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My first tweet... Trying to make sense of the latest stock market slump blogs.piie.com/realtime/?p=53…
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First tweet success, so second tweet :) The shape of the Phillips curve, and how it makes life harder for the Fed bit.ly/1OEbFLK
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Further thoughts on DSGE models: What we agree on and what we do not. piie.com/blogs/realtime… .
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A Trump administration potential silver lining: It may provide macroeconomists with true randomized (not quite controlled) experiments.
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A third pass at DSGEs :(. Theory is elegant. Reality is messy. One class of models cannot do everything. bit.ly/2jcmX4O
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I did not leak, but am not too unhappy that it did leak :). 7 years already, and still no clear/realistic plan. twitter.com/TrineeshB/stat…
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On the need for (at least) five classes of macro models :) bit.ly/2nVMLjK
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Economists, policy debates, and policy making. A note with Jean Tirole and Agnes Benassy-Quere. bit.ly/2vOPVe7
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Rethinking monetary policy, with Ben Bernanke, Mario Draghi, Phillip Hildebrand, Lael Brainard, Alan Possen. bit.ly/2kM3UQH
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Should we get rid of the natural rate hypothesis? What evidence is there for hysteresis? Can we exploit the Phillips curve trade off? For all the answers, see bit.ly/2jwnUGH
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In this courageous compromise, democrats get all the spending they want, republicans get all the spending they want, and nobody pays more taxes. :( With such sacrifices, no wonder this compromise was so hard to achieve.
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On the euro architecture. The focus has been on fiscal and banking unions. To me, even more important is improving macroeconomic adjustments. And the only solution I see is national wage agreements. bit.ly/2CpPJJb
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On macro, the need to simplify, and agent based models, reread the one paragraph novel by Jorge Luis Borges, bit.ly/2t2sbWO
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Too slow progress on euro inflation should be seen as great news, not bad news: It tells us that unemployment can decline for quite a bit more without triggering overheating. The natural unemployment rate is lower than policy makers assumed.
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Global supply chains and trade wars. You are China and unhappy about the new tariffs. You identify a few Chinese plants crucial to the supply chains of a couple of US firms. You send a hygiene inspector, who finds a rat, and closes the plant for a month. You are done.
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For those who still think that trade wars have a winner and a loser: Look at the synchronous movements of stock markets in Asia and in the US on Friday, and on Monday. Case closed.
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With the threatened tariffs, the Chinese may be succeeding where the Democrats have so far failed: Decreasing support in the Trump base. Russians may have determined the last election. The Chinese may determine this one. :)
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"Against ignorance we have education. Against inequalities, development. Against cynicism, trust and good faith. Against fanaticism, culture. Against disease and epidemics, medicine. Against the threats on the planet, science."
Macron in his speech to Congress. Feels good.
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China has indicated it is tired of lending to the US. It has asked the US to take measures to cut its trade deficit vis a vis China by 200 billion by the end of 2020. (Just kidding obviously. But doesn't it remind you of another set of ridiculous demand?)
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Anybody who says that economics is in trouble, that economists do not deal with the relevant issues, just has not done his/her homework. Look at the set of papers presented at the AEA meetings. Amazing. bit.ly/2J2Iiub
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Should we be worried about an Italian economic crisis? Yes. bit.ly/2LqXqAd
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The usual argument that markets eventually scare governments in doing the ``right thing'' sounds hollow when there is no government in place to scare.
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Asked by Bloomberg today: What are economists (or economic forecasts) getting wrong today?
So once again:
Economics is not primarily about economic forecasting.
Economists analyze how the economy works, examine policies, explore counterfactuals.
But they know that:
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2/
If markets work half decently, they imply that most economic movements should be largely unpredictable.
The best example is the stock market.
Anybody who says that they can forecast major movements in the stock market is a crook, not an economist
Robert Solow Professor of economics emeritus, MIT
Fred Bergsten Senior Fellow, Peterson Institute for International Economics