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Scott Sumner: December 2015

An Author Archive by Month (17 entries)

There's no taste for accounting

Economic Methods
Scott Sumner
Modern economics tends to use sophisticated statistical techniques to try to infer causal relationships. Boring old accounting is out of style. I think this is unfortunate. The most important book on macroeconomic history was Friedman and Schwartz's Monetary History of... MORE

The art of the possible

Tax Reform
Scott Sumner
This is from an excellent John Cochrane essay on tax reform: Second, the government should tax consumption, not wages, income or wealth. When the government taxes savings, investment income, wealth or inheritance, it reduces the incentive to save, invest and... MORE

Economists who lack an imagination

Economic Methods
Scott Sumner
One thing that bugs me is economists who seem to think that their way of looking at life is the right way. Indeed the only sensible way. 1. Economists who complain that Christmas presents are inefficient. Do they ever consider... MORE

The Fed doesn't have a magic wand

Monetary Policy
Scott Sumner
Suppose I put a digital sign outside my house, with "Sumner's fed funds rate target" and a number. And suppose I adjusted the target rate from 0.25% to 0.5% last week, right at 2pm on Wednesday. Would I have caused... MORE

I have a couple posts over at MoneyIllusion, arguing that lower interest rates are contractionary. The basic argument is that lower interest rates reduce velocity, which reduces NGDP (for any given money supply). Now Nick Rowe has a post which... MORE

Not all depressions are due to NGDP shortfalls

Cross-country Comparisons
Scott Sumner
Here's the Financial Times on Brazil: Brazil's economy has suffered a dramatic decline this year. Economists surveyed by the central bank expect economic growth to contract 3.6 per cent this year and 2.7 per cent in 2016 while inflation is... MORE

Libertarians have nowhere to turn

Politics and Economics
Scott Sumner
In my view neither major political party has libertarian inclinations. That's not to say that there aren't a few individual party members who lean slightly libertarian. Senator Rand Paul is obviously more libertarian that Donald Trump, and Senator Ron Wyden... MORE

Everything is back to being the same again

Monetary Policy
Scott Sumner
The long dark age of vulgar Keynesianism is finally over. For 7 long years we've heard economists tell us that the laws of economics don't apply at the zero bound. We are told that "everything is different" at the zero... MORE

Intellectual regress

Economic Methods
Scott Sumner
Intellectual progress is much more common than regress, but I do believe that the latter problem occurs more often than we might assume. Mid-century Keynesianism may have represented progress in some dimensions, but it also reflected regress on our understanding... MORE

Mood affiliation and the success of BOJ policy

Monetary Policy
Scott Sumner
Bryan Caplan recently applied Tyler Cowen's mood affiliation hypothesis to global warming. Here's Tyler: It seems to me that people are first choosing a mood or attitude, and then finding the disparate views which match to that mood and, to... MORE

NGDP targeting is not "easy money"

Monetary Policy
Scott Sumner
One of the many frustrations that I face in advocating NGDP targeting is the misconception that this policy regime is more "expansionary" than inflation targeting. In fact, the two are identical in the long run, and in the short run... MORE

Some Keynesians define the stance of monetary policy in terms of interest rates. This is of course a really bad idea, as it implies monetary policy is highly contractionary during periods of hyperinflation. Give Paul Krugman credit for avoiding that... MORE

Tim Fernholz has an excellent article in Quartz on the evolution of Ted Cruz's views on monetary policy: But the Washington Examiner's Joseph Lawler has found Cruz is shifting directions in an intriguing fashion. He has begun echoing critiques made... MORE

A little bit of each. 1. My analysis of the Great Depression is monetarist in the sense that I believe inflation and demand-side business cycles are fundamentally monetary phenomena, to be explained by analyzing changes in the supply and demand... MORE

Paging Frederic Mishkin

Monetary Policy
Scott Sumner
Consider the following recent exchange in a Senate hearing: Senator Cruz: In the summer of 2008, responding to rising consumer prices, the Federal Reserve told markets that it was shifting to a tighter monetary policy. This in turn set off... MORE

Paul Krugman on inequality

Income Distribution
Scott Sumner
Paul Krugman reviews Robert Reich's new book in the New York Review of Books: Something else began happening after 2000: labor in general began losing ground relative to capital. After decades of stability, the share of national income going to... MORE

The Midas Paradox

Economic History
Scott Sumner
My book on the Great Depression is officially published today. Looking back on the long project, I see 6 themes that have been there throughout my research career (which began in 1986, with this project.) Never reason from a... MORE

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