A Brief Note on Macroeconomics and Ethics/March 8, 2012, 1:10 PM

A Brief Note on Macroeconomics and Ethics マクロ経済学と倫理に関する小論

I only have a few minutes here, but I want to acknowledge Karl Smith’s very gracious and brave response to my piece on economics in the crisis. And I’d also like to add a small further thought.

My argument in Lisbon was that what economists say in times of crisis, when the usual rules don’t apply, matters a lot. And so the fog created by all too many macroeconomists did a lot of real-world damage.

That said, disagreement will happen. Economics is a hard subject, people will come to different provisional conclusions, and some of them will, in retrospect, turn out to have given very bad advice. That’s a shame but not a sin.

To take an example: Ken Rogoff and I differ seriously on the relative risks of public debt and failure to spend on job creation. One of us is wrong , which means that the other is giving bad advice. (And yes, I’m personally sure that I’m right ― but that’s a different argument). But this is an argument in good faith.

What bothers me, and should bother you, about much of this debate is that it pretty clearly is not in good faith. Too many economists and commentators on economics are clearly playing for a political team; too many others are clearly playing professional reputation games. Their off-the-cuff reactions to policy issues were wrong and foolish, and I think they know in their hearts that they messed up; but instead of trying to remedy the fault, they’re trying to defend the property values of their intellectual capital.

And that really is a sin. This is not an academic game, where tempers run high because the stakes are so small. This really matters to millions of people, and refusing to think clearly because you don’t want any negative thoughts about the papers you and your friends have been writing the past few decades is unforgivable.

Japanese Debt And Growth/July 28, 2010, 10:12 AM

Japanese Debt And Growth 日本の債務と成長

Just a quick note: I thought it might be worth doing an Irons-Bivens plot for Japan (and, to be honest, I wanted to see if I had finally managed to trick a spreadsheet into labeling the data points!). So here it is (data from IMF WEO database):
簡潔に:僕は日本を対象としたIrons-Bivens図をプロットしてみる価値があるかもしれないと考えた(そして、正直に言えば、スプレッドシートをいじくってデータにラベル付けできるか見てみたかった!)。それがこれ(IMF WEO databaseのデータ):


So, Japan has had high debt and low growth since the mid-90s ― in other words, since the economy entered deflation.

Do you really want to argue that the debt caused the low growth, rather than the other way around? Really, really?
あなたは本気で債務が低成長を引き起こしたと主張したいの?、その逆じゃなくて? 本当に、本気か?


A Note On The Ricardian Equivalence Argument Against Stimulus (Slightly Wonkish)/December 26, 2011, 1:30 PM

A Note On The Ricardian Equivalence Argument Against Stimulus (Slightly Wonkish) リカードの等価原理対景気刺激策論争に関する論考(ちょっとオタク風)

There have been a lot of shockingly bad performances among macroeconomists in this crisis; but if I had to pick the one that is most startling, it is the way freshwater economists have demonstrated that they don’t understand one of their own doctrines, that of Ricardian equivalence.

Ricardian equivalence says that what determines consumption is the lifetime present value of after-tax income, and hence that, say, a temporary tax cut won’t stimulate spending, because people will figure that whatever they gain now will be offset by higher taxes later. It is a dubious doctrine even done right; many people are liquidity constrained, and very few people have the knowledge or inclination to estimate the impact of current government budgets on their lifetime tax liability.

But even if you assume that the doctrine is right, it does NOT imply that government spending on, say, infrastructure will be met by offsetting declines in private spending. In other words, Robert Lucas was betraying a complete misunderstanding of his own doctrine when he said this:

If the government builds a bridge, and then the Fed prints up some money to pay the bridge builders, that’s just a monetary policy. We don’t need the bridge to do that. We can print up the same amount of money and buy anything with it. So, the only part of the stimulus package that’s stimulating is the monetary part.

But, if we do build the bridge by taking tax money away from somebody else, and using that to pay the bridge builder ― the guys who work on the bridge ― then it’s just a wash. It has no first-starter effect. There’s no reason to expect any stimulation. And, in some sense, there’s nothing to apply a multiplier to. (Laughs.) You apply a multiplier to the bridge builders, then you’ve got to apply the same multiplier with a minus sign to the people you taxed to build the bridge. And then taxing them later isn’t going to help, we know that.

