by Chidem Kurdas At the current economic juncture two camps offer diametrically opposed macro policy prescriptions. Economists on the Keynesian side such as Joseph Stiglitz and Paul Krugman advocate further monetary easing by the Federal Reserve and massive new federal deficit spending. The opposing camp includes Austrians and monetarists. Among its distinguished members is Allan Meltzer, who in … Continue reading Uncertainty and the Keynesians
by Chidem Kurdas A nice thing about Paul Krugman, he does not mince his words. Thus his new book, End This Depression Now!, repeats as boldly as possible the central point he’s repeatedly made in his New York Times columns and blogs for years. Namely, governments have to spend a lot more. They have to … Continue reading Krugman Redistribution or Ponzi Scheme
by Chidem Kurdas Regulation advocates seem to regard the JP Morgan loss as the best thing since sliced bread. Thus Paul Krugman gleefully bawls out Mitt Romney for refusing to see it as a sign for greater government intervention. Krugman repeats the by now well-known argument on banks, as a riff on “It’s a Wonderful … Continue reading Krugman on Banks and Romney
by Chidem Kurdas It has become a standard left-liberal jibe that those complaining of government largesse receive a piece thereof themselves. Such beneficiaries go against their own interest if they favor smaller government—so it is alleged. Thus Paul Krugman in the NYT largely agrees with Thomas Frank, who attributed apparent red state ingratitude to the exploitation of … Continue reading Elitist Hokum from Krugman
by Mario Rizzo Although by the standards of contemporary economics, I am a historian of economic thought, I am not a historian of economic thought, properly considered. Thus my major interest in F.A. Hayek’s business cycle theory is not from the point of view of a historian. My interest is only incidentally in how Hayek’s contributions … Continue reading Yes, Paul: It is Hayek versus Keynes
by Chidem Kurdas The Obama administration’s remake of the US healthcare system stands on three legs. It makes the purchase of insurance compulsory. It doles out new entitlements via expanded Medicaid, subsidies and certain benefit mandates. And it promises to control the growth of medical costs. The title of the 2010 law, the Affordable Care … Continue reading Politics of Healthcare Rationing
by Chidem Kurdas Once upon a time, people tried to explain the post-war “Japanese Miracle” of rapid growth. Then in the current century, the puzzle shifted to Japanese stagnation since 1990. The lesson from these two distinct phases of Japanese history is germane for current American policy. Chalmers Johnson’s influential book, MITI and the Japanese … Continue reading Japan Reveals Regulatory Trap
by Chidem Kurdas That’s a daft question, but it is suggested by what became conventional political wisdom in the aftermath of the financial crisis. Finance was vilified and financial activity widely described as socially useless, a term coined by British regulator Adair Turner. Yet the developed economy that has boomed in post-crisis years is Switzerland, … Continue reading Are Swiss Banks Socially Useless?
by Chidem Kurdas In two substantial New York Review of Books articles, Paul Krugman and Robin Wells offer their views on various explanations of the property bubble and ways to get out of the slump. On the latter front, they advocate aggressive deficit spending by the federal government and quantitative easing by the Federal Reserve— … Continue reading Taylor, Krugman and Quantitative Easing
by Chidem Kurdas Apparently left-liberal pundits are convinced that people oppose government expansion either out of stupidity or cupidity—not, say, out of a sincere belief in freedom. The oft-repeated story is that ignorant and misguided masses are being led by greedy business interests. Paul Krugman’s recent column is one of many examples in the genre … Continue reading Two Visions Fuel Political Attacks
by Richard Ebeling* On July 9th, Nobel economist and New York Times columnist, Paul Krugman, gave his read on the recently unearthed letters between J. M. Keynes and F. A. Hayek in the London Times in October 1932, which have been posted and discussed on ThinkMarkets. (and in the Wall Street Journal). Krugman insists that Hayek … Continue reading Still Hearing Defunct Economists in the Air: Krugman’s Misplaced Attack on Hayek
by Mario Rizzo Some time ago I wrote a post with this name. Now Paul Krugman is at it again with his ex-cathedra pronouncements. He says that because of the recent planned move by European countries in the direction of austerity and the talk in the US about austerity, we are on the verge on … Continue reading Paul Krugman, Ipse Dixit 2
by Mario Rizzo Paul Krugman continues to invoke Keynes’s famous statement. I wish Krugman and others would give some serious thought about what it is supposed to mean and the errors it involves. In the first place, Keynes was complaining about the “classical” economics, that is, the ideas of the economists before him who believed that … Continue reading “In the Long Run We Are All Dead” What Does It Mean?
by Mario Rizzo More than thirty-five years have passed since Friedrich Hayek said in his Nobel speech, “The Pretence of Knowledge" (1974): “The theory which has been guiding monetary and financial policy during the last thirty years… consists in the assertion that there exists a simple positive correlation between total employment and the size of … Continue reading Quick, More Stimulus!
