tag:blogger.com,1999:blog-17232051.post4546752099773081091..comments2024-03-18T22:32:52.802-04:00Comments on Noahpinion: Greg Mankiw thinks Obama's stimulus workedNoah Smithhttp://www.blogger.com/profile/09093917601641588575noreply@blogger.comBlogger31125tag:blogger.com,1999:blog-17232051.post-17561069917571288372012-05-18T22:31:46.554-04:002012-05-18T22:31:46.554-04:00What Mankiw says is that if the government spends ...What Mankiw says is that if the government spends $1 Trillion, then we'll see about $800 Billion of benefit in the short run as public spending displaces some private spending. Then we all have repay about $1.1 Trillion through higher taxes which reduces consumption. In summary, we get pay $1.10 for an $0.80 gain. Does this sound like a good investment to you? Clearly it isn't.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-57960209953101288362011-08-21T01:08:10.875-04:002011-08-21T01:08:10.875-04:00Ptuomov,
As a short run comparison of policies I...Ptuomov,<br /><br /> As a short run comparison of policies I can see how a straight comparison of social welfare is *informative* but I maintain it is far from determinant with respect to what policy is better.<br /><br />I would argue we have decent evidence that the utility losses are significantly disparate across socioeconomic strata. This is potentially a source of significant social problems that can be avoided by maintaining higher levels of employment at the risk of lower net (but more equally distributed) gains in utility.Michaelhttps://www.blogger.com/profile/14534659435591307831noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-37706328063763929812011-08-15T22:21:02.419-04:002011-08-15T22:21:02.419-04:00many of mankiws comments are in the NY times; as I...many of mankiws comments are in the NY times; as I, an avg times reader, read them, he said, yes, stimulus works, but if leaves a deficit, and I think that lowering interest rates is better...<br />so , contrary to your position, I think mankiw has been reasoanble on this one (as opposed, say to teh hocky stick graph...)Soccer Dadhttps://www.blogger.com/profile/10745967553131454562noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-57289399131059782262011-08-15T07:29:17.989-04:002011-08-15T07:29:17.989-04:00More circumstantial evidence: he once had a dog [p...More circumstantial evidence: he once had a dog [poor thing passed away several years back] and its name was Keynes. Yeah, there's a fondness there, for sure.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-39676032655524380992011-08-15T03:55:54.208-04:002011-08-15T03:55:54.208-04:00I thought both Mankiw and Taylor had long been kno...I thought both Mankiw and Taylor had long been known as exemplar saltwater (or at least "brackish") New Keynesians, albeit GOP-aligned.TGGPhttps://www.blogger.com/profile/11017651009634767649noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-37921113046239225252011-08-14T11:35:19.866-04:002011-08-14T11:35:19.866-04:00You are finishing your PhD in economics and you th...You are finishing your PhD in economics and you think that Greg Mankiw is a "closeted" Keynesian?<br /><br />How did you get through 2 years of grad macro without knowing anything about Mankiw?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-68287025172105319802011-08-14T10:28:26.740-04:002011-08-14T10:28:26.740-04:00Michael --
You are off course correct that the cr...Michael --<br /><br />You are off course correct that the cross-sectional distribution is important to aggregate utility if people have similar risk averse utility functions. However, I think that welfare comparisons are useful even if they are not realistic. At least, Mankiw is trying to do the right thing.<br /><br />Between the WW2 and 2000, the business cycle related to cross-sectional distribution in the following way:<br />- One year income inequality increases in recessions<br />- Consumption inequality does not increase in recessions<br />- If consumption data are used to predict income, the permanent income inequality doesn't increase in recessions<br />- Utility losses from recessions are small<br /><br />Historically, it has not been the case that episodes of higher unemployment have forced people to significantly adjust their consumption paths. Recessions in general don't seem to be an important issue from utilitarian social welfare perspective.<br /><br />Some caveats:<br /><br />First, government policy in the form of automatic stabilizers and Taylor rule Fed policy may be the cause of the fact that recessions are not important to utility. In a sense, the conclusion may be that problem is being managed well instead of there not having been a problem int he first place.<br /><br />Second, this time it could be different, of course. Unemployment duration is much longer in this recession and people's perceptions about their housing wealth have declined dramatically. So when we have household-level data on consumption during the great recession, it may indeed show big revisions of consumption paths and big utility losses.<br /><br />Best, ptuomovAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-74458341541269822422011-08-14T08:42:39.303-04:002011-08-14T08:42:39.303-04:00Don't feed the trolls - though to be fair I wo...Don't feed the trolls - though to be fair I wouldn't call the 'P^wned' comment trolling.<br /><br />The other comment about Mankiw and your posterior is definitely a troll comment - you should delete it rather than using it to make yourself feel better.<br /><br />Cheers!Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-45964330561027331512011-08-14T02:15:59.197-04:002011-08-14T02:15:59.197-04:00Re: the last two comments...