This remark was followed, by the way, by a smear against Christy Romer:

Christina Romer ― here’s what I think happened. It’s her first day on the job and somebody says, you’ve got to come up with a solution to this ― in defense of this fiscal stimulus, which no one told her what it was going to be, and have it by Monday morning.

So she scrambled and came up with these multipliers and now they’re kind of ― I don’t know. So I don’t think anyone really believes. These models have never been discussed or debated in a way that that say ― Ellen McGrattan was talking about the way economists use models this morning. These are kind of schlock economics.
彼女は乗数効果やらをかき集めて提出したが、それらはなんというか―私には理解できないものだ。誰も本気でそれを信じる人がいるとは思えない。あの人が言うようなやり方で、この種のモデルが議論されたり、討議されたりすることはない―Ellen McGrattanは今朝経済学者がモデルを扱う際の方法について話をしていた。こういうのは低俗な経済学というものだ。

Maybe there is some multiplier out there that we could measure well but that’s not what that paper does. I think it’s a very naked rationalization for policies that were already, you know, decided on for other reasons.

I’ve tried to explain why Lucas and those with similar views are all wrong several times, for example here. But it just occurred to me that there may be an even more intuitive way to see just how wrong this is: think about what happens when a family buys a house with a 30-year mortgage.

Suppose that the family takes out a $100,000 home loan (I know, it’s hard to find houses that cheap, but I just want a round number). If the house is newly built, that’s $100,000 of spending that takes place in the economy. But the family has also taken on debt, and will presumably spend less because it knows that it has to pay off that debt.

But the debt won’t be paid off all at once ― and there’s no reason to expect the family to cut its spending right now by $100,000. Its annual mortgage payment will be something like $6,000, so maybe you would expect a fall in spending by $6000; that offsets only a small fraction of the debt-financed purchase.

Now notice that this family is very much like the representative household in a Ricardian equivalence economy, reacting to a deficit financed infrastructure project like Lucas’s bridge; in this case the household really does know that today’s spending will reduce its future disposable income. And even so, its reaction involves very little offset to the initial spending.

How could anyone who thought about this for even a minute ― let alone someone with an economics training ― get this wrong? And yet as far as I can tell almost everyone on the freshwater side of this divide did get it wrong, and has yet to acknowledge the error.
数分間ですらこのことを考えた人の中で―経済学の訓練をつんだ人は言うまでもなく―今の話を理解できないやつがいると思う? 僕の知る限り、この分水嶺の淡水学派側にいるほぼ全ての人が理解していないし、未だこの間違いに気づいていない。

Our Blogs, Ourselves/October 18, 2011, 10:37 AM

Our Blogs, Ourselves 我々のブログ、我々自身のこと

Ryan Avent and I have been corresponding about the role of the economics blogosphere, for the Christmas issue of The Economist. I don’t know what parts of our conversation will actually show up there, but having assembled my thoughts I might as well put some of them up here.

The concern, or maybe just issue, is whether the rise of econoblogs is undermining the gatekeepers, whether any old Joe can now weigh in on economic debate, whereas in the good old days you had to publish in the journals, which meant getting through the refereeing process.

My take is that the system never worked like that ― or at least not in my professional lifetime. And when you consider how economic discussion actually used to work, you see the blogs in a different and more favorable light.

Second, even for more academic research, the journals ceased being a means of communication a long time ago – more than 20 years ago for sure. New research would be unveiled in seminars, circulated as NBER Working Papers, long before anything showed up in a journal. Whole literatures could flourish, mature, and grow decadent before the first article got properly published – this happened to me with target zones back in the late 1980s, where my original 1988 working paper had spawned a large derivative literature by the time it actually got published. The journals have long served as tombstones, certifications for tenure committees, rather than a forum in which ideas get argued.

What the blogs have done, in a way, is open up that process. Twenty years ago it was possible and even normal to get research into circulation and have everyone talking about it without having gone through the refereeing process – but you had to be part of a certain circle, and basically had to have graduated from a prestigious department, to be part of that game. Now you can break in from anywhere; although there’s still at any given time a sort of magic circle that’s hard to get into, it’s less formal and less defined by where you sit or where you went to school.

