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Scott Sumner: February 2015

An Author Archive by Month (15 entries)
Bryan Caplan offers conventional views on a wide range of issues. Instead of offering my own, I'll comment on his: 1. Most academics are out of touch with the real world and have little useful to say about it. The... MORE

Mission creep

Macroeconomics
Scott Sumner
During periods where there is an enormous demand shortfall, such as the 1930s and the period after 2008, there is a resurgence of interest in demand-side models. This is good. But it also produces an unfortunate side effect---mission creep. Demand... MORE

Power is a residual

Economic Methods
Scott Sumner
When economists use regression analysis to estimate the relationships between variables, part of the dependent variable is unexplained. Thus even after you put land, labor, and capital into the model, you may not be able to fully explain economic growth.... MORE

The New York Times has a new piece discussing the importance of foreign buyers at the top end of the NYC real estate market: The foreign owners have included government officials and close associates of officials from Russia, Colombia, Malaysia,... MORE

The housing bubble: Perceptions and reality

Macroeconomics
Scott Sumner
Kevin Erdmann has an excellent post that discusses what really happened in the famous housing bubble and bust. It's fairly long, so I'll just excerpt a few highlights--but read the whole thing: As far as I can tell, just about... MORE

Inconvenient truths

Energy, Environment, Resources
Scott Sumner
Arnold Kling has a post pointing out that anti-science attitudes are not confined to the right. He starts by quoting Jonah Goldberg: Why does the Left get to pick which issues are the benchmarks for "science"? Why can't the measure... MORE

Reasoning from a price change, example #341

Macroeconomics
Scott Sumner
In EC101 we constantly emphasize that students should not reason from a price change. Higher gasoline prices are not expected to be associated with lower consumption, it depends entirely on whether the price increase was due to less supply (1974)... MORE

There's no point in arguing over definitions

Macroeconomics
Scott Sumner
Economics textbooks define savings as being equal to investment: S = I This means savings is defined as the funds used for investment. It's derived from another identity, which says that in a closed economy with no government, gross domestic... MORE

Here's Paul Krugman: In his incredible essay "The Great Slump of 1930" - an essay that reads remarkably well to this day, as an analysis of our crisis as well as his - Keynes briefly vents a bit of frustration.... MORE

The Wittgenstein test

Macroeconomics
Scott Sumner
I usually start off my PowerPoint presentations as follows: "Tell me," the great twentieth-century philosopher Ludwig Wittgenstein once asked a friend, "why do people always say it was natural for man to assume that the sun went around the Earth... MORE

Experiments in a Guaranteed Annual Income

Labor Market
Scott Sumner
Ever since the 1970s, I've favored wage subsidies for low wage jobs, and I've opposed the minimum wage and the guaranteed annual income (GAI.) It seems to me that this article in The Economist has some bearing on the debate... MORE

Statist policies in China

Central Planning vs. Local Knowledge
Scott Sumner
I frequently read commentary on the Chinese economy. Often we are informed that the Chinese growth "miracle" was produced by a wise policy of rejecting laissez-faire and having the government direct much of the economy. The logic seems to run... MORE

The new jobs figures and macro theory

Macroeconomics
Scott Sumner
Each January the government revises its payroll jobs estimates, to provide more accurate figures. The recent revisions are not dramatic, but do slightly strengthen two arguments that I've been making over the past few years. Let's look at the previous... MORE

What's so funny?

Scott Sumner
It's interesting to think about what society views as funny, and what it does not. Comedians make lots of jokes about drinking alcohol, but you generally don't see jokes about serious crimes like rape. (In the rare cases where they... MORE

Over the past 6 years I've repeatedly warned that monetary policy is the Achilles heel of the right. Perhaps the most famous example was the US during the 1920s, where small government policies under Harding and Coolidge were ruined by... MORE

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