tag:blogger.com,1999:blog-1740670447258719504.post2685042333773599635..comments2024-03-27T03:00:27.024-04:00Comments on Facts & other stubborn things: Keynesians on NGDP-growth paths: Confusing arguments about policies and arguments about the goalEvanhttp://www.blogger.com/profile/12259004160963531720noreply@blogger.comBlogger7125tag:blogger.com,1999:blog-1740670447258719504.post-33938398609528402192012-04-29T08:45:47.164-04:002012-04-29T08:45:47.164-04:00The other frustrating thing about Scott, of course...The other frustrating thing about Scott, of course, is that he takes any hesitations (i.e. - any mention of either the liquidity trap or the expectations trap) as being an argument against doing monetary policy, when in actuality it is an argument for fiscal policy.Daniel Kuehnhttp://www.factsandotherstubbornthings.blogspot.comnoreply@blogger.comtag:blogger.com,1999:blog-1740670447258719504.post-37538573009845025562012-04-29T08:44:26.420-04:002012-04-29T08:44:26.420-04:00I sometimes think it's useful to collect mater...I sometimes think it's useful to collect material and arguments that are often left implicit.<br /><br />I also think a lot of this is Scott Sumner's "fault" (if you want to use the word "fault"). He is a master image-manager, and the image he seems to like is the voice-in-the-wilderness. And he's convinced a lot of people (including Bob) that he is such a voice. I found this interesting in Bob's comment above:<br /><br /><i>"Just to clarify, Daniel, what I thought was "BS" was DeLong claiming that in early 2009, he thought the Fed was going to announce that it wanted to target NGDP."</i><br /><br />I couldn't find you claiming that anywhere in the statement that Bob posted. And this is why it's so critical to separate goals from policies. You clearly had an interest in returning nominal GDP to trend for years now. That has always been your goal which is all you said in the post. And to achieve your goal you've always seemed to say that the Fed should buy bonds, as you said in the post.<br /><br />So this is different from Scott - who combines his goal and his policy into NGDP targeting. You now support that, of course - but you never said you were promoting NGDP targeting as a policy back then. You only said you supported bond buying.<br /><br />Anyway, it is a subtle distinction, I think. But it is also something which - as you say - you've left a huge record on.Daniel Kuehnhttp://www.factsandotherstubbornthings.blogspot.comnoreply@blogger.comtag:blogger.com,1999:blog-1740670447258719504.post-54224605397973051522012-04-28T22:38:13.330-04:002012-04-28T22:38:13.330-04:00Thanks for doing this. It's very hard for me t...Thanks for doing this. It's very hard for me to understand why Murphy seeks to perpetrate the misrepresentations that he does, on things that are so easy to check...<br /><br />Yours,<br /><br />Brad DeLongbradhttps://www.blogger.com/profile/04548019979157668776noreply@blogger.comtag:blogger.com,1999:blog-1740670447258719504.post-34058975299293297062012-04-28T08:03:55.951-04:002012-04-28T08:03:55.951-04:00Bob -
You would agree he cared about NGDP being o...Bob - <br />You would agree he cared about NGDP being off trend back then, right? I think I've shown he did. You would agree he advocated and thought the Fed would pursue large bond purchases to get NGDP back on track, right? I think I've shown that too (that is QE after all - which you agree here he was in support of). To me, that is the same thing as his recent assertion that:<br /><br /><i>"as long as nominal GDP was below its pre-2008 trend, the Federal Reserve was going to buy bonds for cash–and keep buying bonds for cash until forecasts of nominal GDP were back on track."</i><br /><br />If you can see a difference between the two, you need to explain it to me because I don't understand it.<br /><br />It's true, Keynesians haven't always called it "NGDP level targeting". But that's why I highlight here that that's a policy goal, not a policy - and the policy they advocate (expanding the money supply when we're off NGDP trend) is the same policy Sumner advocates. <br /><br />The liquidity trap point is a genuine difference, as I've said on several occasions. But I've never known a Keynesian (maybe there are some out there - I can't think of any) to say that monetary policy should not be loose because of the liquidity trap. Indeed because of the expectations trap they say it should be <i>very</i> loose. The liquidity trap simply suggests its worth talking about fiscal policy now too.Daniel Kuehnhttp://www.factsandotherstubbornthings.blogspot.comnoreply@blogger.comtag:blogger.com,1999:blog-1740670447258719504.post-45193012153759380612012-04-28T01:05:56.523-04:002012-04-28T01:05:56.523-04:00Speaking of monetary policy and reactions to expec...Speaking of monetary policy and reactions to expectations, it seems that monetary economists have a poor theoretical understanding of how to deal with uncertainty of agents. I've found one paper from a Google search that deals with monetary policy and decision-making under uncertainty, and I think economics could benefit from research coming from decision theory.<br /><br />http://www2.warwick.ac.uk/fac/soc/wbs/subjects/finance/research/wpaperseries/wf05-233.pdfBlue Auroranoreply@blogger.comtag:blogger.com,1999:blog-1740670447258719504.post-41966633256884332692012-04-27T23:47:52.412-04:002012-04-27T23:47:52.412-04:00Just to clarify, Daniel, what I thought was "...Just to clarify, Daniel, what I thought was "BS" was DeLong claiming that in early 2009, he thought the Fed was going to announce that it wanted to target NGDP. I think the post I quoted from him, back then, is as much of a smoking gun as one could ask for. To say interest rate cuts don't work at ZLB, and that all you're left with then is untested "quantitative easing" (his quotation marks to show he thinks it's newfangled), is about the furthest thing from a Sumnerian view imaginable. Indeed it is precisely the orthodox view that Sumner had to beat back over about 18 months.<br /><br />I will admit you have some links in this post that cast doubt on my thesis. I actually think the Caplan one helps me: Note that Caplan thinks it is a *good response* by him to say, "Well sure, if what we care about is NGDP, then maybe that would work..." So that post doesn't do what you think it does. You think you've got Bryan Caplan admitting, at the time, that DeLong cares about NGDP growth, when really what Caplan is doing is saying, "DeLong you obviously didn't make a good argument there, because your suggestion would just influence NGDP, and we economists all know that nobody cares about NGDP." I.e., that's exactly what I said economists besides Sumner and a few others were thinking, back then, including Fed officials.<br /><br />Your other link, where DeLong talks about the equation of exchange, is admittedly closer to what you need for your case. I still think I'm right, and that DeLong's discussion of Becker (the one I quoted in my post) is way more conclusive evidence than the one you dug up, but I can understand why you think I'm being too flippant with DeLong. It's not as open and shut as I thought when I first made the post, I will grant you.Bob Murphyhttps://www.blogger.com/profile/04001108408649311528noreply@blogger.comtag:blogger.com,1999:blog-1740670447258719504.post-73155484054300927482012-04-27T21:36:15.706-04:002012-04-27T21:36:15.706-04:00Setting a goal to solve a problem, and having a me...Setting a goal to solve a problem, and having a method to solve a problem are different things. Isn't having a method to prevent the problem also different ?<br /><br />Would monetary policies be more effective (sufficient?) in preventing a liquidity trap than in resolving a liquidity trap ?bpabbotthttps://www.blogger.com/profile/17047791198702983998noreply@blogger.com