tag:blogger.com,1999:blog-17232051.post1212334098191706513..comments2024-03-28T03:16:14.104-04:00Comments on Noahpinion: Blogger smackdown: Robert Waldmann vs. David GlasnerNoah Smithhttp://www.blogger.com/profile/09093917601641588575noreply@blogger.comBlogger34125tag:blogger.com,1999:blog-17232051.post-28235529472748100012013-07-17T04:34:26.910-04:002013-07-17T04:34:26.910-04:00I'm reading Robert's arguments differently...I'm reading Robert's arguments differently.<br /><br />I think the main thrust of his argument is contained in a sentence by him lifted from the comments above, "I don't really think that macro evidence is so feeble. There is more of a problem that people wish their opinion to be treated as a null and think that means a failure of the data to reject it amounts to something, but also refuse to define their opinion precisely enough for it to be testable."<br /><br />That is exactly how I understand it. The point is not that macro data sucks. I really don't see why you think it sucks. Because it's low frequency? Then you should have low-frequency null hypotheses to go along with the type of data available, no? <br /><br />As Robert says, there's plenty of macro data available to debunk silly theories. The problem is when people come up with theories (and especially when they keep "fixing" their theories as evidence accumulates) that aren't designed to be tested: the "falsifiability" Popper type argument.<br /><br />Just as Freudian and Marxian theories can't be falsified, some economic "theories" are designed to body-swerve falsifiable nulls: if you think you have a point, then frame it in a way that if A happens your null holds and if non-A happens your null is refuted. <br /><br />Or in other words, take your theory to the test instead of blathering.Patrickhttps://www.blogger.com/profile/06658507365116962150noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-16300752165110013952013-03-10T22:00:17.194-04:002013-03-10T22:00:17.194-04:00This comment has been removed by the author.Eric Lhttps://www.blogger.com/profile/17688525347746547529noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-69302959954380223632013-03-08T14:11:04.314-05:002013-03-08T14:11:04.314-05:00Very interesting way of summing up the discussion,...Very interesting way of summing up the discussion, and one that I would agree with, for the most part: Macro data (and analysis) is problematic at best and if you can state that you have the null, so to speak, then you certainly have the advantage.<br /><br />But I'm very curious, Noah, about one thing: are you a fan of Takeshi Kaga by any chance?Pedronoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-33716508255601441792013-03-06T08:08:39.970-05:002013-03-06T08:08:39.970-05:00It would not be inflationary to monetize the short...It would not be inflationary to monetize the short term debt (with negative real yields). Why would it - and why would it be a party?neminoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-76549679021880537272013-03-05T04:27:08.516-05:002013-03-05T04:27:08.516-05:00P.S. Yes there is a famous quote from Keynes which...P.S. Yes there is a famous quote from Keynes which is quite apposite here.reasonhttps://www.blogger.com/profile/10958786975015285323noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-32467937294339577392013-03-05T04:25:15.704-05:002013-03-05T04:25:15.704-05:00What makes you think that monetary policy is trivi...What makes you think that monetary policy is trivial in a stationary world. There are still trade deficits. There is still new credit being issued and old credit being retired. The world is still active under the hood. It is like looking at the atmosphere from Jupiter and staying it is in stasis. Hey man, there are hurricanes down there.reasonhttps://www.blogger.com/profile/10958786975015285323noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-37381333976083058292013-03-05T04:20:42.019-05:002013-03-05T04:20:42.019-05:00Brett,
this whole discussion has got off target. ...Brett,<br /> this whole discussion has got off target. We are not looking for a "null" policy. We are trying to discern what works and what doesn't. One guy is saying "there is no conclusive evidence that my policy doesn't work". The other is saying "there is no evidence that it does work".reasonhttps://www.blogger.com/profile/10958786975015285323noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-44723585912609057152013-03-04T09:21:27.617-05:002013-03-04T09:21:27.617-05:00I don't think Macro Data is the problem. Ideol...I don't think Macro Data is the problem. Ideology is the problem. Just because people lie, we don't say words are at fault. Words can be used to deceive, or illuminate, data is no different. Words can fail us even when we are trying to illuminate, and indeed we don't yet know everything in order to be able to fully illuminate it in any case, words are not the problem. <br /><br />Economics has many distracting conversations going on in the language of choice among Economists, math. With care and time it becomes clear who is seeking to deceive (or more generously persuade) and who is seeking to illuminate. Clever constructs aimed at persuasion are a distraction. <br /><br />Math is a few words short in its capacity to articulate what is really going on in the economy as well. But in the case of looking at monetary policy there are two problems, the first has been pounded home by Bernanke, Fed policy can not overcome current bad fiscal policy on it's own, the second is a corollary, few things are true absolutely, most things are true conditionally, monetary policy effectiveness depends. It depends on what else is going on; are nominal rates high or low, where are real rates, what is going on with investment, exports, debt levels, fiscal policy. No man is an island, and neither is an economic truth, nor is it iid, or stationary, etc.