When Piketty Argued for Income Redistribution, He Changed Economics by Mark Thoma
Showing posts with label Thoma. Show all posts
Showing posts with label Thoma. Show all posts
Tuesday, November 18, 2014
Friday, October 17, 2014
Waldman on "Econometrics, open science, and cryptocurrency"
Econometrics, open science, and cryptocurrency by Steve Randy Waldman
Mark Thoma wrote the wisest two paragraphs you will read about econometrics and empirical statistical research in general:
You are testing a theory you came up with, but the data are uncooperative and say you are wrong. But instead of accepting that, you tell yourself "My theory is right, I just haven't found the right econometric specification yet. I need to add variables, remove variables, take a log, add an interaction, square a term, do a different correction for misspecification, try a different sample period, etc., etc., etc." Then, after finally digging out that one specification of the econometric model that confirms your hypothesis, you declare victory, write it up, and send it off (somehow never mentioning the intense specification mining that produced the result).
Too much econometric work proceeds along these lines. Not quite this blatantly, but that is, in effect, what happens in too many cases. I think it is often best to think of econometric results as the best case the researcher could make for a particular theory rather than a true test of the model.What Thoma is describing here cannot be fixed. Naive theories of statistical analysis presume a known, true model of the world whose parameters a researcher need simply to estimate. But there is in fact no "true" model of the world, and a moralistic prohibition of the process Thoma describes would freeze almost all empirical work in its tracks. It is the practice of good researchers, not just of charlatans, to explore their data. If you want to make sense of the world, you have to look at it first, and try out various approaches to understanding what the data means. In practice, that means that long before any empirical research is published, its producers have played with lots and lots of potential models. They've examined bivariate correlations, added variables, omitted variables, considered various interactions and functional forms, tried alternative approaches to dealing with missing data and outliers, etc. It takes iterative work, usually, to find even the form of a model that will reasonably describe the space you are investigating. Only if your work is very close to past literature can you expect to be able to stick with a prespecified statistical model, and then you are simply relying upon other researchers' iterative groping.
...
Tuesday, October 14, 2014
Wednesday, July 02, 2014
Yellen
"...Yellen argued that those weapons would likely be more effective than the blunt tool of monetary policy. To make her point, she rebutted a common criticism that the Fed primed the stage for the Great Recession by waiting too long to raise interest rates, allowing home prices to rise unabated and encouraging investors to pile on risk.
Yellen conceded that policymakers “failed to anticipate” the ensuing global financial crisis but also argued that monetary policy would have been “insufficient” to address the problems that caused it. Higher rates would not have beefed up regulation or increased the transparency of the exotic new financial instruments at the heart of the crisis -- or the firms that helped generate them.
In fact, Yellen said that raising rates would likely have caused greater unemployment, which would likely have led to more people defaulting on their debts."
How does John Taylor respond?
Sunday, June 22, 2014
K21 uber list by date (CHRONOLOGICALIZING A WORK IN PROGRESS)
Should markets clear? by Steve Randy Waldman (5.14.14)
Juncture interview: Thomas Piketty on capital, labour, growth and inequality (Juncture, 5.14.14)
The Top of the World: An ambitious study documents the long-term reign of the 1 percent by Doug Henwood (Bookforum, April/May 2014)
Tax as Policy: Capital in the Twenty-First Century by Heather Boushey (Challenge magazine, May/June 2014)
The Book Every Plutocrat Should Read: Thomas Piketty’s new tome just might save the super-rich from themselves. by Chrystia Freeland (Politico, 4.20.14)
Why We’re in a New Gilded Age by Paul Krugman (New York Review of Books, May 8, 2014 issue)
The Piketty Panic by Krugman (New York Times, 4.24.14)
The Piketty Phenomenon by David Brooks (New York Times, 4.24.14)
Wealth Over Work by Krugman (New York Times, 3.23.14)
Class, Oligarchy, and the Limits of Cynicism by Krugman (4.21.14 @ 8:29 a.m.)
Thomas Piketty Is Right: Everything you need to know about 'Capital in the Twenty-First Century' by Robert M. Solow (New Republic, 4.22.14)
THE HONEST BROKER: MR. PIKETTY AND THE “NEOCLASSICISTS”: A SUGGESTED INTERPRETATION: FOR THE WEEK OF MAY 17, 2014 by DeLong (5.22.14)
The Daily Piketty: Thursday Focus: April 24, 2014 by DeLong (4.24.14)
K21 translator Arthur Goldhammer tweets: "@delong plays Hicks to #Piketty: http://equitablegrowth.org/2014/05/07/slides-mr-piketty-neoclassicists-suggested-interpretation-wednesday-focus-may-7-2014/ … smart take, must read" (linked below as well)
OVER AT THE WCEG: SLIDES FOR: MR. PIKETTY AND THE "NEOCLASSICISTS": A SUGGESTED INTERPRETATION: WEDNESDAY FOCUS: MAY 7, 2014 by DeLong (5.7.14)
Juncture interview: Thomas Piketty on capital, labour, growth and inequality (Juncture, 5.14.14)
The Top of the World: An ambitious study documents the long-term reign of the 1 percent by Doug Henwood (Bookforum, April/May 2014)
Tax as Policy: Capital in the Twenty-First Century by Heather Boushey (Challenge magazine, May/June 2014)
The Book Every Plutocrat Should Read: Thomas Piketty’s new tome just might save the super-rich from themselves. by Chrystia Freeland (Politico, 4.20.14)
Why We’re in a New Gilded Age by Paul Krugman (New York Review of Books, May 8, 2014 issue)
The Piketty Panic by Krugman (New York Times, 4.24.14)
The Piketty Phenomenon by David Brooks (New York Times, 4.24.14)
Wealth Over Work by Krugman (New York Times, 3.23.14)
Class, Oligarchy, and the Limits of Cynicism by Krugman (4.21.14 @ 8:29 a.m.)