Are there TWO anonym...Re: the last two comments...<br /><br />Are there TWO anonymous trolls, or did he decide that he wasn't drunk enough when he wrote the first comment? ;-)Noah Smithhttps://www.blogger.com/profile/09093917601641588575noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-34633449471897298822011-08-13T22:37:14.428-04:002011-08-13T22:37:14.428-04:00Mankiw just fucked you in the ass.Mankiw just fucked you in the ass.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-31247030866910291452011-08-13T20:07:09.804-04:002011-08-13T20:07:09.804-04:00You got P^wned....by yourself. Congratulations.
I...You got P^wned....by yourself. Congratulations.<br /><br />If you are really concerned about public policy and not posturing - you should also call out Delong/Krugman for not allowing data in comments that contradict their posts. John Quiggin (Far left) and Mankiw (Centre Right) are far better than these 2 in terms of online intellectual honesty.<br /><br />Don't try to be Delong's baby - establish your own standards for intellectual discovery - and try to avoid these gotcha political posturing posts. You do your intelligence a disservice.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-20072862643881314662011-08-13T14:55:52.321-04:002011-08-13T14:55:52.321-04:00You're as 'nuanced' as a Soviet agitpr...You're as 'nuanced' as a Soviet agitprop hack. If you read more before you wrote, you'd help yourself a great deal. Focusing on sophomoric self-identified 'gotcha' moments is, well, sophomoric.GlibFighternoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-55305743936135814212011-08-13T13:48:45.838-04:002011-08-13T13:48:45.838-04:00ptuomov,
Please pardon my screaming but...
NET S...ptuomov,<br /><br />Please pardon my screaming but...<br /><br />NET SOCIAL WELFARE!??? Really???<br /><br />In a country where 1 percent of the population controls over 40 percent of the wealth what is the point of looking at net social welfare? <br /><br />Did it ever occur to anyone that doubling the wealth of the top 1% and cutting the wealth of bottom 90% in half would represent a MASSIVE increase in net social welfare? (Please ignore the food riots on your way to the day spa...)<br /><br />Unless considering wealth distribution explicitly (which, sorry, that cocktail napkin, Mankiw & Weinzierl does not), discussions of net social welfare are useless. <br /><br />Dear right-wing economists, please focus on employment & stop using measures that just make you feel good about yourselves.Michaelhttps://www.blogger.com/profile/14534659435591307831noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-55322136994925005512011-08-13T12:50:14.462-04:002011-08-13T12:50:14.462-04:00I've enjoyed many of your posts but your comme...I've enjoyed many of your posts but your comments about Mankiw do not resonate with me as accurate. Your characterization of Mankiw's opinions do you strike me as fully correct. As to a closet Keynesian, Mankiw has always been out of the closet. In a recent interview with Tom Keane of Bloomberg he was very clear that he is an admirer of Keynes, but does not believe that classic Keyensian solutions will work. Nonetheless, you may be right and I may be wrong.Tom Cnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-56064592156272932962011-08-13T11:23:51.364-04:002011-08-13T11:23:51.364-04:00You got his attention:
http://gregmankiw.blogspot....You got his attention:<br />http://gregmankiw.blogspot.com/2011/08/coy-or-nuanced.htmlB10https://www.blogger.com/profile/14944290748469475620noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-37698719484637251192011-08-12T12:28:45.587-04:002011-08-12T12:28:45.587-04:00""In other words, how is our government ...""In other words, how is our government going to commit to spending less in the future if they spend more now?""<br /><br />"Which also applied to the Bush tax cuts. I don't recall Mankiw raising that issue."<br /><br />If you would bother to go and read his paper, you'd see what he thinks about tax cuts.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-43170490736300808192011-08-12T08:50:46.186-04:002011-08-12T08:50:46.186-04:00"My impression is that Prof. Mankiw's pri..."My impression is that Prof. Mankiw's primary concern about the 2009 fiscal stimulus was that there was a significant risk that the government spending that was supposed to be temporary would turn into permanent spending. In other words, how is our government going to commit to spending less in the future if they spend more now?"<br /><br />Which also applied to the Bush tax cuts. I don't recall Mankiw raising that issue.<br /><br />"That's a significant achievement for someone who has been as close to actual policy making as he has been."<br /><br />Mankiw signed up in the Bush administration in 2003, when it was clear to honest observers that it was even deeper in econofraud than the Reagan administration (see Krugman's columns from 2000-2002 for details).<br /><br />That, right there, makes Mankiw a liar and hack on any issue until proven innocent.Barry DeCiccohttps://www.blogger.com/profile/04735814736387033844noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-10127988913343478252011-08-12T06:28:11.206-04:002011-08-12T06:28:11.206-04:00Noah --