Since there’s some kind of conservation principle here, the fact that it’s easier for people with less formal credentials to get heard means that people who have those credentials are less guaranteed of respectful treatment. So yes, we’ve seen some famous names run into firestorms of criticism ― *justified* criticism – even as some “nobodies” become players. That’s a good thing! Famous economists have been saying foolish things forever; now they get called on it.
今、ある種の保存則が存在するようになっているので、正式な資格をあまり持っていない人々が簡単に話を聴いてもらえるようになってきているという事実は、そういった資格を持っている人々が敬意を表した扱いを受ける保証が少なくなっていることを意味する。そう、我々は何人かの名高い人々が批判の嵐にされされるのを眼にするようになっている―*もっともな*批判―それと同時に、「取るに足らないやつ」がプレイヤーになることもある。それはいいことだ! 名高い経済学者がずっと愚かなことを言い続けている。今、彼らは非難を受けるようになった。

And this process has showed what things are really like. If some famous economists seem to be showing themselves intellectually naked, it’s not really a change in their wardrobe, it’s the fact that it’s easier than it used to be for little boys to get a word in.

As you can see, I think this is all positive. The econoblogosphere makes it a lot harder for economists to shout down other people by pulling rank ― although some of them still try ― but that’s a good thing.

Don’t Blame The Krona/October 28, 2011, 8:20 AM

Don’t Blame The Krona クローナを責めるな

One thing that was clear during yesterday’s Iceland conference was that many people here (I’m still in Reykjavik) believe that the floating krona was responsible for the huge capital inflows that set the stage of the crisis. The story they tell is that expectations of a rising krona, combined with relatively high interest rates, drew hot money in via the carry trade. And this story is used to argue that things would have been much better if Iceland had adopted the euro.

I was kind of surprised by this, well, insularity (which I guess is more excusable if you are in fact on an island in the middle of the North Atlantic). For Iceland was by no means unique in its inflow of funds. Here’s the average current account deficit (which is equal to capital inflows) as a percentage of GDP for a bunch of European countries, over the boom years from 2000-2007:


The fact is that there was a tsunami of money flowing from the European core to peripheral economies; Iceland was just part of a broader class that included countries on fixed rates against the euro and some countries already on the euro.

There are valid arguments for euro entry (and arguments against, which I think win on balance). But this isn’t one of them.

Trolls/August 27, 2011, 3:00 PM

Trolls 荒らし

Guys, you are still banned, no matter what new names you’re using. Same lies, same rhetoric, no place for it here. Find something else to do.

The IMF on Fiscal Austerity/October 5, 2010, 12:56 PM

The IMF on Fiscal Austerity 財政的緊縮に関してのIMF

Chapter 3 of the IMF’s new World Economic Outlook is online; it examines the economics of fiscal austerity. It won’t make the austerians happy.
IMFによる最新のWorld Economic Outlookの第3章がオンライン上にある;それは財政緊縮策の経済学を精査したものである。それは緊縮財政派を喜ばせるようなものじゃない。

Two things are worth noting.

First, the report takes on Alesina-type studies, which have been heavily promoted by some commenters here (especially the trolls). The IMF basically finds them all wrong, largely for the reasons I have pointed out in the past: their methodology does a really terrible job at identifying actual changes in fiscal policy. For example, as the IMF confirms, there was a large fiscal contraction in Japan in 1997 ― indeed, the results of that contraction, the only modern large contraction to take place in the face of a liquidity trap, are one of the reasons some of us believe austerity is a terrible idea right now. But Alesina and Ardagna don’t pick up that contraction at all, instead identifying some spurious cases of austerity in other years.

And it turns out that identifying the episodes right reverses the results: contractions are contractionary, after all.

Second, the study shows that fiscal contractions have normally been accompanied by both lower policy interest rates and currency depreciation, both of which help cushion the negative effects. It seems clear that when you’re both in a liquidity trap and facing a global slump, the negative effects of austerity are likely to be much worse.

The IMF, then, is talking sense. I wish I thought it would make a difference.


