FT blog Alphaville discussing what went wrong in Europe: The Riksbank faced this... MORE

I often argue that people should never reason from a price change. Interest rates are also a price. Here Noah Smith gets into trouble by considering the impact of a change in interest rates: But what if QE had the... MORE

The "it doesn't matter" theories

Economic Methods
Scott Sumner
Economics is a much less beautiful and elegant field than physics. But it does have some theories that I've always found attractive. I'm going to call these the "It doesn't matter" theories. Here are a few: In my own field... MORE

The title of this post has probably angered 90% of the profession, and perplexed another 9%. Obviously I'm taking a few liberties here; both individuals died long ago. And it's not even clear their policies caused the Great Recession. But... MORE

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