I think you are selling yourself short if...Noah --<br /><br />I think you are selling yourself short if you are using Brad Delong's posts as evidence of anything about Greg Mankiw's thoughts. Based on his blog, I am starting to think that Prof. Delong has some anger issues that are dominating his posts. Perhaps he's simply very concerned about the world and where it's going; however, what I like about your blog is that it's more about working things out than displaying frustrations.<br /><br />Although I am not a mind reader, I would say that Prof. Mankiw's views on economy are well summarized that one paper to which I linked. If you can create a temporary increase in government spending, it stimulates in a recession. It may not be optimal policy from welfare perspective, but it increases reported GDP. Furthermore, if the central bank doesn't have the credibility to commit to future interest rates, it may even be good policy from welfare perspective. <br /><br />My impression is that Prof. Mankiw's primary concern about the 2009 fiscal stimulus was that there was a significant risk that the government spending that was supposed to be temporary would turn into permanent spending. In other words, how is our government going to commit to spending less in the future if they spend more now?<br /><br />In other words, all of Greg Mankiw's statements on this stimulus topic are fully internally consistent and furthermore consistent with the academic papers he writes. That's a significant achievement for someone who has been as close to actual policy making as he has been.<br /><br />Best, ptuomovAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-3923244891058288082011-08-11T15:51:45.098-04:002011-08-11T15:51:45.098-04:00ptuomov identifies the problem correctly, though I...ptuomov identifies the problem correctly, though I think he's got the sign reversed on his "competence" variable ;-) The sane and the conservatives have different definitions of what they mean, by "fiscal stimulus 'working'", and the difference is incommensurable.<br /><br />Old Keynesians said, the classical model of the macro-economy as "naturally" hewing to a homeostasis corresponding to a unique general equilibrium is wrong, full stop. Money and financial intermediation matter a lot to a continuous dynamic process, and they make Says Law, wrong, wrong, wrong.<br /><br />New Keynesians, as I understand it, argue that the macro-economy does tend to a general equilibrium Solow-path "in the long run", if we help it along a bit, and good policy consists of helping the actual economy behave 'as if' the classical model were correct. As Brad DeLong might say, Says Law is wrong, but the task of policy is to make it right.<br /><br />Mankiw's argument in Mankiw-Weinzierl seems to me to conform to this general and defining New Keynesian architecture: policy should aim to make the classical model correct, and under the classical model, fiscal policy 'does not work' to improve welfare (beyond classical cost-benefit considerations). If the economy is 'far' enough from classical equilibrium, then more radical policy steps than usual may be justified to bring it back toward classical equilibrium, but fiscal policy still sucks in classical terms, so there!<br /><br />Mankiw-Weinzierl works well, as an analytical clarification of Mankiw's priors, so if our primary interest is the particulars of Mankiw's subjective view, it is somewhat enlightening. It tells us how Mankiw thinks an economy "works", in a moral sense. But, it doesn't give us any purchase at all on how the economy "works", in a functional, operational sense.<br /><br />Noah's instinctual impulse, to shout "Gotcha!" when Mankiw expresses a conventional expectation with regard to the effect of the fading stimulus on aggregate activity reflects an admirable desire to see Popperian falsification in action. If the economy were anywhere near a classical/full-employment equilibrium where fiscal policy would have no aggregate effects on welfare, operational values of aggregate levels of activity would also not be behaving as Mankiw (and pretty much all other sane folk) expect, to the fading of stimulus, and the coming of austerity.