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Scott Sumner: November 2016

An Author Archive by Month (18 entries)

Primitive cultures need a dose of utilitarianism

Economics and Culture
Scott Sumner
In this post I will discuss two primitive cultures, the Sudanese and the Americans. I will argue that both need to adopt a utilitarian ethical framework. Let's start with the Sudan. In the Sudan, female genital mutilation is a common... MORE

Did John Allison just endorse NGDP targeting?

Monetary Policy
Scott Sumner
Lars Christensen has a new post pointing to a recent interview of John Allison, who is being considered for the post of Treasury Secretary. Here is what Allison said: We need discipline, we need some kind of rule, I like... MORE

Capitalism has a PR problem

Cross-country Comparisons
Scott Sumner
Here's one of my favorite Deirdre McCloskey remarks, from her Bourgeois Virtues: I don't care how one defines capitalism, as long as it's not defined as evil incarnate. Unfortunately, that's exactly how it is often defined. Here's a recent example... MORE

The third domino?

Scott Sumner
Here's Wolfgang Münchau: The largest and most important is the Five Star Movement, a party that defies the usual left-right classification. The second is Forza Italia, Silvio Berlusconi's party, which has turned rabidly anti-euro after the former prime minister was... MORE

In defense of rational expectations models

Macroeconomics
Scott Sumner
David Glasner has a post criticizing the rational expectations modeling assumption in economics: What this means is that expectations can be rational only when everyone has identical expectations. If people have divergent expectations, then the expectations of at least some... MORE

I've been frequently arguing that fiscal stimulus makes no sense, especially at a time when the unemployment rate is 4.9% and the Fed is raising interest rates. Any impact on aggregate demand will be offset by tighter monetary policy. In... MORE

Dr. Strangelove at the Fed

Monetary Policy
Scott Sumner
Perhaps you recall this classic line from Dr. Strangelove: The whole point of the doomsday machine...is lost if you keep it a secret! I thought of that line when reading a recent Bloomberg piece on monetary offset of the widely... MORE

Tyler Cowen on fiscal stimulus

Fiscal Policy
Scott Sumner
Here's Tyler Cowen in Bloomberg: In Keynesian theory, fiscal policy only works well if you use it in down times and pay off the bill during a boom. Trump seems ready to do the opposite by upping spending as the... MORE

Lake Wobegon Keynesianism

Fiscal Policy
Scott Sumner
With the recent discussion of a possible "fiscal stimulus" coming out of Washington, I find that many people are forgetting a few basic ideas from EC101. As you may know, I do not believe that fiscal stimulus in the US... MORE

You always fail . . . until you succeed

Cross-country Comparisons
Scott Sumner
Will Wilkinson has a post on Wagner's Law: "Wagner's Law" says that as an economy's per capita output grows larger over time, government spending consumes a larger share of that output. . . . There's an abiding faith on the... MORE

Implications of Trump for monetary policy?

Monetary Policy
Scott Sumner
It's difficult to know what Trump will do about monetary policy, or any other issue for that matter. Lars Christensen has suggested that inflation expectations are rising due to the perception that Trump will do massive infrastructure spending. (And a... MORE

The morning after

Politics and Economics
Scott Sumner
Here I'll list a few observations: I've been consistently wrong about Trump, so I won't even try to predict what he'll actually do. This is the most Republican national government of my lifetime. Will they shrink government, or increase spending... MORE

Final thoughts before the election

Politics and Economics
Scott Sumner
President Obama has been campaigning hard in recent days. He's told his supporters that he needs them to vote, in order to preserve his legacy. That's probably because Donald Trump has promised to undo almost every single significant policy initiative... MORE

Should the Fed give workers a raise? No

Monetary Policy
Scott Sumner
After many years of 2% wage growth, nominal average hourly earnings are finally accelerating, up to 2.8% in October (year over year). This reflects the fact that the (downward) wage adjustments in the wake of the Great Recession are over,... MORE

Ben Bernanke is a mild mannered and modest individual. Anyone who has read his memoir will not confuse him with Donald Trump. During the Great Recession, Bernanke suggested that it would be helpful if fiscal authorities would help to boost... MORE

Legal in some states, life imprisonment in others

Economics of Crime
Scott Sumner
Defenders of the War on Drug Using Americans often tell me that people almost never go to jail for mere possession, rather it is the evil "dealers" who are imprisoned. (I must admit that I don't see why one side... MORE

Lots of people argue that the Fed would not offset a push for more spending out of Washington. In fact, while that would be technically possible, as a practical matter they have almost no choice in the matter. They are... MORE

Suppose you favor a 4% NGDP target. And suppose NGDP growth is running at 3%. What advice should you give to the Fed? I will argue that you should not advise the Fed to push NGDP growth up to 4%.... MORE

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