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Scott Sumner: October 2016

An Author Archive by Month (22 entries)

The zero bound isn't interest rate pegging

Monetary Policy
Scott Sumner
Saturos directed me to a new paper by John Cochrane: This long period of quiet inflation at the zero bound - and Japan's longer period - poses a deep challenge to monetary economics. Old-Keynesian models (including Milton Friedman's 1968 AEA... MORE

Japan refutes old Keynesianism

Fiscal Policy
Scott Sumner
Over at TheMoneyIllusion I have a post lamenting the recent revival of old Keynesian ideas. It occurred to me that Japan is an almost perfect refutation of these theories. In particular, Japan shows that: 1. Inflation is not caused by... MORE

Is the data "rigged"?

Economic Methods
Scott Sumner
We live in an age where everything official seems to be distrusted. Trump has suggested that the government's unemployment data is incorrect, and that the actual rate may be as high as 40%. Some economists on the left also question... MORE

21st century Vikings

Liberty
Scott Sumner
This Washington Post article caught my eye: REYKJAVIK, ICELAND -- The party that could be on the cusp of winning Iceland's national elections on Saturday didn't exist four years ago. Its members are a collection of anarchists, hackers, libertarians and... MORE

Every so often I need to push back against common misconceptions regarding saving and investment. The comment section of my previous post provided a few examples, starting with "pyroseed13": In a less risk-averse and more economically free environment, savings would... MORE

The WSJ's odd critique of the Fed

Monetary Policy
Scott Sumner
This article in the Wall Street Journal left me scratching my head: The Fed, Not the Market, Is Stifling Growth That's the title, and I eagerly looked forward to an explanation, perhaps a criticism of the Fed rate increase last... MORE

Two approaches to macroeconomics

Macroeconomics
Scott Sumner
Here's an abstract from a paper by Erich Pinzón-Fuchs: This paper discusses a longstanding debate between two empirical approaches to macroeconomics: the econometrics program represented by Lawrence R. Klein, and the statistical economics program represented by Milton Friedman. I argue... MORE

Long time readers know that I am a huge fan of the Efficient Markets Hypothesis, mostly for pragmatic reasons. (As with all social science theories, I do not believe it is literally true---just approximately true.) Now it appears that the... MORE

Is the Fed a firefighter or an arsonist?

Monetary Policy
Scott Sumner
Most economists view the Fed as a sort of firefighter, an institution that pushes back against "shocks" that mysteriously arise in the private sector. Bob Hetzel and Josh Hendrickson have a different view. Here's Josh: The predominant difference between this... MORE

Global warming phonies

Energy, Environment, Resources
Scott Sumner
I seem to be one of the relatively few right-of-center intellectuals that worry about global warming. In previous posts I've argued that if the GOP were smart (no jokes please) they would propose the following policy: 1. Global warming is... MORE

Does AD influence AS?

Monetary Policy
Scott Sumner
TravisV directed me to a recent speech by Janet Yellen: The Influence of Demand on Aggregate Supply The first question I would like to pose concerns the distinction between aggregate supply and aggregate demand: Are there circumstances in which changes... MORE

Why America can run trade deficits forever

International Macroeconomics: Exchange Rates, International Debt, etc.
Scott Sumner
Here's the Financial Times: China's provision of development finance to the emerging world has always been about much more than building infrastructure to reap a commercial return. It has also been about changing destinies. Beijing selected countries that it aimed... MORE

Open market operations vs. helicopter drops

Monetary Policy
Scott Sumner
Patrick Sullivan directed me to Brad DeLong: Bernanke (2000): Contrary to the claims of at least some Japanese central bankers, monetary policy is far from impotent today in Japan... Why is it not impotent? Because of: what amounts to an... MORE

Why it's hard to give good advice to the Fed

Monetary Policy
Scott Sumner
This Washington Post story (by Ylan Mui) from a couple months back makes me kind of sad: During the long recovery from the Great Recession, the central bank kept its benchmark interest rate at virtually zero and pumped trillions of... MORE

A few weeks ago I presented a graph that showed the trade-off between a big central bank balance sheet and faster NGDP growth: Now I'd like to use this framework to discuss why so many people confuse easy and tight... MORE

Are robots taking our jobs?

Labor Market
Scott Sumner
Tyler Cowen and Alex Tabarrok have a new debate on "Econ Duel", discussing whether robots are taking our jobs. Who's right? I don't think we know. Tyler argues in the affirmative, and suggests that this problem will increase over time.... MORE

The Financial Times has a report that Americans are becoming increasing supportive of globalization: While Donald Trump has called for a rewrite of US trade deals and moots the imposition of tariffs on imports from China and Mexico, two in... MORE

Non-materialistic millennials and the Great Stagnation

Growth: Causal Factors
Scott Sumner
When I was a teenager in the early 1970s, I looked forward to getting a nice stereo system, with a receiver, amp, turntable and big set of speakers. My 17-year old daughter also likes music, but has no interest in... MORE

Brexit: What I got wrong, and what is still uncertain

International Macroeconomics: Exchange Rates, International Debt, etc.
Scott Sumner
Immediately after the Brexit vote, I used the knee jerk reactions of various markets to try to estimate the impact. After 14 weeks, it looks like one key market reaction was wrong. Here's the FTSE250, a stock index with a... MORE

Infrastructure is not fiscal policy

Fiscal Policy
Scott Sumner
A recent comment started off as follows: Suppose someone had a fetish for fiscal policy and infrastructure Using the construction of infrastructure for fiscal policy purpose does NOT get you any more infrastructure than not using it for fiscal policy... MORE

Gary Johnson has received lots of flack for being unable to name the world leader that he most admires. Here's Matt Yglesias: The closest thing you will find to a US-style libertarian abroad is what are called "liberal" parties in... MORE

Look past the labels

Monetary Policy
Scott Sumner
Commenter CA directed me to a recent post by Roger Farmer: We are stuck in a low inflation liquidity trap, caused by the fact that money and short term securities are currently perfect substitutes. The way out of the liquidity... MORE

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