EconLog small logo

Scott Sumner: August 2015

An Author Archive by Month (25 entries)

Tight money leads to lower interest rates

Monetary Policy
Scott Sumner
Tyler Cowen has a new blog post that has 13 observations on the Fed's upcoming policy decisions. Most are reasonable, especially the first comment. But I strongly disagree with point 6: 6. Now the risks look fairly symmetric. The first... MORE

Asian immigration will make America more unequal, and that's a good thing

Labor Mobility, Immigration, Outsourcing
Scott Sumner
It seems that Asia has overtaken Latin America as the largest source of immigration to the US. Here's a recent example of that trend: Mexicans still dominate the overall composition of immigrants in the U.S., accounting for more than a... MORE

I hope the title of this post has caught your attention---if not please reread it. In the previous few recessions, the consensus of economists did not even forecast a recession until it was already underway. That is, not only can... MORE

Beyond victims and villains

moral reasoning
Scott Sumner
I've always had a visceral distaste for dividing people up into victims and villains. Thus I wasn't happy to see this analogy by Bryan Caplan (when talking about the Ashley Madison affair.) Constructing hypotheticals with blameworthy pseudo-victims is easy enough.... MORE

Confirmation bias?

Finance: stocks, options, etc.
Scott Sumner
I agree with David Henderson's new post, which starts off with this Bob Murphy quote on the recent stock market decline: As shocking as these developments [drops in stock prices and increased volatility] may be to some analysts, those versed... MORE

Does a measly quarter point matter?

Macroeconomics
Scott Sumner
Paul Krugman and Larry Summers have recently argued that the Fed should not raise rates later this year. I agree, mostly because I believe it will prevent them from hitting their announced inflation target, but also because it slightly increases... MORE

Why bubbles are so hard to spot

Finance: stocks, options, etc.
Scott Sumner
There's been a lot of discussion about the recent Chinese stock market crash. Most observers view the events through the lens of the "bubble" model of financial markets. This view claims that there are sharp price run-ups caused by irrational... MORE

How bad government policies make us meaner

Price Controls
Scott Sumner
In a recent post I argued that government monopolies often offered worse service to customers than competitive private firms. In this post (which will have something to offend both progressives and conservatives), I'll look at a different, but related problem.... MORE

One of the most gratifying things about blogging is seeing the quality of press reporting going up over time. One sees more and more news reports that seem to have been influenced by the debate in the blogosphere. A great... MORE

It's worse than it looks

Macroeconomics
Scott Sumner
By "it" I mean the current stance of policy. To see why, we need to review the circularity problem. Asset markets look at the Fed, and the Fed looks at asset markets. When there is enough blood on the floor,... MORE

More on levels vs. growth rates

Cross-country Comparisons
Scott Sumner
I seem to be one of the few people that are neither a China bull nor a China bear. On one side I'm constantly annoyed by China boosters who claim their rapid growth rate is proof of the superiority of... MORE

Paul Krugman has a post that contrasts the economic performance of Japan, the US and France: What's striking here is how similar the three look. Japan lagged in the late 1990s and early 2000s, but recovered. France has lagged since... MORE

Is Europe becoming more like the US?

Cross-country Comparisons
Scott Sumner
A new article in the Financial Times got me thinking about the US and Europe: Portugal is the EU country hit hardest by a Europe-wide demographic problem as falling fertility rates and ageing populations threaten economic growth and the provision... MORE

Divine coincidence?

Labor Market
Scott Sumner
Some of my progressive friends argue that markets are not efficient because information is a public good. Thus research in equity values will be under-provided. Others argue the financial sector is inefficient because greedy Wall Street types convince the gullible... MORE

Michael Darda on Alan Blinder

Monetary Policy
Scott Sumner
Alan Blinder once served as Vice Chairman of the Federal Reserve Board, and now has a new piece in the Wall Street Journal. Michael Darda sent me the following email in response: Alan Blinder in today's WSJ, arguing, as some... MORE

How shall we define 'liberal'?

Economic History
Scott Sumner
Daniel Klein has a very interesting piece in the Intercollegiate Review on the changing meaning of the term 'liberal'. It begins as follows: Here I make a plea, addressed to conservatives and libertarians, regarding the word liberal: please do not... MORE

Why are so many currencies suddenly appreciating all over the world?

International Macroeconomics: Exchange Rates, International Debt, etc.
Scott Sumner
Many readers might be confused by the title of this post. Haven't we been reading about a currency war? Aren't competitive devaluations occurring one after another, all over the world? The answer is no, for a very simple reason---it's impossible.... MORE

Was China's devaluation a beggar-thy-neighbor policy?

International Macroeconomics: Exchange Rates, International Debt, etc.
Scott Sumner
I've argued that devaluations are not beggar-thy-neighbor policies. More specifically, the Chinese need to devalue their currency to boost NGDP (and RGDP) growth, and that this would also help the world economy, as a more prosperous China would import more... MORE

Free the yuan

Monetary Policy
Scott Sumner
A few days ago I did a post suggesting that the Chinese government needed to devalue the yuan. Today (or last night) the Chinese government took a modest step in that direction: China said it will let the market play... MORE

In the 1990s there was (or seemed to be) a consensus that you do not want to apply aggregate demand arguments to questions of long run growth and income distribution. Demand shocks have no long run real effects. In simple... MORE

Shun the paper, not the person

Economic Methods
Scott Sumner
Paul Romer has recently been posting on the subject of intellectual honesty in economic research. I'm supportive of his argument that economists should behave like honest scientists, rather than lawyers who withhold information that is detrimental to their argument. I'm... MORE

There are many arguments for rules over discretion. Here's one that I haven't seen before. Policymakers are only human, and don't like to admit to making mistakes. Especially when those mistakes might have harmed millions of people. In contrast, markets... MORE

Dennis Hastert and Colorado pot dealers

Economics of Crime
Scott Sumner
It was always understood that some people might have a legitimate need to withdraw large amounts of cash from banks, perhaps if they ran businesses that had to make a lot of cash transactions. The law against structured withdrawals of... MORE

Is the rise of utilitarianism unstoppable?

Labor Mobility, Immigration, Outsourcing
Scott Sumner
If I might be allowed a bit of armchair philosophical speculation, it seems to me that the advance of technology and utilitarianism are two of the most relentless trends in world history. The growing importance of technology is easy to... MORE

China: The real problem is nominal

Macroeconomics
Scott Sumner
Here's a report on China in the Financial Times: Before the release of Wednesday's second-quarter gross domestic product estimate, China's nominal GDP growth rate had plummeted from almost 20 per cent to 5.8 per cent since 2011, a much sharper... MORE

Return to top