Thomas Piketty Is Right: Everything you need to know about 'Capital in the Twenty-First Century' by Robert M. Solow (New Republic, 4.22.14)
THE HONEST BROKER: MR. PIKETTY AND THE “NEOCLASSICISTS”: A SUGGESTED INTERPRETATION: FOR THE WEEK OF MAY 17, 2014 by DeLong (5.22.14)
The Daily Piketty: Thursday Focus: April 24, 2014 by DeLong (4.24.14)
K21 translator Arthur Goldhammer tweets: "@delong plays Hicks to #Piketty: http://equitablegrowth.org/2014/05/07/slides-mr-piketty-neoclassicists-suggested-interpretation-wednesday-focus-may-7-2014/ … smart take, must read" (linked below as well)
OVER AT THE WCEG: SLIDES FOR: MR. PIKETTY AND THE "NEOCLASSICISTS": A SUGGESTED INTERPRETATION: WEDNESDAY FOCUS: MAY 7, 2014 by DeLong (5.7.14)
OVER AT THE WASHINGTON CENTER FOR EQUITABLE GROWTH: NOTES AND FINGER EXERCISES ON THOMAS PIKETTY'S "CAPITAL IN THE TWENTY-FIRST CENTURY": THE HONEST BROKER FOR THE WEEK OF APRIL 19, 2014 by DeLong (4.12.14)
Capital in the 21 Century: Still Mired in the 19th (See correction) by Dean Baker (3.9.14 @ 10:35 p.m.)
Forces of Divergence: Is surging inequality endemic to capitalism? by John Cassidy (The New Yorker, 3.31.14)
PIKETTY’S INEQUALITY STORY IN SIX CHARTS by John Cassidy (The New Yorker, 3.26.14)
THE “PIKETTY BUBBLE” IS MORE THAN HOT AIR by John Cassidy (New Yorker, 5.1.14)
Studying the Rich: Thomas Piketty and his Critics by Mike Konczal (Boston Review, 4.29.14)
Capital in the 21 Century: Still Mired in the 19th (See correction) by Dean Baker (3.9.14 @ 10:35 p.m.)
Forces of Divergence: Is surging inequality endemic to capitalism? by John Cassidy (The New Yorker, 3.31.14)
PIKETTY’S INEQUALITY STORY IN SIX CHARTS by John Cassidy (The New Yorker, 3.26.14)
THE “PIKETTY BUBBLE” IS MORE THAN HOT AIR by John Cassidy (New Yorker, 5.1.14)
The accidental controversialist: deeper reflections on Thomas Piketty’s “Capital” by Thomas Palley (4.24.14 @ 1:57 p.m.)
Even Elizabeth Warren doesn't want Piketty's wealth tax by Matthew Yglesias (Vox, 4.28.14 @ 4:40 p.m.)
Lessons from a rock-star economist by Gillian Tett (Financial Times, 4.25.14 @ 11:40 a.m.)Even Elizabeth Warren doesn't want Piketty's wealth tax by Matthew Yglesias (Vox, 4.28.14 @ 4:40 p.m.)
Class warfare justified? by Robert J. Samuelson (Washington Post, 4.20.14)
dsquared's comment to Robin's Crooked Timber post:
"As far as I can tell, nothing really important in Piketty’s book depends on the capital controversy; it’s actually a book about wealth rather than capital in the technical sense. It’s just a bit irritating for people who happen to know that his use of “capital” and connected marginal concepts is wrong. Like if someone had written a really good book about climate change but kept on referring to “the temperature divided by zero” (4.26.14 @ 11:40 am) and this comment and this comment.
Hey, Big Thinker: Thomas Piketty, the Economist Behind ‘Capital in the Twenty-First Century’ Is the Latest Overnight Intellectual Sensation by Sam Tanenhaus (New York Times, 4.25.14)
Piketty for Dummies by Peter Dorman (4.26.14 @ 3:24 p.m.)
Two followups, in way too many words by Steve Randy Waldman (2.11.11(!) via DeLong)
Poulos Gets Piketty—and Tocqueville—Wrong by Arthur Goldhammer (Daily Beast, 4.26.14)
Today’s Wonky Elite Is in Love With the Wrong French Intellectual by James Poulos (Daily Beast, 4.23.14)
The Power of Piketty's Capital by Eric Alterman (The Nation, 5.12.14)
Thomas Piketty and Millennial Marxists on the Scourge of Inequality by Timothy Shenk (The Nation, 4.14.14)
Thomas Piketty and Millennial Marxists on the Scourge of Inequality by Timothy Shenk (The Nation, 4.14.14)
The New Marxism Part II by James Pethokoukis (National Review Online, 3.31.14)
The Most Important Book Ever Is All Wrong by Clive Crook (BloombergView, 4.20.14)
Piketty's Tax Hikes Won't Help the Middle Class by Megan McArdle (BloombergView, 4.22.14)
Whither The Bottom 90 Percent, Thomas Piketty? by Scott Winship (Forbes, 4.17.14)
Thomas Piketty, Jedediah Purdy And The Leftist Ethic of Resentfulness by Repair Man Jack (Red State, 4.22.14 @ 8:47 pm)
Thomas Piketty Revives Marx for the 21st Century by Daniel Shuchman (Wall Street Journal, 4.21.14 @ 7:18 p.m.)
White House honors French neo-Marxist by Thomas Lifson (American Thinker, 4.20.14)
What’s Wrong with Piketty’s Answer To Inequality by Veronique de Rugy (National Review Online, 4.24.14 @6:57 p.m.)
Capital Punishment: Why a Global Tax on Wealth Won't End Inequality by Tyler Cowen (Foreign Affairs, May/June 2014 issue)
Why I am not persuaded by Thomas Piketty’s argument by Tyler Cowen (4.21.14 @ 2:20 p.m.)
Tyler Cowen is one of Nietzsche’s Marginal Children by Corey Robin (4.22.14)
The Hourly Piketty: Paul Krugman, “Gattopardo Economics”, and Economic Modelling by DeLong (4.24.14 @ 5:23 p.m.)
Piketty and Pareto by Krugman (4.25.14 @ 8:20 a.m.)
Frustrations of the Heterodox by Krugman (4.25.14 @ 10:09 a.m.)
The Daily Piketty: Thursday Focus: April 24, 2014 by DeLong (4.24.14 @ 2:47 p.m.)
