Instead he has this weird post that seems to take the view that Krugman doesn't understand, respect, or agree with a forty year old revolution incorporating expectations into macro.
This is simply bizarre because Krugman actually works in that tradition, and that has formed the bedrock of what he's had to say on monetary and fiscal policy in a liquidity trap.
We all know what Krugman means when he talks about saltwater/freshwater. He's talking about weird resurgences of the Treasury View among people like Fama (they actually do say that stuff). He's talking about claims that the problem is not an aggregate demand problem from people like Casey Mulligan.
He's not talking about expectations in macroeconomics.
What's sad is that Williamson is a sharp guy and very accessible as a blogger. He could offer an interesting counter-arguent to Krugman, but he chooses to post weird stuff like this. I don't know why.
Monday, December 17, 2012
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"people like Fama."
ReplyDeleteThis implies there is more than one person that are spouting the "Treasury View". Aside from one quote from Eugene Fama from 3 years ago, can you name anyone else (don't say John Cochrane because that would be a lie)?
It burns my toast that all the macroeconomists at Chicago School are constantly written off by Krugman (now you) for essentially one bad argument by a non-macroeconomist from 3 years ago.
Don't be melodramatic. I haven't "constantly written off" Chicago macroeconomics by any stretch of the imagination.
DeleteThose bad arguments have policy ramifications, that's the problem.
Anyway, the point is the concerns Krugman has have nothing to do with what Williamson was talking about.
Does this mean you can't name any other examples besides Fama (again, a financial economist that made one bad macro argument over 3 years ago)?
DeleteIf so, you should probably reconsider whether your characterization of "Freshwater" economics is accurate.
What student said... Daniel Krugman literally said half of the profession is a cult. How else is Williamson supposed to respond to that, except by pointing out that they are all working in the same tradition with the same type of models?
ReplyDeleteBob Murphy, Who's Daniel Krugman?
DeleteThe antichrist of prophecy?
DeleteGood one MF.
Delete1. As opposed to Austrians, of course, who have written off 95% of the profession as a cult ;-)
Delete2. So what really confuses me about Williamson is that he's not saying "we're all doing the same models" at all! He's accusing Krugman of not being up on current macro (which is quite plausible... I'm sure Krugman knows the broad outlines of current work, but certainly he isn't going to be as well informed as someone like Williamson) - and then as an example he cites work done forty years ago! You have to take your normal Krugman goggles off and admit this is weird.
You know I actually agree with Williamson on a lot of these points - that economic science weeds out bad ideas pretty well, that we've got a pretty good consensus right now - even in macro. I'm actually more on Williamson's (and Woodford, for that matter) side on that more than Krugman's. But he reports "what's going on in macro" in an attempt to educate Krugman, and it's exactly Krugman's sort of macro!
"Freshwater" has become short hand and he doesn't redefine it every time, but anyone that follows him like you do knows he's talking about strong Ricardian equivalence and Treasury View type stuff.
"But he reports "what's going on in macro" in an attempt to educate Krugman, and it's exactly Krugman's sort of macro!"
DeleteAgreed. If Steve had gone more into the new-monetarist contribution to modern macro in his post, then he would probably be right to lecture Krugman -- the new monetarist literature isn't Krugman's sort of macro, nor does Krugman really know what's going on in that quadrant. I think their work is great stuff, see my old introduction of Steve to the world.
Daniel reflects, "he chooses to post weird stuff like this. I don't know why?"
ReplyDeleteDaniel, "you see but you do not observe."
Don't like being so blunt but have you ever stopped to consider Williamson's motives? Have you observed enough about Williamson to be confident you truly know his motives?
Have you ever stopped to look for evidence that he might be writing to a reader other than yourself? Or other economists?
To exactly whom would his recent comments appeal?
Have you ever thought to consider that fresh and salt water is a description of large bodies of water where people fish? Have you ever asked what whales are in the fresh water where Chicago school economists fish? What do economists use for bait when the fish for whales?
Have you ever made room for the possibility that Delong was speaking to another characteristic of Williamson when he called him the second dumbest man in the world?
About Krugman, what do you know about what he knows about macro? You draw and inference there (that he doesn't know), based on what evidence?
If you are willing to draw inferences about Krugman, what are you unwilling to observe and draw inferences about Williamson? To draw the proper inferences about Williamson, what facts should you have that you presently don't know?
Daniel reflects, "he chooses to post weird stuff like this. I don't know why?"
ReplyDeleteDaniel, "you see but you do not observe."
Don't like being so blunt but have you ever stopped to consider Williamson's motives? Have you observed enough about Williamson to be confident you truly know his motives?
Have you ever stopped to look for evidence that he might be writing to a reader other than yourself? Or other economists?
To exactly whom would his recent comments appeal?
Have you ever thought to consider that fresh and salt water is a description of large bodies of water where people fish? Have you ever asked what whales are in the fresh water where Chicago school economists fish? What do economists use for bait when the fish for whales?
Have you ever made room for the possibility that Delong was speaking to another characteristic of Williamson when he called him the second dumbest man in the world?
About Krugman, what do you know about what he knows about macro? You draw and inference there (that he doesn't know), based on what evidence?
If you are willing to draw inferences about Krugman, what are you unwilling to observe and draw inferences about Williamson? To draw the proper inferences about Williamson, what facts should you have that you presently don't know?
Weird? Krugman said macroeconomics was rotten and half the field should be displaced. I don't know how you read that as a dispute with Fama, who is not a macroeconomist, or Casey Mulligan, who may be a macroeconomist but is not taken seriously by anyone I know. What's true, which I think you understand, is that Krugman has wrapped himself up in contradictions. Back in the day, he did normal economics as a trade theorist, but he doesn't think macroeconomists should be allowed to do normal economics. We should be put back in the IS/LM box.
ReplyDelete