Saturday, January 28, 2012

Expansionary Austerity - a Guide to Killing Zombie Economists


Pondering the puzzle of far too many zombie economists, many of European, English, and American fresh-water origin, I started researching how to REALLY kill a zombie.

The recent tragic British recessionary news motivates this research. Britain receded into a recession in the fourth quarter, making the current depression the longest even considering the prior depression. This NIESR chart is from Jonathan Portes, Director, National Institute of Economic and Social Research, previously, Chief Economist at the UK Cabinet Office. Notice that, in Britain, this depression is also almost as deep as the prior one.


Menzie Chinn, of the University of Wisconsin, Madison, also weighs in with his view which highlights the drastic difference that zombie-supporting political ideologues make in the affairs of nations. Here is his chart:

And Chris Dillow, via Mark Thoma, both have the same question I do (minus the zombie part).

So, I feel I am on solid ground in my quest. The best reference so far for killing zombies (not refereed a.f.a.i.k.), seems to be the Zombie Wiki.

The essential step, though there are many, is destroying the brain of the zombie. That sounds about right to me, though I would hope these charts and the recent IMF studies would destroy the offending brain cells. I think it's way past time
that expansionary austerity die its deserved death. Waiting for dark, got my high power flash and brain destroying implements. Off to hunt Zombies.

Can anyone identify the economist in the opening picture?

Update: Here is a link to the IMF Working Paper; the conclusion is at page 30, but take a minute to browse their graphs. Austerity is contractionary.

4 comments:

  1. "Can anyone identify the economist in the opening picture?"

    I'm not sure about his name, but I've seen him around Martin Place (Sydney).

    My guess is that he works at the Reserve Bank of Australia (otherwise, he is at the Commonwealth Bank).

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    1. Hello Magpie (here in NA a bird of great intelligence and voice). Well, that would be great...but I suspect this is a figure in the public eye that is an internationally known economist or some suitable imposter. I just can't quite place him....

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  2. The IMF research dept has some timid critiques of expansionary contractions. Krugman uses them as an example of how austerity is incorrect, but note that IMF is in fact for moderate austerity. Blanchard has been explicit about it. I would´n't use the IMF as an example. For a critique of the IMF see last year UNCTAD's Trade and Development Report chapters 2 and 3 (http://www.unctad.org/en/docs/tdr2011_en.pdf)

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  3. Yes, caution about the IMF is warranted. I should be very specific here...I am referring to an IMF working paper (so the normal author's opinion yadayada) that seems definitive. At least in the short term, austerity is contractionary. I'll update the blog with the link

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