Notes from Capital in the 21st Century Panel by Suresh Naidu (The Slack Wire, 4.20.14)
What Marx Really Meant by Suresh Naidu (Jacobin, 4.28.14)
‘Capital in the Twenty-First Century’, by Thomas Piketty by Martin Wolf (Financial Times, 4.15.14 @ 5:38 p.m.)
Thomas Piketty doesn’t hate capitalism: He just wants to fix it by Matthew Yglesias (Vox, 4.24.14)
Interview with Piketty by Matthew Yglesias (Vox, 4.24.14)
The return of "patrimonial capitalism": review of Thomas Piketty's Capital in the 21st century by Branko Milanovic (October 2013)
The return of "patrimonial capitalism": review of Thomas Piketty's Capital in the 21st century by Branko Milanovic (October 2013)
The Capital Creators, Piketty and Growth Theory by Joshua Gans (Digitopoly, 4.23.14)
OVER AT THE WASHINGTON CENTER FOR EQUITABLE GROWTH: PIKETTY DAY HERE AT BERKELEY: THE HONEST BROKER FOR THE WEEK OF APRIL 26, 2014 by DeLong (4.23.14)
A Good Question Re the Piketty Book by Jared Bernstein (4.26.14 @ 10:26 a.m.)
Piketty’s “Capital,” in a Lot Less than 696 Pages by Justin Fox (Harvard Business Review, 4.24.14 @ 8:00 a.m.)
New French Book Will Become Important When It's In English by Kevin Drum (Mother Jones, 12.16.13 @ 1:15 p.m.)
Drum (above) links to Assorted links by Tyler Cowen (12.16.13 @ 12:46 p.m.)
All men are created unequal: Revisiting an old argument about the impact of capitalism (The Economist, 1.4.14)
American Economists Are Not Equipped To Digest What Piketty Has Served Them by Rob Wiley (Business Insider, 4.28.14 @5:54)
DeLong expanded his answers:
Over at Business Insider: Five Questions and Answers About Thomas Piketty’s “Capital in the Twenty-First Century”: Monday Focus; April 28, 2014 by DeLong (4.28.14 @ 11:42 a.m.)
Capital in partial equilibrium by Ryan Decker (3.25.14 @ 7:54 p.m.)
"From the right" by Ryan Decker (4.28.14 @ 6:14 p.m.)
What Piketty’s Conservative Critics Get Wrong by Kathleen Geier (The Baffler, 4.28.14)
Taking on the Heiristocracy: History shows that growth alone won’t stop vast economic inequality by Kathleen Geier (Washington Monthly, March/ April/ May 2014)
Physics and the 'marginalist revolution' by Philip Mirowski (via JW Mason)
JW Mason comment on different ways to formalize the Piketty argument (04.29.14)
The Conservative Case For Thomas Piketty by Pascal-Emmanuel Gobry (Forbes, 4.24.14 @ 9:14)
Minnesota Mafia Challenges Piketty by Barkley Rosser (4.28.14 @ 10:02 p.m.)
What Piketty Leaves Out by Robert Kuttner (4.29.14)
Thomas Piketty's Capital: everything you need to know about the surprise bestseller by Paul Mason (The Guardian, 4.28.14 @14:23)
Len McCluskey on Capital in the Twenty-first Century: 'manna from heaven' (The Guardian, 4.28.14 @14.18)
VC for the people by Steve Randy Waldman (4.16.14)
Piketty on Capital: A Footnote by Henry Farrell (Crooked Timber, 4.5.14)
Trickle-Up Economics by David Cay Johnston (Al Jazeera America, 3.23.14 @ 8:45 a.m.)
Capitalism vs. Democracy by Thomas Edsall (New York Times, 1.28.14)
Notes on Piketty (Wonkish) by Krugman (3.14.14 @ 7:47 a.m.)
Thomas Piketty Has a Grim View of Our Plutocratic Future by Kevin Drum (Mother Jones, 1.29.14 @ 11:51 a.m.)
Q&A: Thomas Piketty on the Wealth Divide by Eduardo Porter (3.11.14 @ 6:21 p.m.)
Adam Smith is not the antidote to Thomas Piketty by Deborah Boucoyannis (Washington Post-The Monkey Cage, 4.22.14 @ 10:14 a.m.)
Why Piketty's Book Is a Bigger Deal in America Than in France by Tyler Cowen and Veronique de Rugy (The Upshot, 4.29.14)
The Most Important Book of the Twenty-First Century by Stephen Marche (Esquire, 4.24.14)
A revue of reviews - everything you could ever want to read about Piketty's Capital by Michael Bird (City A.M., 4.29.14 @ 12:29 p.m.)
Piketty and the case for land capital by Karl Smith (FT Alphaville, 2.3.14 @ 15:00)
Heather Boushey (and Me) on Thomas Piketty: Tuesday Focus by DeLong (3.11.14 8:15 a.m.)
THOMAS PIKETTY UNSUCCESSFUL ATTEMPTED SMACKDOWN WATCH: I FIND MYSELF DISAPPOINTED BY THE USUALLY-RELIABLE JAMES GALBRAITH AND PETHOKOUKIS by DeLong (4.6.14 @ 10:23 p.m.)
Thinking About Piketty’s “Capital” by Steve Roth (Angry Bear, 4.6.14 @ 12:50)
America risks becoming a Downton Abbey economy by Lawrence Summers (2.16.14 @ 5:28 p.m.)
Dude, Where’s Your Piketty Review??!! by Jared Bernstein (4.19.14 @ 10:01 a.m.)
Economist Receives Rock Star Treatment by Jennifer Schuessler (New York Times, 4.18.14)
JW Mason comment (Crooked Timber, 4.30.14 at 12:46 a.m.)
"Right. Or think about Milton Friedman, whose Monetary History of the United States is about as far from the ahistorical, mathematical abstraction of contemporary economics as you can get. Bob Pollin once told me that that book is the model we radical economists should be trying to emulate. I think he was right."
Why everyone is talking about Thomas Piketty's Capital in the Twenty-First Century by Ryan Cooper (The Week, 3.25.14)
Video of Piketty with Joseph Stiglitz, Paul Krugman, and Steven Durlauf participated in a panel moderated by Branko Milanovic.
Here’s an unlikely bestseller: A 700-page book on 21st century economics by Jia Lynn Yang (Wonkblog, 4.22.14 @ 12:35 p.m.)