Why Hungary Matters/March 15, 2012, 9:02 AM

Why Hungary Matters なぜハンガリーが重要なのか

A quick note here: I’m actually kind of shocked at some of the comments on Kim Lane Scheppele’s latest post here. Not the ones accusing her of lying or getting her facts wrong; that’s part for the course, with my own experience being that the more solidly grounded in evidence I am the more hysterical accusations of dishonesty I get.
ひとまず簡潔に:このブログでのKim Lane Scheppleによる最新のポストに寄せられたコメントの中にちょっとショックなものがあった。彼女が嘘をついてるとか、事実を誤認していることを非難するものじゃない;そういったものは常にある。個人的な経験では、僕の立場がしっかりと証拠に裏打ちされるほど、僕が不誠実なことをしているという言いがかりはますますヒステリックになっていく。

No, what shocks me are the complaints that there’s even a post on the subject, asking why bother with Hungary at all.

First of all, if you find the subject of a post boring, here’s a useful productivity hint: don’t read it.

But more than that, Hungary really should matter, both to Europeans ― many of whom read this blog ― and to Americans.

Look, there are currently two great democratic powers in the world: the US and the EU. The EU is not a state, but it acts as a unit in many ways, and is a powerful force making the world a better place. And the European idea has been a key driver of democracy and peace these past two generations.

So if you believe in democracy and peace, you have a stake in that idea’s success ― which is why all of Europe’s current troubles are a tragedy for all of us.

And now we have a nation in the heart of Europe, a member of the EU, a nation that emerged from dictatorship, which is at the very least backsliding on democracy. This is terrible ― and terribly important.

If you can’t see this, there’s something very wrong with your priorities.

後書き:最初の段落、with my own experience...の部分はテストに出てきそうな英文だ。

Japanese Bonds/August 18, 2010, 12:40 PM

Japanese Bonds 日本国債

There was a moment last fall when the Obama administration could have pushed for significantly more aid to the economy, with a reasonable chance of getting something through. But the administration balked ― largely, I believe, because it believed warnings that the invisible bond vigilantes were about to strike. And there was a lot of talk at the time about Japan, which was supposedly losing the confidence of investors. As usual, pure speculation was reported as fact:

For jittery investors, Japan’s rising sea of debt is the stuff of nightmares: the possibility of an eventual sovereign debt crisis, where the country would be unable to pay some holders of its bonds, or a destabilizing collapse in the value of the yen.

The only evidence given was a bump up in 10-year bond rates, to a horrifying, um, 1.4 percent. Here’s what has actually happened to those yields since:


Yes, Japanese long-term debt is now yielding less than 1 percent. Oh, and the CDS spread is more or less comparable to other non-Italy G7 countries.

We’re facing a slow-motion catastrophe because policy makers were afraid of the wrong things.


The Taylor Rule And The “Bond Bubble” (Wonkish)/August 22, 2010, 5:02 PM

The Taylor Rule And The “Bond Bubble” (Wonkish) テイラー・ルールと「国債バブル」(オタク風)

Here’s a thought for all those insisting that there’s a bond bubble: how unreasonable are current long-term interest rates given current macroeconomic forecasts? I mean, at this point almost everyone expects unemployment to stay high for years to come, and there’s every reason to expect low or even negative inflation for a long time too. Shouldn’t that imply that the Fed will keep short-term rates near zero for a long time? And shouldn’t that, in turn, mean that a low long-term rate is justified too?
国債はバブルだと主張している人たちのことを考えてみた:現在のマクロ経済学的予想を下にした時、現在の長期利子率はどれくらい不合理なんだろうか? と言うか、この点に関しては、ほとんど全ての人が失業率は今後数年間高いままになると予想していて、長期間にわたり、インフレは低いままか、負のインフレになるかもしれないという理由も十分にある。それは、FRBが短期利子率を長期間ゼロ近辺に維持しようとしていると言う意味ではないのか? 従って、低い長期利子率もまた正当なものだとは言えないんじゃないのか?

So I decided to do a little exercise: what 10-year interest rate would make sense given the CBO projection of unemployment and inflation over the next decade? (CBO also makes interest rate projections ― but you’ll see in a minute why I want to roll my own.)

What we need, first of all, is a Taylor rule. I decided to use the simplified Mankiw rule, which puts the same coefficient on core CPI inflation and unemployment. That is, it says that the Fed funds rate is a linear function of core CPI inflation minus the unemployment rate. Here’s what a scatterplot for 1988-2008 looks like:


Right now, the Mankiw indicator is -8.5 ― core inflation at about 1, unemployment at 9.5. As you can see, that implies a majorly negative interest rate; what we actually get is zero.

