tag:blogger.com,1999:blog-1740670447258719504.post312964461488337171..comments2024-03-27T03:00:27.024-04:00Comments on Facts & other stubborn things: The history of economic thought is not a food fight: Phillips Curve editionEvanhttp://www.blogger.com/profile/12259004160963531720noreply@blogger.comBlogger9125tag:blogger.com,1999:blog-1740670447258719504.post-3777974576036606182014-08-16T04:00:42.202-04:002014-08-16T04:00:42.202-04:00I hate that video. I can articulate but it's s...I hate that video. I can articulate but it's stupidity and MrMackeyiness should be so evident that I won't. I ... I'll stop here.YouNotSneaky!https://www.blogger.com/profile/06378267534638281151noreply@blogger.comtag:blogger.com,1999:blog-1740670447258719504.post-80030522835691843892014-08-06T20:47:44.473-04:002014-08-06T20:47:44.473-04:00I see. Have you finally bought a copy of that?I see. Have you finally bought a copy of that?Blue Aurorahttps://www.blogger.com/profile/02044362251868221897noreply@blogger.comtag:blogger.com,1999:blog-1740670447258719504.post-37359488770108725492014-08-06T08:47:30.056-04:002014-08-06T08:47:30.056-04:00I think that's generally how people think abou...I think that's generally how people think about full employment. Of course the issues raise in that last section about hysteresis and an exploitable LRPC complicate that claim a little.<br /><br />The passage is from the Treatise on Probability, beginning of chapter 32.<br /><br />Daniel Kuehnhttp://www.factsandotherstubbornthings.blogspot.comnoreply@blogger.comtag:blogger.com,1999:blog-1740670447258719504.post-48461262091948556042014-08-06T05:35:26.081-04:002014-08-06T05:35:26.081-04:00This is a very good post, Daniel Kuehn...one more ...This is a very good post, Daniel Kuehn...one more thing I would like to add: couldn't it be argued that the Non-Accelerating Inflation Rate of Unemployment (N.A.I.R.U.) and Full Employment (F.E.) are in practice, one and the same? If one exceeds full employment, one can get stagflation. Also...can you point us to the exact place where you cite J.M. Keynes?Blue Aurorahttps://www.blogger.com/profile/02044362251868221897noreply@blogger.comtag:blogger.com,1999:blog-1740670447258719504.post-79114888450049707632014-08-04T16:03:29.502-04:002014-08-04T16:03:29.502-04:00Modeling financial markets as a "friction&quo...Modeling financial markets as a "friction" is absolutely hilarious and also pretty sad.Ryanhttps://www.blogger.com/profile/18341935691462262579noreply@blogger.comtag:blogger.com,1999:blog-1740670447258719504.post-28125032239658494302014-08-04T13:34:37.401-04:002014-08-04T13:34:37.401-04:00To clarify: it seems as if there is a general stru...To clarify: it seems as if there is a general struggle these days to keep from building ad hoc models to estimate potential for a lot of reasons. For example, some important work has come out by Borio (2013,2104) at BIS that is entirely ad hoc but manages to introduce financial frictions but in doing so, loses its structural element. Since building huge DSGE models is impractical for estimating potential (and suspect in other ways), it seems that researchers are struggling to find a structural model, due in a large part, to the empirical changes in the Phillips Curve. As the paper I reference here states:<br /><br /> Moreover, if inflation is less responsive to domestic cyclical conditions, it is relatively more<br />affected by temporary cost-push shocks linked, for example, to exchange-rate or commodity price<br />movements. For given weights on output and inflation in the monetary policy reaction<br />function, a flatter Phillips curve implies responding more often to cost-push shocks and thus<br />inducing undesirable fluctuations in output and unemployment (Wren-Lewis, 2013).<br /><br />Since this is the case, the flatter Phillips Curve become ill suited to identify cyclical or structural elements, instead, functioning empirically as a channel for price shocks. Since we can measure price shocks directly, whats the value added in including the Phillips Curve anymore other than to say your model has structure?waterzooinoreply@blogger.comtag:blogger.com,1999:blog-1740670447258719504.post-58682497032885319932014-08-04T13:13:44.761-04:002014-08-04T13:13:44.761-04:00Thanks for the link. Could you get me up to speed ...Thanks for the link. Could you get me up to speed a little more on that second sentence - I don't entirely understand what you're trying to tell me. It seems sensible that the Phillips Curve might not be the best tool in all cases, particularly if you're talking about estimating potential output. But my sense is that given any kind of knowledge of potential output and whatever expectations framework you want to use, you can easily move back and forth from a Phillips Curve to something else. So when you say that it's not considered surely that doesn't mean no one is talking about Phillips Curves any more. Your own link provided has lots of discussion of it. So that's not your claim, I hope, is it? Daniel Kuehnhttp://www.factsandotherstubbornthings.blogspot.comnoreply@blogger.comtag:blogger.com,1999:blog-1740670447258719504.post-72333245090284824222014-08-04T13:00:24.902-04:002014-08-04T13:00:24.902-04:00See section II, Part B. http://www.imf.org/externa...See section II, Part B. http://www.imf.org/external/pubs/ft/sdn/2014/sdn1403.pdf<br /><br />Also, doing some work on potential output and at the frontier, using the Phillips Curve to add a structural element is no longer considered.waterzooinoreply@blogger.comtag:blogger.com,1999:blog-1740670447258719504.post-5642596422755778192014-08-04T12:25:06.284-04:002014-08-04T12:25:06.284-04:00Not as long as I had initially worried it would be...Not as long as I had initially worried it would be (which is to say I have several other things that I restrained myself from including), although I still like having it organized in this way.Daniel Kuehnhttp://www.factsandotherstubbornthings.blogspot.comnoreply@blogger.com