‘Capital in the Twenty-first Century’ by Thomas Piketty by Steven Pearlstein (Washington Post, 3.28.14)
Thomas Piketty’s Improbable Data by Hunter Lewis (The Ludwig Von Mises Institute, 5.2.14)
Inequality 101: The Picket Fence and the Staircase by John Cassidy (New Yorker, 4.12.12)
Piketty Review Roundup: “Capital in the 21st Century” by Jeff Madrick (Century Foundation, 5.2.14)
The Right Needs a New Message on Income Inequality by Benjamin Domenech (Wall Street Journal, 4.28.14 @ 7:31 p.m.)
Tyler Cowen's anti-Piketty crusade by Noah Smith (5.2.14)
Piketty, Doom Loops and Haymarket by Ross Douthat (New York Times, 4.22.14 @ 3:53 p.m.)
Robert Solow on Piketty by Arnold Kling (4.23.14)
For Larry Summers, Inequality A Subject Worthy of Yawns by Ellen Killoran (International Business Times, 5.2.14 @ 12:28 p.m.)
Book review: Capital in the 21st Century by Thomas Piketty by Robert Skidelsky (Prospect Magazine, 3.27.14)
How to Write a Marxist Critique of Thomas Piketty Without Actually Reading the Book by Zachary Levenson (Jacobin, 5.2.14)
Hangups of the Heterodox (Vaguely Wonkish) by Krugman (5.1.14 @ 3:41 p.m.)
Thomas Piketty and the Ghost of Joan Robinson by Dean Baker (5.1.14 @ 20:16)
Why Economists Are Finally Taking Inequality Seriously by Mark Thoma (Fiscal Times, 5.6.14)
The coming boom in inherited wealth by John Quiggin (Crooked Timber, 4.16.12)
Piketty, Oligarchy, and Conservative Evasion by Jonathan Chait (New York Magazine, 4.25.14 @ 3:51 p.m.)
More Matt Rognlie on Piketty by Tyler Cowen (4.10.14)
A Prologomena to Any Future Reading of Piketty by Steven Pressman (Dollars and Sense, 5.5.14)
A Prologomena to Any Future Reading of Piketty by Steven Pressman (Dollars and Sense, 5.5.14)
THE MAGICAL MATHEMATICS OF MR PIKETTY by George Cooper (4.29.14)
THE MAGICAL MATHEMATICS OF MR PIKETTY – PART II by George Cooper (5.5.14)
The Critique of Capital in the Twenty-First Century: In Search of Macroeconomic Foundations of Inequatlity by Guillaume Allègre and Xavier Timbeau
Where do profits come from? by Matthew Yglesias (Vox, 5.8.14)
Obama’s Top Economist Has Some Problems With Piketty’s Book by Neil Irwin (The Upshot, 5.7.14)
Global Lessons for Inclusive Growth by Jason Furman (5.7.14)
Piketty’s Arguments Still Hold Up, After Taxes by Jared Bernstein (The Upshot, 5.9.14)
Jason Furman, POTUS’s Chief Economist, on Inequality, Piketty, and Growth by Jared Bernstein (5.10.14 @ 10:04 a.m.)
The problem with Thomas Piketty: “Capital” destroys right-wing lies, but there’s one solution it forgets by Thomas Frank (Salon, 5.11.14)
Selling Thomas Piketty (Harvard University Press Blog, 5.12.14)
Piketty's Wealth Tax Isn't a Joke by Clive Crook (BloombergView, 5.11.14)
Microfoundations of Inequality and Sabotage by Sandwichman (5.12.14)
Thomas Piketty and His Critics by Thomas Edsall (New York Times, 5.14.14)
The Inequality Puzzle by Lawrence H. Summers (Democracy, Spring 2014)
Summers reviews Piketty by Jared Bernstein (5.14.14)
What Larry Summers Gets Wrong On Piketty's 'Capital' by Matt Bruenig (Demos, 5.15.14)
Demos on Piketty's Capital
The Politics of Income Inequality by Eduardo Porter (New York Times, 5.13.14)
What Piketty's Neoliberal Critics Get Wrong by Kathleen Geier (Baffler, 5.15.14)
The Two Inequalities by Peter Dorman (Econospeak, 5.16.14 @ 1:15 a.m.)
Piketty's Old News by Eric Schnurer (U.S. News & World Report, 5.16.14)
Piketty crossing the Delaware by John Quiggin (Crooked Timber, 5.18.14)
Thomas Piketty: I Don't Care for Marx by Isaac Chotiner (New Republic, 5.5.14)
Middle Class Earnings Are Stagnant! (Because Retirees Have No Earnings) by Scott Winship (Forbes, 5.20.14)
Ross Douthat Makes Some Good Points (and one bad one) by Jared Bernstein (5.19.14)
Whiskey Tango Foxtrot Bang Query by Brad DeLong (5.23.14)
The FT Gets Piketty's Capital Argument Wrong by Mike Konczal (5.24.14)
My view on Piketty's critique by the FT by Branko Milanovic
That Big Financial Times Story on Errors in Piketty's Data is Overrated by Danny Vick (5.23.14)
Criticisms of Piketty by James Hamilton (5.25.14)
More on Piketty by James Hamilton (5.28.14)
Nit-Piketty by Debraj Ray (5.25.14)
Should We Count Out Piketty Due to Sum Math Errors? by Steve Pressman (Dollars and Sense, 5.25.14)
Political Economy is Political by Henry Farrell (Crooked Timber, 5.27.14)
Policy, not capitalism, is to blame for the income divide by James Galbraith (Financial Times, 5.26.14)
The Piketty data controversy by Jérémie Cohen-Setton (Bruegel, 5.26.14)
Piketty’s data deserve better analysis by Carter Price (5.27.14)
Reviewing Lawrence H. Summers’s Review of Piketty IV: Combatting Inequality on Many Fronts: Tuesday Focus: May 27, 2014 by Brad DeLong (28 May 2014)
PARSING PIKETTY: IS WEALTH INEQUALITY RISING IN THE U.S.? by John Cassidy (New Yorker, 5.27.14)
Thomas Piketty and Joseph Schumpeter (and Gerard Debreu) by David Glasner (5.28.14)
Bloomberg video
Piketty versus Hassett: a primer on after-tax income and inequality by Marshall Steinbaum (29 May 2014)