Now, take the CBO projection, which calls for unemployment to fall very slowly, and core inflation to stay low for quite a while too. Here’s what it implies for the Fed funds rate, taking the zero lower bound into account:


That’s right: four years of near-zero short-term interest rates. Does a 10-year rate of 2.6 percent still sound so unreasonable? And bear in mind that I’m not using some doomsayer’s forecast; I’m using the staid folks at the CBO.
そのとおり:4年間のゼロ近辺の短期利子率。まだ、2.6%の10年物利子率がそんなに不合理に見える? 僕が悲観論者の予想を使ってないことにも注意してほしい;CBOにいる堅実な人々の推計を使っている。

And just for the heck of it, I asked what interest rate on a 10-year security would yield the same present value as investing in short-term debt at the predicted rates, and rolling it over each year. (Actually, I cheated slightly, because I was getting tired; I considered a bond in which there are no payments along the way, just repayment of accumulated interest and principal in year 10; but I’m pretty sure it doesn’t make much difference).

And the implied interest rate was … 2.6 percent.

Here’s what I think is going on: aside from the obviously intense desire of some of the bond bubble folks to see a fiscal crisis ― they’ve been planning for it, and they’re not going to take no for an answer ― my sense is that a lot of people just can’t bring themselves to face the reality that we’re likely to be in a zero-interest world for a long time. They just keep assuming that the Fed is going to raise rates soon, even though there is absolutely nothing about the macro situation that would justify such a rate increase.

But once again: if you take standard economic forecasts seriously, they point to near-zero short-term rates for a very long time, which in turn justifies low longer-term rates.

Remember Japan.


Microfoundations, Micro Payoffs (Wonkish)/March 13, 2012, 6:33 PM

Microfoundations, Micro Payoffs (Wonkish) ミクロ的基礎、ミクロの成果(オタク風

There has been an ongoing discussion in the econoblogosphere about the usefulness or lack thereof of “microfoundations” in macroeconomics, which in practice means trying to write down models in which aggregate behavior is justified in terms of the actions of utility-maximizing individuals with rational expectations. I upset even New Keynesians, such as Simon Wren-Lewis, with my observation that the crusade for microfoundations has had only one success, the prediction of stagflation after an extended period of high inflation, and that this success is 35 years old.

Yet I stand by that statement.

Let me be clear about what I mean in saying that. I don’t mean that setting up and working out microfounded models is a waste of time. On the contrary, trying to embed your ideas in a microfounded model can be a very useful exercise ― not because the microfounded model is right, or even better than an ad hoc model, but because it forces you to think harder about your assumptions, and sometimes leads to clearer thinking. In fact, I’ve had that experience several times: I was convinced that the liquidity trap was wrong until I did a miniature NK model and saw that it made sense, my work with Gauti Eggertsson on deleveraging also uses NK modeling to clarify matters.

But bear in mind what we’ve actually seen in academic economics: the development of an ethos in which only microfounded models are considered “real” theory, in which it’s basically impossible to publish a paper unless it’s intertemporal optimization all the way. That’s the kind of dominance a theory is only entitled to if it produces dramatically better predictions than the theory it has crowded out: Light bend! The sea floor spreads! And that just hasn’t happened; there has, I repeat, been only one significant predictive success of this kind from microfoundations, and that happened a very long time ago.
だけど、アカデミックな経済学で我々が実際に目の当たりにしていることを思い起こしてほしい:ミクロ的基礎のあるモデルのみが「本物の」理論だと考えられる気風ができあがっていて、その中では、完全に異時点間最適化を満たしていないと、論文を発表することが基本的にできなくなっている。それは、押しのけられた理論よりも劇的なほど優れた予想をしている場合にのみ付与されるような種類の優位性だ:光は歪曲するとか! 海洋底が拡大しているとか! そして、そんなことは起きたことがない;繰り返すが、ミクロ的基礎から得られたこの種の重要な成功した予想というものがたった一つだけあって、それが起こったのはずいぶん昔のことだ。

