Rowe, Harless Williamson and QE

Does house building cause house price inflation? Our Sokal hoax by Nick Rowe

Harless is in comment section making same points below:

Andy Harless tweets on Stephen Williamson (last tweet below is most recent):

"Increasingly I think the key to Williamson's QE->deflation result is neither AS nor abuse of RatEx but a heroic fiscal policy assumption...."

Williamson's heroic fiscal policy assumption results from the fact that he is trying to model a sticky price world w a flexible price model

I call the QE->deflation controversy a draw. Krugman, Rowe, @delong, et al are wrong about what particular silly thing Williamson has done.

DeLong responds to above with ".@AndyHarless you need to add coherence mix to understand Williamson, and adding it in different ways produces different silly things"

Harless: If you think fiscal policy determines the price level, it's reasonable to expect *eventual* deflation in response to a ZLB monetary stimulus

Realistically, though, if QE causes deflation, it does so by causing today's prices to rise ("inflation") relative to future prices.

Now that (I think) I understand what's going on, I no longer find Williamson's result counterintuitive, just his assumptions too unrealistic

If the world really worked according to Williamson's assumptions, then deflation is exactly what I'd expect from QE."

Stephen Williamson's blog

Noah Smith's summary of bloggers

David Glasner's take