Piketty versus Hassett: a primer on after-tax income and inequality by Marshall Steinbaum (29 May 2014)
Thomas Doubting Refuted by Krugman (5.30.14)
Morning Must-Read: Daniel Kuehn Reads Howard Reed on Piketty vs. Giles: “It’s All About the Discontinuities” by Brad DeLong (30 May 2014)
The Daily Piketty: May 30, 2014 by Brad DeLong
This Year's Model by Scott Sumner (6.2.14)
Department of “Huh?!”–I Don’t Understand More and More of Piketty’s Critics: Per Krusell and Tony Smith by Brad DeLong (2 June 2014)
Department of “Huh?!”–I Don’t Understand More and More of Piketty’s Critics: Per Krusell and Tony Smith by Brad DeLong (2 June 2014)
Thomas Piketty’s big book: What do you really need to know? by Heather Boushey (5.14.14)
Reviewing Lawrence H. Summers’s Review of Piketty V: Secular Stagnation and the High-Pressure Economy: Tuesday Focus: June 32014 by DeLong (6.3.14)
Plots and Subplots in Piketty's Capital by Rajiv Sethi (6.3.14)
Educating Brad DeLong by James Hamilton (6.4.14)
OVER AT EQUITABLE GROWTH: TRYING, YET AGAIN, TO COMMUNICATE THE ARITHMETIC SCAFFOLDING OF PIKETTY'S "CAPITAL IN THE TWENTY-FIRST CENTURY": THURSDAY FOCUS: JUNE 5, 2014 by DeLong
Educating Brad DeLong by James Hamilton (6.4.14)
When Piketty Came to America by Andrea Levere and Ezra Levin (Politco, 4.28.14)
Economist says U.S. inequality reaching "spectacular" heights by Alain Sherter (CBS News Moneywatch, 6.5.14)
Not Another Piketty Symposium by Mike Beggs (Jacobin)
Piketty fever: Bigger than Marx (Economist, 5.3.14)
Piketty, Marx and the roots of inequality by Benjamin Selwyn (Le Monde Diplomatique, 6.6.14)
Piketty’s Fair-Weather Friends by Seth Ackerman (Jacobin, 5.29.14)
Three Ways of Looking at alpha = r k by JW Mason (6.4.14)
Capital Man: Thomas Piketty is economics’ biggest sensation. He’s also the field’s fiercest critic. By Emily Eakin (Chronicle of Higher Education, 4.17.14)
OVER AT EQUITABLE GROWTH: DEPRECIATION RATES ON WEALTH IN THOMAS PIKETTY'S DATABASE: MONDAY FOCUS: JUNE 9, 2014 by DeLong
OVER AT EQUITABLE GROWTH: DAILY PIKETTY: MATT ROGNLIE HAS A FIRST-RATE CRITIQUE: THURSDAY FOCUS FOR JUNE 12, 2014 by DeLong
Housing in the twenty-first century by Ryan Avent (Economist, 6.17.14)
Inequality in the long run by Thomas Piketty and Emanuel Saez (Science, May 2014)
How Inherited Wealth Helps the Economy by Greg Mankiw (The Upshot, 6.21.14)
CAPITAL IN PIKETTY'S 'CAPITAL' by Unlearning Economics (Jun 18th 2014)
Piketty’s laws with investment replacement and depreciation by Ton van Schaik, (6 July 2014, Vox)
Sumner on Piketty by Frances Coppola (7.7.14)
When The Rate Of Return And The Rate Of Growth Do Not Matter Much For Piketty by Barkley Rosser (Econospeak, 7.7.14)
Piketty vs. Marx (8.11.14, Bookforum)
Yes, Acemoglu and Robinson's review of Piketty is very strange by Daniel Kuehn (8.26.14)
Understanding Piketty, part 3 by Kenneth Thomas (Angry Bear, 8.21.14)
Labels:
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Tuesday, April 08, 2014
The Fed reaction function
The FRB/US Model: A Tool for Macroeconomic Policy Analysis by Flint Brayton, Thomas Laubach, and David Reifschneider
The foxy Fed by Noah Smith
Transparency for Policy Wonks by John Taylor
Who’s to Blame for the Power Shift at the Fed? by Mark Thoma
The foxy Fed by Noah Smith
Who’s to Blame for the Power Shift at the Fed? by Mark Thoma
deflation threat
Now is the time to preempt deflation by John H. Makin (American Enterprise Institute)
Explainer: Why is deflation so harmful? by Mark Thoma
Monday, March 24, 2014
positive and negative indicators
Bank says money multiplier is wrong - should we be shocked? by Simon Wren-Lewis
You Can’t Connect the [Fed’s] Dots Looking Forward by John Taylor
Monday, January 13, 2014
Saturday, November 30, 2013
Mark Thoma’s classic crack — “I’ve learned that new economic thinking means reading old books”
We don't need new ideas, we need "old" ideas.
New Thinking and Old Books Revisited by Krugman
New Thinking and Old Books Revisited by Krugman
I learn from Francesco Saraceno that some people are attacking me for, as they see it, defending an economic orthodoxy that has failed. It’s kind of an odd place to find myself, given how critical I’ve been of the way the economics profession has dealt with the crisis. But it’s not entirely unfair: I am quite skeptical of people whose response to the sorry state of affairs is to declare that what we need is a whole new field.
Why my skepticism? I’m all for new ideas that add to our understanding. But ideas like that aren’t easy to come by! Mark Thoma’s classic crack — “I’ve learned that new economic thinking means reading old books” — has a serious point to it. We’ve had a couple of centuries of economic thought at this point, and quite a few smart people doing the thinking. It’s possible to come up with truly new concepts and approaches, but it takes a lot more than good intentions and casual observation to get there.
So, for example, what do I say when I read something like this from someone who apparently considers himself a bold rebel against orthodoxy?