Wren-Lewis says he disagrees, but as Robert Waldmann says, his examples offer very thin gruel. The failure of the commodity price shock to filter into wider inflation? Lots of people predicted this without any appeal to microfoundations, just the observation that wage contracts were no longer indexed and oil as a share of GDP was lower than in the 70s.
レン-ルイスは同意できないと言うが、ロバート・ワルドマンが言うように、彼はすかすかの薄い粥のようなものしか例示していない。コモディティ価格のショックがより広範なインフレに波及しなかったことは? たくさんの人がミクロ的基礎ミクロ的基礎に訴えることもなく、ただ賃金契約はもはやインフレ連動ではなく、GDPに占める石油の割合は70年代より低くなっているという観察を元にそう予言していた。

The basic picture is that we’ve seen a more or less complete takeover of macro by an approach that hasn’t remotely earned the right to that kind of dominance.


The Microfoundation Thing (Wonkish)/March 2, 2012, 8:16 AM

The Microfoundation Thing (Wonkish) ミクロ的基礎のこと(オタク風)

Mark Thoma sends us to Simon Wren-Lewis on microfounded macro models (especially the DSGE models that have dominated the literature even on the Keynesian side) versus “ad hoc” models like IS-LM. Wren-Lewis is on my side, sort of; but I’d like to add a few points, in no particular order.

1. Even in microeconomics, we don’t insist on using models built up from maximizing behavior all the time. Exhibit A: supply and demand! I mean, we kind of know how something like the supply and demand curves can be derived from maximizing behavior, but it’s not all that easy, and nobody, nobody, insists that you do this derivation every time.
1. ミクロ経済学ですら、常に最大化行動から組み立てられたモデルを使うよう要求されるわけではない。証拠物件A:つまり需要と供給! 需要曲線や供給曲線のようなものがどのようにして最大化行動から導き出されるかある程度分かってはいるが、それほど容易なものではないし、誰も、誰一人として常にこのような導出を行えと主張する者はいない。

2. Relatedly, as a practical matter intellectual scratch-pads ― approximate version of what we really believe, but stripped down to be tractable ― are what one uses for applied economic analysis all the time.If I want to ask what the effects of some shock will be, it rarely makes sense to demand that the analysis always go all the way back to the intertemporal choices of optimizing agents.
2. 関連して、実際に、知的なスクラッチパッド―我々が信じている事柄を扱いやすくするため簡略化した大まかなバージョン―は応用経済分析において始終使われているものだ。あるショックの結果がどのようなものになるか知ろうとする時に、その分析を常に最適化エージェントによる異時点間選択へ帰着させることを求めても意味のある結果が出ることはほとんどない。

3. In the hard sciences, when dealing with complex systems people have often used higher-level, aggregative concepts that seem to work empirically long before they have a full derivation of effects from the underlying laws of physics. Read Air Apparent, a nifty book on the history of meteorology: meteorologists were using concepts like cold and warm fronts long before they had computational weather models, because those concepts seemed to make sense and to work. Why, then, do some economists think that concepts like the IS curve or the multiplier are illegitimate because they aren’t necessarily grounded in optimization from the ground up?
3. ハードサイエンスでは、複雑系に取り組むにあたって、まずは実証的にうまく機能しそうな上位レベルのざっくり集約する概念を使っておいて、それから長く経ってからようやく物理学の基底的な法則からもろもろの効果が完全に導き出されるようになる場合がよくある。気象学の歴史についてのすばらしい本『Air Apparent』を読んでほしい:気象学では、気象モデルができるまで長く、温暖前線や寒冷前線のような概念が使われてきたが、それはそういったモデルが道理にかなっていて、機能しているように思えたからだ。それなら、なぜ、IS-LMカーブや乗数のような概念が、必ずしも徹底的に最適化に基づかないからといって、認められないと考える経済学者がいるのだろうか?