By Chidem Kurdas Headline topics like derivatives are part of the larger issue of how markets function. About this big question there’s been profound confusion in the past two years. Peter Boettke's article in the Winter 2010 issue of the Independent Review clarifies the muddle. A particular mathematical interpretation of what an efficient market is … Continue reading Understanding Efficient Markets
by Andreas Hoffmann and Gunther Schnabl* In a recent New York Times column Paul Krugman is “Taking on China” again. He argues that the Chinese dollar peg contributes to global imbalances, depressing US and world growth perspectives. Bashing China’s fixed exchange rate is also fashionable in academics. Bernanke blames China’s dollar peg for contributing to a … Continue reading The US is “Taking on China”
by Chidem Kurdas A big rate hike by an insurance company in California’s market for individually purchased health insurance provided a rationale for the new Obama care proposal. As Paul Krugman explains, the key issue is adverse selection: people who retain coverage tend to be those with high medical expenses. Those with low expenses tend … Continue reading Out of Death Spiral, Into the Fire
by Mario Rizzo In recent months there has been a discussion both in the traditional media and in the blogosphere about why orthodox macroeconomics failed to predict or explain the financial crisis and the subsequent Great Recession. Some of that discussion focused around Paul Krugman’s criticism that economics mistook (mathematical) beauty for truth. Subsequently, there … Continue reading How Mathematical Economists Overreach
by Mario Rizzo As we have been saying here, the claims that the fiscal stimulus has saved or created X number of jobs is not a simple empirical question. It must be an inference from a model that tells us what would have happened in the absence of that stimulus. Collecting reports from various firms … Continue reading Mankiw And Meltzer Are Right! More Or Less
by Mario Rizzo There has been some important discussion emanating from Paul Krugman’s unoriginal question implicitly about the Austrian Business Cycle Theory (as well as other sectoral theories of employment shifts both during and outside of business cycles). (See Econbrowser, Marginal Revolution, Econlog, Angry Bear, for examples.) His question, as Tyler Cowen states it: “…[W]hy, … Continue reading Understanding The “Sectoral Problem” In Business Cycles: A Note
by Mario Rizzo I have now read both Paul Krugman’s New York Times essay on the state of macroeconomics and John Cochrane’s reply. They are each, in very different ways, quite disappointing. The level of argument is poor, the prejudices are simplistic, and the tones are annoying. Beginning with tones: Krugman is too dismissive of … Continue reading The Great Moderation In Macroeconomics
by Mario Rizzo In Sunday’s New York Times, Paul Krugman says: “From the beginning, I argued that the American Recovery and Reinvestment Act, a k a the Obama stimulus plan, was too small. Nonetheless, reasonable estimates suggest that around a million more Americans are working now than would have been employed without that plan — … Continue reading What Is The Mechanism? Or Is It Just A Miracle?
by Mario Rizzo Recently Niall Ferguson wrote an interesting op-ed piece for the Financial Times about a debate of sorts he has been having with Paul Krugman on the spike in long-term interest rates and its relation to the large debt the U.S. Treasury must finance. In the course of that article Ferguson described Krugman’s … Continue reading DE HAUT EN BAS: Niall Ferguson, Paul Krugman and John Maynard Keynes
by Mario Rizzo Under other circumstances, Paul Krugman would have made an excellent pope if we judge by his economics pronouncements. Let me take two examples from a recent New York Times column. This is my interpretation of what he is saying. 1. On the one hand, as Keynesians have always taught: There is no … Continue reading Paul Krugman: Ipse Dixit
by Mario Rizzo Paul Krugman has written a column stating that wage cuts at this time are a bad idea. Following Keynes he claims that nominal cuts will do no good – they will not stimulate employment (or prevent unemployment) – because aggregate demand will fall. Real wages will thus remain unchanged. In part, Keynes … Continue reading Relative Prices Matter At All Times