“Rational thinking is an important aspect of human nature, but we have imagination, we have ambition, we have irrational fear, we are swayed by other people, we get indoctrinated and we get influenced by advertising,” he says. “Even if we are actually rational, leaving it to the market may produce collectively irrational outcomes. So when a bubble develops it is rational for individuals to keep inflating the bubble, thinking that they can pull out at the last minute and make a lot of money. But collectively speaking . . . ”
My answer, to put it in technical terms, is “Well, duh.” Maybe grad students at some departments, who are several generations into the law of diminishing disciples, really don’t know that rational behavior is at best a useful fiction, that markets aren’t perfect, etc, etc. But does this come as news to Robert Shiller? To Ben Bernanke? To Janet Yellen? To Larry Summers? Would it have come as news to Irving Fisher or Walter Bagehot?
The question is what you do with this insight.
There is definitely a faction within economics that considers it taboo to introduce anything into its analysis that isn’t grounded in rational behavior and market equilibrium. But what I do, and what everyone I’ve just named plus many others does, is a more modest, more eclectic form of analysis. You use maximization and equilibrium where it seems reasonably consistent with reality, because of its clarifying power, but you introduce ad hoc deviations where experience seems to demand them — downward rigidity of wages, balance-sheet constraints, bubbles (which are hard to predict, but you can say a lot about their consequences).
You may say that what we need is reconstruction from the ground up — an economics with no vestige of equilibrium analysis. Well, show me some results. As it happens, the hybrid, eclectic approach I’ve just described has done pretty well in this crisis, so you had better show me some really superior results before it gets thrown out the window.
Oh, and if you think you’ve found a fundamental logical flaw in one of our workhorse economic models, the odds are very strong that you’ve just made a mistake.
Does this mean that nothing should change in the way we teach economics? By no means — it’s quite clear that the teaching of macroeconomics has gone seriously astray. As Saraceno says, the simple models that have proved so useful since 2008 are by and large taught only at the undergrad level — they’re treated as too simple, too ad hoc, whatever, to make it into the grad courses even at places that aren’t very ideological.
Furthermore, to temper your modeling with a sense of realism you need to know something about reality — and not just the statistical properties of U.S. time series since 1947. Economic history — global economic history — should be a core part of the curriculum. Nobody should be making pronouncements on macro without knowing a fair bit about the collapse of the gold standard in the 1930s, what actually happened in the stagflation of the 1970s, the Asian financial crisis of the 90s, and, looking forward, the euro crisis.
I’d put my oar in for history of thought, too. Watching highly trained economists reinvent old economic fallacies suggests to me that there would be real payoff to requiring that students have some idea how the current leading doctrines got to where they are.
But must we reconstruct all of economics? No. Most of what we need, at least for now, is in those old books.
Labels:
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Tuesday, November 26, 2013
Minneapolis Fed
New Quartz article: A battle for the soul of macroeconomics by Noah Smith
Musings on Minnesota Macro by Krugman
Minnesota Fed President and Research Department by Thoma
Edit: added No, I Do Not Know What Is Going on at Minneapolis Fed Research... by DeLong
Musings on Minnesota Macro by Krugman
Minnesota Fed President and Research Department by Thoma
Edit: added No, I Do Not Know What Is Going on at Minneapolis Fed Research... by DeLong
Monday, November 11, 2013
Yellen-Greenspan
'Greenspan’s Dilemma Revived' by Thoma
Izabella Kaminska at FT Alphaville:
Greenspan’s dilemma revived, by Izabella Kaminska: Deficit continues to be a dirty word in the US..., whilst the idea that the US is an unsustainable deficit spender increasingly propagates in mainstream circles.
But, as Ethan Harris at Bank of America Merrill Lynch shows on Monday, nothing could be further from the truth. In reality the US deficit is contracting at a relatively speedy rate... And, bar the employment situation..., all of this comes in the context of an ever more quickly reviving economy...
Which leaves the following as the most notable point being made by Harris, in reference to the natural unemployment rate (NAIRU):If inflation persists below 1.5%, we would expect the interest rate forecast to drop further. We also expect the FOMC to cut its unemployment rate guidepost for hiking rates from 6.5% to 5.5% or lower. Ultimately, the Fed may decide to “overshoot” the inflation-neutral NAIRU to force inflation back up to target.This in itself could become ever more crucial in the months to come. In short, it echoes exactly the same sort of dilemma Alan Greenspan faced all the way back in 1996. Do you raise rates despite little obvious inflationary pressure and risk stagnating growth? Or do you give the notion of a “new economy” — the idea that technological change is fuelling a boom in productivity and alleviating inflationary pressures — the benefit of the doubt?
Janet Yellen, it must be said, is uniquely positioned to make that call if she is confirmed. Not only was she there the first time around, she may have had more input on Greenspan’s ultimate decision than many remember. Call it something akin to mea culpa dotcom crash hindsight.
Tuesday, August 27, 2013
The Great Recession
The Great Lesson from the Great Recession by Mark Thoma
But we didn't avoid the biggest mistake, which is to try to pop a bubble by causing a recession.
In fact the conduct of monetary policy on the eve of the Great Depression and the Great Recession are eerily similar. Monetary policy was tightened to such an extent that the yield curve became persistently inverted in January 1928, 19 months before the Great Depression started:
http://research.stlouisfed.org/fred2/graph/?graph_id=108333&category_id=0
Similarly monetary policy was tightened to such an extent that the yield curve became persistently inverted in August 2006, 16 months before the Great Recession started:
http://research.stlouisfed.org/fred2/graph/?graph_id=75581&category_id=0
So far from being very different, it's "deja vu all over again".
The bank panics in the Great Depression started in small rural banks, so it was far easier to totally ignore it and to allow things to fester for a couple of years in those days. It wasn't until big urban banks started to fail, like the Bank of the United States in New York City in 1931, that the powers that be started to notice that there was financial crisis going on in their midst.
This time the banks are far larger, and thus harder to miss, especially since with the help of Bernanke and Paulson, they informed the Congress that they were holding the nation's economy hostage unless a TARP ransom was paid. So I'm not sure this is a sign of improved economic policy as much as it is a sign of more deeply entrenched and powerful interests demanding and getting first and best servings near the beginning of our depression, while the rest of us have to wait interminably for poor seconds.