4. And when making such comparisons between economics and physical science, there’s yet another point: what we call “microfoundations” are not like physical laws. Heck, they’re not even true. Maximizing consumers are just a metaphor, possibly useful in making sense of behavior, but possibly not. The metaphors we use for microfoundations have no claim to be regarded as representing a higher order of truth than the ad hoc aggregate metaphors we use in IS-LM or whatever; in fact, we have much more supportive evidence for Keynesian macro than we do for standard micro.
4. そして、そのような経済学の科学と物理学の科学を比較する時に、さらにもう一つのポイントがある:我々が「ミクロ的基礎」と呼んでいるものは物理法則のようなものではないということだ。一体全体、それらは真実ですらない。最大化する消費者はメタファーにすぎず、行動を理解する際に役に立つかもしれないが、役に立たないかもしれない。ミクロ的基礎として使われるメタファーが、IS-LMその他で使われるアドホックな集計的メタファーよりも高いレベルの真理を表しているとみなされる資格はない;実際には、標準的なマクロより、ケインジアン・マクロを支持する証拠の方がずっと多い。

5. A practical observation: the economists who get most bent out of shape at the notion that maybe we don’t always have to derive everything from optimizing individual agents also tend, with remarkable regularity, to be the economists who make simple, ludicrous conceptual errors when they discuss real-world macroeconomic issues. See many posts here and on Brad DeLong’s blog for examples. I don’t think this is an accident; it really helps your ability to think clearly to have those simplified, ad hoc models always in the back of your mind.
5. 実践的な観察として:常に最適化個人エージェントから全てを導出しようとするべきではないという観念にもっとも腹を立てる経済学者ほど、現実世界のマクロ経済学上の問題を議論するときに、単純でばかげた概念的間違いをする経済学者であるという驚くべき法則性がある。当ブログやブラッド・デロングのブログでその多くの実例を見てほしい。僕はこれが偶然とは思わない。心の奥に常に単純でアド・ホックなモデルを持っていることは、本当に明確に考える能力の助けとなる。

So I’m fine with moving back and forth between models microfounded and not; I don’t see any reason to believe that only the microfounded ones are worthy of consideration.

The Mendacity of Dopes/January 3, 2012, 6:13 PM

The Mendacity of Dopes 間抜けの嘘

So Alex Tabarrok thinks I treat everyone who disagrees with me as mendacious idiots, and Tyler Cowen says that I always demonize my opponents.

I plead innocent. I only treat people as mendacious idiots if they are mendacious idiots.

Seriously: I have some big disagreements with Ken Rogoff, but if you use the little search box up there on the upper right and enter “Rogoff” I think you’ll find that I have always treated him with respect. On the other hand, enter “Heritage” and you’ll find me pretty scornful ― but with very good reason! And I always document what I’m saying.
真面目にいこう:僕はケン・ロゴフといくつか大いに意見が合わないことがある。でも、もしあなたが右上にある小さな検索ボックスを使って、「ロゴフ」と入力すれば、僕が常に彼をリスペクトして扱っていることが分かるだろう。一方、「ヘリテージ」と入力すれば、僕がすごく軽蔑してるのが分かるだろう―でも、相当の理由がある! そして、僕が言ったことは常に記録されている。

Now, what about people like Cochrane? You need to bear two things in mind. First, he and his friends entered this whole debate by declaring that Keynesian economics of any stripe was total nonsense, “fairy tales” that nobody serious believes. Then they proceeded to make howling, basic errors. And I was supposed to respond politely? I’ve never gone ad hominem on them ― but I’ve called nonsense and ignorance when I see them. So?
今、コクランのような人々についてはどうか? 二つのことを心に留める必要がある。最初に、彼と彼の友人は、あらゆるケインズ主義経済学がまったくのナンセンスであり、真面目に信じる者などいない「おとぎ話」だと宣言することによって、この議論に参入してきた。それから、彼らは途方もない基本的な間違いをやらかすようになった。そこで、僕は上品に対応するべきなのか? 彼らに人格攻撃をやったことなんてないんだよ―でも、ナンセンスや無知を見たときは、ナンセンスで無知だと言ってきてる。そうだろ?

Cowen apparently wants me to make the best case for the opposing side in policy debates. Since when has that been the rule? I’m trying to move policy in what I believe to be the right direction ― and I will make the best honest case I can for moving in that direction.
コーエンは、明らかに、僕が政策論議の相手側に対して出来るだけ上品に主張するよう求めてる。そんなルールがいつからできたんだよ? 僕は自らが正しいと思う方向に政策を動かそうとしている―そして、その方向に持っていくことに対してできるだけ誠実であるつもりだ。

Look, economic policy matters. It matters for real people who suffer real consequences when we get it wrong. If I believe that the doctrine of expansionary austerity is all wrong, or that the Ryan plan for Medicare would have disastrous effects, or whatever, then my duty, as I see it, is to make my case as best I honestly can ― not put on a decorous show of civilized discussion that pretends that there aren’t hired guns posing as analysts, and spares the feelings of people who are not in danger of losing their jobs or their health care.