<br />Danhttps://www.blogger.com/profile/15136541075745913165noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-25029245542740012042013-03-03T15:55:48.130-05:002013-03-03T15:55:48.130-05:00I was referring to the Malthusian trap which, iron...I was referring to the Malthusian trap which, ironically I guess, isn't very Malthusian.<br /><br />The only monetary policy now is trivial. Its just set it and forget it.The Blorchnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-8874059430918618892013-03-03T09:59:48.976-05:002013-03-03T09:59:48.976-05:00It's exactly like debate over the ARRA (Obama&...It's exactly like debate over the ARRA (Obama's stimulus), TARP, Federal Reserve bailouts, etc. Conservatives argue that there's no proof that they worked. Liberals argue that they mitigated the downturn and helped the economy recover.<br /><br />My view as a non-economist is that if the economy improves in 2013H2 and 2014, then it will be partly due to Bernanke. My prediction is that if does improve, then the QE skeptics will argue that the economy improved on it's own without the help of the Fed. Conservative will argue that the economy improved despite Obama's policies. If the economy doesn't finally improve then yes the QEs were a dud.<br /><br />http://www.chicagofed.org/webpages/publications/speeches/2013/02_28_13_cfa_desmoines.cfm<br /><br />"Policies Are Working<br /><br />Today, we are seeing evidence that our accommodative policies are working. Financial markets recognize that low returns on the safest fixed-income assets are an economic reality that will continue for a long time. Not being satisfied with these low returns, investors are repositioning into other asset classes that will more directly bolster spending. The stock market has rebounded significantly and is back near its pre-recessionary level. In an encouraging development, commercial and industrial lending by banks is picking up while their credit terms, which had been quite restrictive during the recession, are easing. Indeed, from a variety of sources, markets are increasingly channeling money to promising projects that had previously lacked funding.<br /> <br />Accommodative monetary policies also are supporting some more-familiar cyclical recovery mechanisms that lead to a virtuous cycle of growth in economic activity. Although bottlenecks certainly remain for many households (particularly those whose home mortgages are under water or those that have imperfect credit scores), low mortgage rates have facilitated a pickup in refinancing and a slow but steady rise in new residential construction. Some further increase in demand will spill over from the improvement in housing markets, coming in the form of higher demand for construction materials and appliances. Furthermore, for years now, consumers and businesses have made do with old household durable goods and capital equipment, and there likely is much pent-up demand for replacing such items with new ones. Low interest rates are helping to support some pickup in this demand to replace old items; for example, I’ve heard from several carmakers how low-interest financing has contributed to an improvement in auto sales."<br /><br />Evans has three more paragraphs on how Fed policy is helping.Peterhttps://www.blogger.com/profile/08272747870634233567noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-76581081191354644872013-03-03T02:28:17.777-05:002013-03-03T02:28:17.777-05:00So, we are really just arguing which null hypothes...So, we are really just arguing which null hypothesis is least likely to be damaging, rather than which alternative hypothesis is most likely to be right.Matthew Martinhttps://www.blogger.com/profile/10254244795963585737noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-53553570462747888552013-03-03T01:59:37.477-05:002013-03-03T01:59:37.477-05:00There, do you approve of the update? :-)There, do you approve of the update? :-)Noah Smithhttps://www.blogger.com/profile/09093917601641588575noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-76825329594284557712013-03-02T22:41:54.011-05:002013-03-02T22:41:54.011-05:00Bottom line: We are not creating enough new jobs ...Bottom line: We are not creating enough new jobs fast enough to return to full employment in a reasonable period. This exacerbates the GDP gap, the revenue gap and risks creating a permanent unemployable underclass who lack job experience and therefore lack job skills.