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Scott Sumner: March 2015

An Author Archive by Month (16 entries)

Talking about Britain while talking about Singapore

Growth: Causal Factors
Scott Sumner
The Guardian has a long piece on Lee Kuan Yew, with the following subtitle: The founding prime minister of an independent Singapore, he sought to encourage prosperity through ensuring a dominant role for the state The article also contains this:... MORE

What's new since 1982?

Income Distribution
Scott Sumner
When I moved to Boston in 1982, no one talked about the declining share of national income going to labor. Or increasing income inequality. Now these are the hottest topics in economics. Much of the discussion seems to implicitly suggest... MORE

I think we all agree that private property rights are an important feature of capitalism. But what is "property"? It increasingly seems like the answer is just about everything: Taylor Swift Trademarks 'This Sick Beat' and Other Catchphrases Thinking about... MORE

Is Stanley Fischer too complacent?

Monetary Policy
Scott Sumner
Stanley Fischer is one of the world's most thoughtful monetary economists. And now he is also vice chairman of the Federal Reserve Board. He recently gave a speech on monetary policy, which as you'd expect contained many wise observations. However... MORE

Hard Asia, Soft Europe

Scott Sumner
Former Singapore Prime Minister Lee Kuan Yew died today. He was famous for being dismissive of "soft" European welfare states. But was Lee as important as most friends and foes assume? I'm not sure; the other two small Chinese tiger... MORE

Fed officials don't like the idea of a rigid policy instrument rule, such as the Taylor Rule. They don't even like less restrictive policy targets, such as 2% inflation; to be achieved in any way the Fed chooses. Currently the... MORE

I recently argued that Krugmanomics would become instantly obsolete the moment the Fed raises interest rates (a date that seems to be steadily receding into the future, although still expected this year.) A new post by Noah Smith suggests that... MORE

The Republicans in Congress are facing an interesting decision on the budget. Here is the New York Times: WASHINGTON -- The congressional push this week to secure the first Republican budget plan in nearly a decade is revealing a chasm... MORE

In the 1990s and early 2000s Paul Krugman basically employed a classical approach to policy analysis, with opportunity costs playing a central role. (Note that this should not be confused with New Classical claims of the non-importance of demand shocks,... MORE

Krugman's dangerous idea (It worked for me too!)

Economic Philosophy
Scott Sumner
In a recent post I argued that Paul Krugman had started out as a critic of intellectuals who ignored economic models---the sort of person who argued that the laws of supply and demand do not apply to the minimum wage... MORE

All human institutions are fallible, and hence need to be accountable. That should be obvious, but when it comes to the Fed some people seem to think we just need to trust them. Allan Meltzer knows otherwise, and did a... MORE

In a paper I wrote back in 2008 I speculated that what I called "economistic" thinking led to classical liberal (i.e. free market) views on economics. By 'economistic' I meant thinking that takes economic theory very seriously. The belief that... MORE

Consider the following thought experiment. The Democrats take control of Congress and the Presidency. With more than 60 seats in the Senate, they can do as they like. Do they go after the root cause of inequality in income? Let's... MORE

The bizarre way economists calculate real income

Income Distribution
Scott Sumner
Over the years I've argued that economists are horribly confused about the concept of "income." They use income for tax incidence discussions and also economic inequality, whereas on theoretical grounds consumption is clearly the appropriate variable. And yet until a... MORE

The last New Keynesian left alive

Scott Sumner
I've done numerous posts pointing out that prior to 2008, New Keynesian economists believed the fiscal multiplier was roughly zero. Paul Krugman used to say that aggregate demand was essentially whatever Alan Greenspan wanted it to be. Jared Pincin sent... MORE

How interest rates matter, and how they don't

Monetary Policy
Scott Sumner
There are certain topics that are extremely hard to explain to the average person. Interest rates are one of those topics. I've often argued that interest rates don't really matter that much; they are a sort of epiphenomenon of monetary... MORE

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