From 1933-37 the US pulled off the greatest economic recovery in history. Real GDP growth averaged 9.5% and unemployment dropped from 20.9% to 9.2%. And we know based on analysis by E. Cary Brown, Christina Romer, Barry Eichengreen etc. that the contribution of fiscal policy to the recovery was minor. Thus this was primarily a monetary policy led recovery.
Why did monetary policy work so well back then despite the incredible odds against it? Because by taking the country off the gold standard in April 1933, and allowing the price of gold to rise from $20.67 an ounce to $35.00 an ounce by January 1934, FDR effectively set a Price Level Target (PLT). This PLT was high enough to attract a large gold inflow from abroad which the Treasury monetized by issuing gold certificates to the Federal Reserve. The monetary base skyrocketed upward, reaching a maximum year-on-year rate of increase of 23.0% in February 1935, which essentially was the QE of its day. The economic recovery only came to an end when the decision to start sterilizing gold inflows in December 1936 meant prematurely removing the punch bowl, leading to the 1937 Recession.
That was very much unlike our recent experience, where no new target has been set (it's just the same old 1-2% inflation rate target, yawn) and, until QE3, monetary base expansion has come in fits and starts.
It seems to me, rather than evolving over time, monetary policy has devolved back into the "lunged" fish-like gold standard era ancestors from which it evolved, and seems utterly content to wallow in the miasmic swamp from which it came.
Saturday, August 10, 2013
KHAAAAAN!
commenter Denim at Economist's View:
Basically the New Deal was slowly bled in order to replace it with fierce dog eat dog competition among us wage slaves and small businesses via deregulation and turning a blind eye toward predatory pricing by the behemoths. That began with Jimmy Carter's Alfred E Kahn inflation and deregulation guru. All Presidents thereafter adopted this meme. All.
Pace Yglesias.Why do the current crop think they have it right?
http://www.thedailybeast.com/articles/2013/04/26/daniel-kahneman-s-gripe-with-behavioral-economics.html
Wednesday, July 24, 2013
Yellen for Fed chair (Romer would be better!)
Larry Summers is the Front-Runner? WTF? by Thoma
Larry Summers is unqualified to be Fed chair by Scott Sumner
Just shoot me by Scott Sumner
Do Larry Summers and Janet Yellen Disagree About Monetary Policy? by Yglesias
Scott Sumner on blogs:
and via commenter Sadowski:
In the financial crisis behind-the-scenes books Summers comes off better than I would have guessed. He sided with Romer on somethings. He wanted to nationalize Citigroup. He has argued for more fiscal policy stimulus.
Scott Sumner on blogs:
Saturos asked me for areas where my views have been changed by bloggers. I’d rather talk about bloggers who have influenced me. MR is probably my favorite blog, but I’d single out 4 bloggers who often get me to rethink my assumptions; Bryan Caplan, Robin Hanson, Matt Yglesias and Paul Krugman. In all four cases they often make claims with which I disagree. After reading their arguments I still often disagree. But I find that they seriously undermine my confidence in my own position. That is, I find it hard to refute their arguments, even if the conclusion seems annoying. Once and a while I am converted.
In some cases (such as the Cowen and the Tabarrok/Yglesias examples mentioned by Noah Smith), I have vague and free-floating intuitions that suddenly solidify into strong coherent arguments. In others I go from strongly supporting X, to having some doubts. It’s rarely a 180 degree turn.
I’d add that Yglesias influences me more than Krugman for two reasons. First, he focuses more on narrow issues that interest me, such as progressive consumption taxes. (Has Krugman ever mentioned those?) Yglesias does read my blog, and seems to be more a part of the monetary policy conversation as I see it. Krugman almost never even nods to the monetary offset point. He has a wider audience. And second, Yglesias seems to come to positions from a more ideologically neutral perspective than Krugman. That allows me to dismiss some Krugman arguments as “biased,” even if I really should not be doing so.
I wouldn't be that surprised if Summers was relatively good as Fed chair. But then again I wouldn't be that surprised if he was complacent as Bernanke was.I probably shouldn’t have started this list, as I don’t know where to stop. I like lots of the MM bloggers, but tend to already agree on most points. Ditto for Ryan Avent. Other talented bloggers like DeLong I don’t read as often, purely due to lack of time. I’m always running behind these days. Even the two teenage econ bloggers (Soltas and Wang), have influenced me on a few points.
Friday, July 05, 2013
MMT and never say never
Warren Mosler, a Deficit Lover With a Following by Annie Lowrey
Reconciling Modern Monetary Theory with the Wisdom of Mark Thoma by Dean Baker
Still, even for those with some knowledge of economics, the tenets of the modern monetary theory can make your head spin. The government does not tax its citizens to pay for federal spending. It taxes them to ensure they use the dollar and to help to regulate demand. Since the government prints the dollar, it can never run out of money and it need never balance its budget, not even to prevent the crowding out of private investment when the economy is humming along.I have a problem with the hyperbolic claims. It's Keynesiansism with some suspect claims tacked on employing the word "never." Perhaps it is a straw man. But they are right that we shouldn't be worrying about the deficit and that fiscal policy could take the place of monetary policy. The problem is politics and a corrupt elite. But monetary policy has offest fiscal austerity to some extent so I don't understand the MMTers who denigrate the focus on monetary policy. The more mainstream economists are right to focus on it.
Stephanie Kelton has a comment.
On a different point: MMT supports tax increases and/or spending cuts to address demand-pull inflation. No different from, say, Abba Lerner or Marriner Eccles.
The real point of departure for MMTers and textbook Keynesians is, I think, very much bound up in the loanable funds theory of the interest rate (the former rejecting and the latter accepting it). From that follow all sorts of differences re: fiscal sustainability. Scott Fullwiler has written brilliantly on this.
Saturday, June 15, 2013
Yes but the Stimulati were not running things.
ORIGINS OF THE CRISIS by Chris Dillow
IMF Urges Repeal of 'Ill-Designed' Spending Cuts by Mark Thoma
In case you missed this, the IMF estimates that economic growth would be nearly double what it is now without the "excessively rapid and ill-designed" government spending cuts:
After 1997, Asian economies wanted to run big current account surpluses, either as a policy of export-led growth or in order to rebuild reserves depleted by the 97 crisis. By definition, this meant they were net savers, which put incipient downward pressure upon global interest rates. In a parallel universe, these high savings might have financed a boom in real capital spending in the west. But because firms couldn't see good investment opportunities, this didn't happen.Instead, the lower interest rates fuelled a housing boom and the hunt for yield led to strong demand for mortgage derivatives. These bubbles in housing and derivatives then burst, giving us the crisis.