<br /><br />Whether or not monetary policy is effective, it is not effective enough and needs help, a lot of help, from fiscal policy to address unemployment more directly.<br /><br />-jonny bakhoAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-79008237118993660912013-03-02T20:10:34.144-05:002013-03-02T20:10:34.144-05:00I think macro data are plenty numerous enough to r...<i>I think macro data are plenty numerous enough to refute RBC and a modicum of intelletually integrity would have ended the approach by 1976 at the latest (I think it started in 1976).</i><br /><br />I think the real problem with macro data is that it's just time-series. With only time-series, you have to assume stationarity, and yet all unit-root tests are low-power. Furthermore many business-cycle models depend crucially on assumptions of stationarity or non-stationarity of some finite-order AR or ARIMA-type process. Second, you have to assume ergodicity, and even if you drop the assumption and include trend breaks, the same data that lets you test for trend breaks doesn't let you estimate parameter values (or vice versa).<br /><br />On top of all this, there's the problem that no one can agree about what the "business cycle" actually IS (H-P filtered time series? First differences? Something else?), making conclusions sensitive to the way you define your trend (but nobody can test what the trend really is). <br /><br />I agree that RBC looks like toast, and I would probably be willing to be persuaded that New Keynesian (monetarist) models are toast, but is there a fully specified "old Keynesian" or ZLB-New-Keynesian model out there that gives good out-of-sample predictions and/or isn't rejected by a FIML test? I haven't heard of such a thing...Noah Smithhttps://www.blogger.com/profile/09093917601641588575noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-3151714647103629292013-03-02T19:43:54.333-05:002013-03-02T19:43:54.333-05:00Your translation of my statement about QE# isn'...Your translation of my statement about QE# isn't exactly what I meant. It is true that we don't have clear evidence of the sign of the effect, but we have evidence on its magnitude.<br /><br />A point estimate which is very close to zero is evidence that the true effect is small (perhaps weak evidence is the stadard error islarge,but in this case it isn't). The evidence that the true effect of FOMC announcements on expected inflation is small is solid, clear, and strong.<br /><br />"nothing much happened" is not the same as "we don't know what happened". Evidence that the magnitude of the effect is close to zero is not the same as close to zero evidence about the magnitude of the effect.<br /><br />I confessed that I have in the past tried to get the null on my side. I did not mean to confess taht I was doing so in this case.Roberthttps://www.blogger.com/profile/14455788499385673507noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-52615824451738131002013-03-02T18:18:42.018-05:002013-03-02T18:18:42.018-05:00Is Waldmann's argument that the Fed can fully ...Is Waldmann's argument that the Fed can fully monetize the US debt and it not be inflationary? Then let's party!!!Danielhttps://www.blogger.com/profile/14768681721522073619noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-63460686530182942942013-03-02T18:13:30.214-05:002013-03-02T18:13:30.214-05:00Wouldn't the null hypothesis always be "c...Wouldn't the null hypothesis always be "change nothing from the present"? So if Mr. 2nd Medieval Doctor just said, "We have no proof that bleeding does anything - we should do nothing at all", he'd be in the "null" situation. Bretthttps://www.blogger.com/profile/05741738070067590221noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-13877827944592558652013-03-02T18:00:38.278-05:002013-03-02T18:00:38.278-05:00Non-economist take: Too many economists think in ...Non-economist take: Too many economists think in terms of equations and infer causal relations from the equations. In the real world the relationships may be inequalities (constraints) which do not imply a causal relationship. <br /><br />If we have A = B an economist would conclude that increasing B would increase A. On the other hand if the real relationship is A < B then increasing B may or may not increase A depending on what else is influencing A.<br /><br />Monetary policy can certainly cool an economy by raising interest rates. It can stimulate an economy by relaxing the constraint but only over the range where interest rates are the operating constraint on the economy. Once interest rates are below some threshold another constraint will operate and further reductions will not stimulate the economy. <br /><br />The purchase by the Fed of mortgage backed securities is a direct intervention in credit channels and the Fed is doing it because credit channels are broken so monetary policy per se was not feeding through to borrowers. <br /><br />Absalonhttps://www.blogger.com/profile/09131268683451462949noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-67577550130648905322013-03-02T17:58:15.461-05:002013-03-02T17:58:15.461-05:00JOOC, I'd like to know what JOOC means.
