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Scott Sumner: May 2015

An Author Archive by Month (20 entries)

"Forcing" the GOP to accept needles

moral reasoning
Scott Sumner
Here's a revealing (and very sad) Politico article on the drug epidemic in "red states." It wasn't supposed to happen here. Not in Austin, a one-doctor-and-an-ice-cream-shop town of 4,200 in southeastern Indiana, nestled off Interstate 65 on the road from... MORE

Looking for AD in all the wrong places

Scott Sumner
Here's a typical story about the economy, this one from the Washington Post: When oil prices began to dive in October, analysts and investors spoke of an economy poised for a higher gear: Cheaper prices at the pump amounted to... MORE

Over at TheMoneyIllusion I discuss a new paper by James Bullard, et al, on the case for NGDP targeting. The Wall Street Journal reported some additional comments by Bullard: He said his model is consistent with the Fed maintaining its... MORE

Greece and Detroit

Scott Sumner
In a recent post I claimed that it made no sense to talk about NGDP at the global level. In the comment section Nick Rowe argued that one might be able to come up with a meaningful estimate of global... MORE

Questions that don't get asked very often

Monetary Policy
Scott Sumner
I don't recall many articles written by neoconservatives discussing how certain aspects of modern global instability might have been caused by US intervention. Perhaps that's because they favor intervention. I don't recall reading many articles written by progressives discussing how... MORE

All transactions are two-sided. However in most cases the market for the object being sold is impacted much more strongly than the market for the object being purchased. If a huge new silver mine started selling silver on the open... MORE

Aggregate demand is fundamentally a monetary concept, linked to each country's monetary unit. Only in a few cases, such as the eurozone, does it make sense to talk about aggregate demand as a regional concept. Indeed in the eurozone, aggregate... MORE

A consumption tax is a wealth tax

Scott Sumner
When I advocate a (progressive) consumption tax to replace our current income tax system, some commenters reply that wealth provides benefits beyond consumption, such as peace of mind and security. I think that's true, but to me it seems to... MORE

Imagine living in a country where the top 30% of the population had roughly 25 times as much wealth per person as the bottom 30% of the population. That seems pretty unequal, doesn't it? Now suppose the same statistics applied,... MORE

About 90% of the macroeconomics you read in the media is pop macro, which basically caters to the prejudices and ignorance of the average reader. For instance, I recently did a post discussing the media's focus on "currency manipulation" (as... MORE

Reallocation and growth

Scott Sumner
I was recently chatting with Caroline Baum about "never reason from a price change" and she mentioned an example from 1986 that I had forgotten. Then I realized it also related to the concept of "re-allocation," which is frequently discussed... MORE

Low hanging fruit and the inequality question

Income Distribution
Scott Sumner
Increasing economic inequality has become one of the trendy issues in economics, mostly for the wrong reasons. I've pointed out that inequality pundits tend to rely on income data, which doesn't measure what they assume it measures---economic inequality. This discussion... MORE

Labor market blues

Labor Market
Scott Sumner
Here's Free Exchange: The unemployment rate as expected fell to just 5.4%, much less than economists predicted a year ago. Last July I said: I believe the unemployment rate (6.1%) is the most informative. There is still some slack, but... MORE

Markets > Polls > GOP pundits

Politics and Economics
Scott Sumner
Back in 2012 there was a lot of discussion about how forecasters who relied on polls, such as Nate Silver, made much more accurate election predictions that many GOP pundits, who seemed engaged in little more than wishful thinking. I... MORE

Suppose I wanted to claim that almost all Americans favor lower taxes on the rich. How would I show this? Easy, conduct a public opinion poll asking what the highest income tax rate should be. Here's an example from 2012:... MORE

How would we know if we won the War on Poverty?

Income Distribution
Scott Sumner
Ross Douthat recently made this observation: 1.) The modern welfare state has succeeded in substantially cutting our country's poverty rate. This is a point that both right and left sometimes obscure, the right because it complicates a simple "we fought... MORE

Yes, falling oil prices were like a tax cut

Fiscal Policy
Scott Sumner
In late 2014, many pundits claimed that falling oil prices were like a tax cut---in the sense that they put more dollars in the pockets of consumers. Note that they were referring to the demand-side effects, drawing a comparison to... MORE

Patrick Sullivan left me the following comment: [Read] what Alan Greenspan did in October 1987. He was on an airplane to Dallas on 'Black Monday' when the stock market began to plummet. On arrival he made a few phone calls,... MORE

Noah Smith recently made this claim: Maybe people are perfectly smart and rational enough to understand the David Ricardo idea, and also smart enough to understand something else that economists have known for 200 years -- international trade doesn't necessarily... MORE

More evidence for a Great Stagnation

Scott Sumner
The government recently estimated that real GDP rose at a 0.2% rate in the first quarter of 2015. Most forecasters overestimated the growth rate, while the Atlanta Fed was pretty close, with a 0.1% forecast. The media pointed to temporary... MORE

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