In this way, we've seen what Marx saw in the 19th century - that a lack of profitable opportunities in the real economy pushes people down "the adventurous road of speculation, credit frauds, stock swindles, and crises."
I say all this as a corrective to a common view on the non-Marxist left - that our economic problems are due to greedy bankers and to austerity. But this is nothing like the whole story. This has been a crisis of real, and not just financial, capitalism - which is why it is so intractable
IMF Urges Repeal of 'Ill-Designed' Spending Cuts by Mark Thoma
In case you missed this, the IMF estimates that economic growth would be nearly double what it is now without the "excessively rapid and ill-designed" government spending cuts:
IMF Urges Washington to Repeal ‘Ill-Designed’ Spending Cuts, Reuters: The International Monetary Fund urged the United States on Friday to repeal sweeping government spending cuts and recommended that the Federal Reserve continue a bond-buying program through at least the end of the year.
In its annual check of the health of the U.S. economy, the IMF forecast economic growth would be a sluggish 1.9 percent this year. The IMF estimates growth would be as much as 1.75 percentage points higher if not for a rush to cut the government's budget deficit. ...
"The deficit reduction in 2013 has been excessively rapid and ill-designed," the IMF said. "These cuts should be replaced with a back-loaded mix of entitlement savings and new revenues."
The IMF warned cuts to education, science and infrastructure spending could reduce potential growth. ...
The Fund recommended that the U.S. Federal Reserve keep up its massive asset purchases at least through the end of the year to support the U.S. recovery, but should also prepare for a pull-back in the future. ...The recovery of output and employment didn't have to be so slow. I'm not saying that reversing these policies (or replacing them with more aggressive fiscal policy measures) would have brought miracles, it was going to be a difficult recovery no matter what polices we pursued. But we certainly could have done better than we did, particularly on the fiscal policy front.
Thursday, May 23, 2013
Tuesday, May 14, 2013
Triffin dilemma
I agree with many of the economic ideas put forward by Yglesias, Thoma, Krugman, DeLong and Baker (among others like Waldman and Bernstein and others on my bloglist). I've learned a great deal from them and not just about economics, but about other things that surround the dialogue of econblogging. How to argue and have sense of humor and good attitude, etc. I almost always agree with them on the economics and usually on the politics which is much more subjective.
So it's illuminating to me when they disagree, which is rare, or on when they have differences of emphasis. It's not a competition of course it's just interesting to learn how these smart guys think.
For one thing they all want full employment. That's not the goal of glibertarians or cranks like Tyler Durden at Zero Hedge who's main focus is that it's all a scam to give banks money and America's days are numbered.
Anywaying it's interest how Dean Baker emphasizes the trade deficit and the strong dollar policy of Summers-Rubin, while DeLong and Krugman do not.
DeLong started off working for Summers and Krugman started off dismissing liberals' complaints about trade and NAFTA, as did DeLong. Bush's radicalism and nihilism pushed them both to the left.
Anyway I'm not clear on all of this but I don't think Dean Baker has mentioned monetary policy and the Triffin dilemma in regards to the trade deficit, except that monetary policy effects the exchange rate.
His story here from this morning makes sense to me. If I understand it correctly, the Triffin dilemma is where a reserve currency has to do monetary policy for the world and is posed with a dilemma, an example would can be seen in Europe which has a common currency but not a common banking union nor common fiscal policy.
Either have policy too tight in the center and appropriate for the periphery or it's appropriate for the center and too loose for the periphery. This is what happened in Europe which had appropriate policy for Germany during the 2000s after adoption of the Euro, but was too loose for the periphery. And now it is too tight for the periphery while appropirate for Germany.
I'm not sure how this fits with Rubin's strong dollar policy, but it did help our trading partners boost exports to the detriment of the U.S. export business. Clinton replaced this lost demand with demand from an asset bubble and Bush did the same with a housing bubble.
I think ultimately you can derive demand and full employment from some combination of trade/currency policy, fiscal and monetary policy. Each can be stimulative or not depending on the policies.
So it's illuminating to me when they disagree, which is rare, or on when they have differences of emphasis. It's not a competition of course it's just interesting to learn how these smart guys think.
For one thing they all want full employment. That's not the goal of glibertarians or cranks like Tyler Durden at Zero Hedge who's main focus is that it's all a scam to give banks money and America's days are numbered.
Anywaying it's interest how Dean Baker emphasizes the trade deficit and the strong dollar policy of Summers-Rubin, while DeLong and Krugman do not.
DeLong started off working for Summers and Krugman started off dismissing liberals' complaints about trade and NAFTA, as did DeLong. Bush's radicalism and nihilism pushed them both to the left.
Anyway I'm not clear on all of this but I don't think Dean Baker has mentioned monetary policy and the Triffin dilemma in regards to the trade deficit, except that monetary policy effects the exchange rate.
His story here from this morning makes sense to me. If I understand it correctly, the Triffin dilemma is where a reserve currency has to do monetary policy for the world and is posed with a dilemma, an example would can be seen in Europe which has a common currency but not a common banking union nor common fiscal policy.
Either have policy too tight in the center and appropriate for the periphery or it's appropriate for the center and too loose for the periphery. This is what happened in Europe which had appropriate policy for Germany during the 2000s after adoption of the Euro, but was too loose for the periphery. And now it is too tight for the periphery while appropirate for Germany.
I'm not sure how this fits with Rubin's strong dollar policy, but it did help our trading partners boost exports to the detriment of the U.S. export business. Clinton replaced this lost demand with demand from an asset bubble and Bush did the same with a housing bubble.
I think ultimately you can derive demand and full employment from some combination of trade/currency policy, fiscal and monetary policy. Each can be stimulative or not depending on the policies.
Saturday, May 11, 2013
'In Praise of Econowonkery' by Mark Thoma
In the comment section, I did a link dump about the floor system safe asset paradigm shift genealogy.
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