http...JOOC, I'd like to know what JOOC means. <br /><br />http://www.internetslang.com/JOOC-meaning-definition.aspAshok Raohttp://ashokarao.comnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-91722758598300481572013-03-02T17:56:22.874-05:002013-03-02T17:56:22.874-05:00"WADR" was genuinely mysterious to me. ..."WADR" was genuinely mysterious to me. One might suspect that this is due to the fact that the concept of "due respect" is alien to me, but, in any case, I didn't guess the phrase for which it is the acronym (your mileage does vary, but I am 52 and just can't handle the way the kids text these days).<br /><br />What does "JOOC" mean ? I am honestly asking for information. I suspect it means something like "feigning ignorance" with the implication that I was implying that I would never have guessed that WADR means "with all due respect" given how little respect Glasner was showing me. In fact, I just didn't get the acronym.<br /><br />I may come back to comment on content. First I have to read Glasner's latest post (I have known about it for hours, and the first sentence seems polite).<br /><br />I don't really think that macro evidence is so feeble. There is more of a problem that people wish their opinion to be treated as a null and think that means a failure of the data to reject it amounts to something, but also refuse to define their opinion precisely enough for it to be testable. I think macro data are plenty numerous enough to refute RBC and a modicum of intelletually integrity would have ended the approach by 1976 at the latest (I think it started in 1976).<br /><br />Similarly, I think that there is plenty of information about monetary policy at the ZLB and it is clear that there isn't much the FOMC can do or could have done short of sneaking subsidies for housing around the limits of the Federal Reserve act. I stress that the qualifier "the FOMC" is necessary to my claim. I think that a long lived monetary dictator could precommit further ahead than the FOMC.Roberthttps://www.blogger.com/profile/14455788499385673507noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-12080877316201575522013-03-02T17:50:36.438-05:002013-03-02T17:50:36.438-05:00Except population in the developed world isn't...Except population in the developed world isn't growing geometrically. And there are 2x as many calories being produced as needed for a real diet. <br /><br />Doesn't sound Malthusian to me.<br /><br />Monetary policy has to exist, right, even if that is the ultimate negative of no state alteration of the money supply at all (basically the world of Ludwig von Mises).Ashok Raohttp://ashokarao.comnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-58407732188439872062013-03-02T17:46:41.645-05:002013-03-02T17:46:41.645-05:00Absolutely, never doubted that! (Or expected this ...Absolutely, never doubted that! (Or expected this whole thing to be some scientific calculatory endeavor). <br /><br />Would you agree, though, that it's a bigger leap to believe something works than to believe something may work, go through with it, but also do something else? I know there are lots of people that think expansionary fiscal and monetary policy at the same time is a bad idea, but limited to the frame of argument provided in your post, I can't see the argument for not doing both, which is why Glasner seems to be the more blindly faithful one! <br /><br />(see the fun of things like this is idiots like me can have an opinion and debate... Where can I debate , oh I don't know, whether the Copenhagen interpretation is appropriate w/o being an expert!) Ashok Raohttp://twitter.com/AshokRao95noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-47611942672576685212013-03-02T17:39:46.055-05:002013-03-02T17:39:46.055-05:00At any rate, hopefully you see my point policy usu...At any rate, hopefully you see my point policy usually requires a leap of faith in one direction or another... ;-)Noah Smithhttps://www.blogger.com/profile/09093917601641588575noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-48603725440512133692013-03-02T17:35:25.775-05:002013-03-02T17:35:25.775-05:00Though to be fair I think bleeding (or leeches) ar...Though to be fair I think bleeding (or leeches) are an unfair comparison to Glasner's argument. Even the ancient doctors knew that bleeding or leeches hurt without knowing (as in justified true belief) that it helped.<br /><br />We don't know increasing the money supply is painful in the same sense that bleeding is. That comparison implies some sort of sacrifice.Ashok Raohttp://ashokarao.comnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-24508692429918796522013-03-02T17:31:47.226-05:002013-03-02T17:31:47.226-05:00Well, I'd let him continue to bleed.
Anyway. ...Well, I'd let him continue to bleed.<br /><br />Anyway. sure I'd let him continue to bleed. Especially if one assistant thinks it will help and the other is doubtful it will help, and expresses no opinions on whether it will hurt.<br /><br />That's my point though. One guy is sitting and cheering "bleed, bleed, bleed!" and pointing to his theory (maybe, right, we don't know) that it works. The other guy is saying, "I don't know that it doesn't work, I'm not saying don't bleed him, why don't we do something else, as well?"<br /><br />Re: your first point, 'suppose he'll die anyway'. Depends. If I act independently and have no opinions of my own, I would do nothing, because I have no reason to believe bleeding him is better than doing nothing. But if I consider these assistants to be experts and another expert doesn't tell me bleeding causes harm then yes, I'd bleed him.<br /><br />Back to the previous question... Why rely like religious ducks to see if the Fed works? Sure, maybe it does, and work towards that assumption. In the mean time, also do other things like, oh I don't know, not slashing spending?Ashok Raohttp://ashokarao.comnoreply@blogger.com