This is not a game.


Schrödinger’s Tax/March 4, 2012, 8:50 AM

Schrödinger’s Tax シュレディンガー税

David Cay Johnston tells us that the usual suspects on the right are arguing that it’s OK to cut corporate tax rates, because they really fall on wages, not on profits.

But wait ― weren’t we being told just a few weeks ago that Mitt Romney doesn’t really pay only 14 percent taxes, because you should include the corporate taxes paid by the companies whose stock he owns?

So, here’s the situation as I understand it: the profits tax is both a tax Romney pays and a tax he doesn’t pay, depending on what question you’re asking (with the answer always being the one that favors the 0.01%). Also, his cat is both alive and dead (as opposed to his dog, which is in car-roof torment); and it’s a floor wax and a dessert topping.

All clear.

New Frontiers in Economic Barbarism/December 23, 2011, 4:15 PM

New Frontiers in Economic Barbarism 経済学的野蛮主義の新境地

I’ve written quite a lot about the way much of the macroeconomics community has descended into a Dark Age, forgetting the things they used to know. I was originally set off by the way some economists were propounding Say’s Law ― the idea, refuted 75 years ago, that all income must be spent and hence that supply creates its own demand ― as a profound insight, somehow missed by three generations of economists.

Well, new forms of acquired ignorance keep surfacing.

Matthew Yglesias finds John Cochrane ridiculing the notion that devaluation makes it easier to bring a country’s relative wages down, whereas the empirical evidence is overwhelming that devaluation does, in fact, do just that.

Now, Yglesias has some fun with Cochrane’s violation of the extended version of Godwin’s Law, which says that the first person to mention either Weimar or Zimbabwe in a discussion of current issues loses. But Matt’s main point is that there are very good reasons why changing relative currency values is a lot easier than changing the whole structure of nominal wages and prices:

Depreciation makes vacations in Spain cheap, it makes Spanish exports cheap, and it makes it attractive for rich foreigners to actually go buy up excess Spanish housing stock to use as vacation homes and such. Everyone’s taken a hit, but they’re back on the path to growth.

The other alternative ― the road we’re actually traveling down ― is one in which all of these adjustments need to happen piecemeal. To make the same adjustment happen, every single contract in the country needs to be piecemeal renegotiated. That’s every town budget, every cell phone plan, every commercial lease, every salary, etc. It’s not “impossible” but it’s a logistical and political nightmare. And it takes time. During that time instead of everyone working harder because they’re poorer and more indebted than they realized and need to raise their incomes what happens is that 10-20 percent of the population does nothing because they can’t find jobs.

Quite. What Matt may not know, however, is that this is a classic argument in international macro, and the person who made it best was …. drumroll … Milton Friedman. Here’s a snip from Friedman’s 1953 essay “The case for flexible exchange rates”:


変動為替相場を擁護する論拠は、奇妙なことに、サマータイムを擁護する論拠とほとんど同じだ。まったく同じ成果を達成するために、全ての個人の習慣を変えるよりも、夏に時計を変えるというのは馬鹿げたことだろうか? 必要なのは、全ての人が一時間早く会社に来たり、一時間早く昼食を取ったりするように決めることだけだ。だが、皆がそれを望んだとしても、それぞれが時計に対するパターンを別々に変えるよりも、全ての指針となる時計を変えるほうが明らかにずっと簡単だ。その状況は為替市場でも全く同じだ。内的な価格構造を共に構成している多数の価格の変化に頼るよりも、一つの価格を変化させること、すなわち、外国為替の価格を変化させたほうがずっとシンプルだ。

Is it really possible that people at the University of Chicago have unlearned not only Keynes but Friedman? Alas, yes.
シカゴ大学の人々がケインズだけでなく、フリードマンも学んでいないなんて本当にありえるのだろうか? 悲しいけど、あるんだよ。