<br /><br />As ptuomov wryly notes, real economists do not build operational models, using modal instead of categorical reasoning; statisticians might. Without such operational models, though, Popperian falsification is a non-starter.<br /><br />I see a theme developing between this post, and previous ones, including not just Taylor, but also the recent Lucas post. And, the Clive Cook moderated Krugman-Barro lovefest comes to mind as well. <br /><br />Conservatives prefer to minimize or ignore operational circumstances in their policy recommendations. ("Zero lower bound? Bah, humbug!" "The money has to come from somewhere, even in a depression") They like to promote moral causality in their narratives ("business confidence!"), even to the point of losing all sense of quantity or proportion. And, they "test" their ideas subjectively, pridefully leading with a solipsistic skepticism and categorical models.<br /><br />In terms of the intellectual history from Old Keynesian (thru the neoclassical synthesis I was taught), to the current New Classical/RBC/New Keynesian stalemate, I would propose a corollary to Minsky's financial instability hypothesis: the longer policy is successful in imitating a classical equilibrium, the more idiots will think that that's the way the economy actually operates.Bruce Wilderhttps://www.blogger.com/profile/09631065564839959376noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-48498731128619346112011-08-11T10:10:12.462-04:002011-08-11T10:10:12.462-04:00If Mankiw is a hack, which economist with any conn...If Mankiw is a hack, which economist with any connection to policy making isn't?<br /><br />ptuomovAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-3862081116448878892011-08-11T09:05:11.764-04:002011-08-11T09:05:11.764-04:00Sorry, that was me.Sorry, that was me.Barry DeCiccohttps://www.blogger.com/profile/04735814736387033844noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-56716812522469397952011-08-11T09:04:21.124-04:002011-08-11T09:04:21.124-04:00"Or it might just be that his real beliefs do..."Or it might just be that his real beliefs don't coincide with the model in the paper."<br /><br />Or he's a hack. I used to read his blog, back when comments were enabled. He was regularly shredded due to dishonesty.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-71446964155446687032011-08-11T08:00:11.683-04:002011-08-11T08:00:11.683-04:00Coy is as close to honest as a Republican economis...Coy is as close to honest as a Republican economist can be.<br /><br />Of course Mankiw knows stimulus works. He's a Keynesian and always has been.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-7209802720702453882011-08-11T07:36:01.023-04:002011-08-11T07:36:01.023-04:00If you actually read the Barro paper, he is really...If you actually read the Barro paper, he is really talking about Old Keynesians. new keynesians are neoclassicals with an extra friction or two.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-39096079552129881222011-08-11T06:23:08.552-04:002011-08-11T06:23:08.552-04:00The first fundamental difference here between diff...The first fundamental difference here between different people and different conversations is the following: What do you mean by fiscal stimulus "working?"<br /><br />A competent economist should do the welfare comparison, basically utility gain from fiscal stimulus. A non-economist (such as a statistician) or an incompetent economist would look at things such as multipliers or bang per buck when deciding whether fiscal stimulus is a good policy. (Ok, having a bit of fun there with competent/incompetent...)<br /><br />Most (all?) correctly solved New Keynesian models say that, even in the presence of zero nominal interest rate bound, if the central bank can commit to keeping interest rates low for a long enough period of time, monetary stimulus is more efficient than and dominates fiscal stimulus from welfare gain perspective.<br /><br />Mankiw & Weinzierl's paper is great in that it is (a) a very simple and thus accessible model that (b) has all the New Keynesian assumptions and (c) is correctly solved and (d) is realistic enough to be used for practical policy advice.<br /><br />I predict that if many self-proclaimed "New Keynesian" bloggers etc. would really read and understand that paper, they would stop shouting their current policy advice in ALL CAPS and spend a period of time reflecting and revising their views.<br /><br />ptuomovAnonymousnoreply@blogger.com