tag:blogger.com,1999:blog-8595404115121834255.post922409710960603481..comments2024-03-28T03:24:05.678-04:00Comments on NAKED KEYNESIANISM: On the state of macroeconomics: fashion versus logic and evidenceMatias Vernengohttp://www.blogger.com/profile/09521604894748538215noreply@blogger.comBlogger8125tag:blogger.com,1999:blog-8595404115121834255.post-92143166326188317392012-12-22T08:11:17.894-05:002012-12-22T08:11:17.894-05:00It's not even the facts in this regard, Matias...It's not even the facts in this regard, Matias. It's that Krugman doesn't seem aware what argument he's making. His argument is very simple: the Fed controls the interest rate in the US therefore we are not Greece. But he feels the need to go through a whole Mundell-Fleming model to make this point when in fact the MF model is completely superfluous and he just slips in the controlled interest rate argument at the end of the discussion/soliloquy/meditation. Why does he need to do this? I don't know. I don't understand it. It's weird.<br /><br />It reminds me of a scholastic in the medieval ages wanting to say something fairly simple and rational. But, in order to do so, they first feel the need to expound on whatever metaphysical system is popular at the time. So, in order to make a simple statement like: "Black cats are more popular in London" the scholastic has to go through all this stuff about what it means to have the "essence" of "catness" and how catness was distributed through the Great Chain of Being by our Lord and Savior... and so on. After this long disquisition -- so well parodied by playwrights and authors later on -- they would finally come out and make their simple statement on black cats in London. Pure ritual.TheIllusionisthttps://www.blogger.com/profile/17642837989235595346noreply@blogger.comtag:blogger.com,1999:blog-8595404115121834255.post-24108459558990708662012-12-22T07:52:31.456-05:002012-12-22T07:52:31.456-05:00I tend to agree that believe in neoclassical econo...I tend to agree that believe in neoclassical economics requires a willful ignorance about the facts, and it is hard to think that Krugman really believes that our problem is a negative natural rate of interest. And yes this is a very strange profession. Keynes wanted us to look more like dentists, which he assumed were dispassionate technicians. And Colander suggested that our standards are lower than garbage collectors.Matias Vernengohttps://www.blogger.com/profile/09521604894748538215noreply@blogger.comtag:blogger.com,1999:blog-8595404115121834255.post-12991031872706482162012-12-22T05:18:19.599-05:002012-12-22T05:18:19.599-05:00That's totally true. And I respect them (in so...That's totally true. And I respect them (in some sense) for it. But if Krugman and his ilk are perfectly self-conscious about what I just described above then the profession has become so cynical that you'd have to just ask: is it even worthwhile?<br /><br />My impression is that they're not conscious of what they're doing. And when they do stuff like what I just mentioned they think they're actually engaged in some sort of science. That's freaking weird.TheIllusionisthttps://www.blogger.com/profile/17642837989235595346noreply@blogger.comtag:blogger.com,1999:blog-8595404115121834255.post-62820270326960229412012-12-21T17:48:08.825-05:002012-12-21T17:48:08.825-05:00Most NK guys will ignore neoclassical economics wh...Most NK guys will ignore neoclassical economics when the facts tell them otherwise.Unlearningeconhttps://www.blogger.com/profile/13687413107325575532noreply@blogger.comtag:blogger.com,1999:blog-8595404115121834255.post-64672540181190952272012-12-21T17:08:58.231-05:002012-12-21T17:08:58.231-05:00That's fine, continue, continue, I do like wha...That's fine, continue, continue, I do like what I hear. Did I ever tell you that I tend to agree a lot with what I say?Matias Vernengohttps://www.blogger.com/profile/09521604894748538215noreply@blogger.comtag:blogger.com,1999:blog-8595404115121834255.post-22235481191292456882012-12-21T17:00:08.370-05:002012-12-21T17:00:08.370-05:00the opposite of being in fashion is understanding ...the opposite of being in fashion is understanding history in both empirics and theory. Classical-Keynesianism (ok, ok, it's a Matias suck-up moment) seems to dominate the right analyses.Steve Bannisterhttps://www.blogger.com/profile/14466785184416801339noreply@blogger.comtag:blogger.com,1999:blog-8595404115121834255.post-53601011324476410862012-12-21T14:52:02.317-05:002012-12-21T14:52:02.317-05:00Yep, it is bizarre, but the schizophrenia comes fr...Yep, it is bizarre, but the schizophrenia comes from the need to use conventional models. It's difficult to make reasonable arguments with crazy models. But mind you, Krugman says that was what reasonable people were trying to do in the 1980s. His words: “By the early 1980s it was already common knowledge among people I hung out with that the only way to get non-crazy macroeconomics published was to wrap sensible assumptions about output and employment in something else, something that involved rational expectations and intertemporal stuff and made the paper respectable." Link here http://nakedkeynesianism.blogspot.com/2011/09/if-youre-surprised-that-means-that-you.htmlMatias Vernengohttps://www.blogger.com/profile/09521604894748538215noreply@blogger.comtag:blogger.com,1999:blog-8595404115121834255.post-16344864906678604802012-12-21T13:49:58.327-05:002012-12-21T13:49:58.327-05:00Watching Krugman can be beyond bizarre sometimes. ...Watching Krugman can be beyond bizarre sometimes. Recently he put forward a fairly decent point about the US not being Greece because they issue their own currency (where have I heard that before, hmmm?). Fine. But then he claimed to have a model to prove it. <br /><br />I think "Hmmm... that might be interesting...". But then I read it. It's just a Mundell-Fleming model and then Krugman nakedly states that the Fed can control the interest rate. What was the point of the model? There was no point. None. Krugman could have made his argument in a sentence, but instead works through an ISLM-BP model and inserts his argument toward the end. Is this the best that the profession has to offer? Really?TheIllusionisthttps://www.blogger.com/profile/17642837989235595346noreply@blogger.com