In a recent blog post, Paul Krugman writes:
As far as I know, among basic textbooks only Krugman/Wells even talks about the liquidity trap.
This is probably a true statement. It is not that other books don’t cover the topic, however. It is just that Paul Krugman doesn’t know it.
- Greg Mankiw. Excerpt from his own textbook follows.
Many of the world’s professional economists are spending the next few days in San Diego for the annual ASSA meeting, where economists network, get some publicity for themselves, and learn what other economists are up to. I am skipping this year’s meeting to spend more time with family. You might think that is lazy of me. But heck, my marginal tax rate just went up. A bit of extra laziness is optimal.
mathematics is characterized as “the careful study of a set of tautologies” — which is true in (and only in) exactly the same sense that physics, psychology, and economics are careful studies of sets of tautologies. Anything is a tautology if you start with the right set of axioms. But mathematicians are generally more interested in figuring out which tautologies are true — just like physicists, psychologists, and economists this side of Berkeley.
[Some politician posturing] reminds me of a homemade sign that economist Ben Powell had on his door when he was on the faculty at San Jose State University and a number of faculty were threatening to go on strike. They had professionally made signs that said, “I don’t want to strike, but I will.” Ben’s sign: “I don’t want to strike, so I won’t.”
From David Henderson.
Some deals are only offered because companies know the majority of customers won’t take them up. Starbucks, for example, has long offered a “short” cappuccino without listing it on its menu. It’s a less expensive drink, enjoyed by that rare intersection of people who know about coffee yet visit Starbucks.
Economics is important…sounds like someone should study it…
Tyler Cowen wrote a post on income mobility, saying that mobility was meaningless (for total welfare) unless incomes also rose. Krugman says Cowen wants people to stay in whatever class they’re from. Cowen gets exasperated:
Let’s put it this way. Paul Krugman is a great economist. But of all the people in my RSS feed, in terms of his quality and skill as a reader, he is not in the top 90 percent.
A discussion on – snore – inflation gets interesting as academics start being snide at each other.
Krugman wrote off-the-cuff, in a post titled “What Chicago Doesn’t Know”,
Brad recalls what John Cochrane was saying 40 months ago: inflation! fiscal crisis because nobody will buy our bonds!
You might think that the failure of high inflation to materialize, plus record low interest rates, would at least provoke some reflection, some consideration of the possibility that one had the wrong model. But no.
Essentially, he says ‘where’s your model now, punk?’. Cochrane responds: there are only three ways out of debt – running a surplus, default and inflation. The first two are unlikely, leaving only the third as a possibility. Then he turns mean,
I happen to dislike inflation. Krugman and DeLong are all for it. They must have been smoking better weed in the 1970s. But I notice that lots of people seem to agree with them. So, it seems to me that inflate it away, and print money to pay the bills, remains a decent possibility.
… What Chicago does “know” is scholarship. DeLong cites a transcription from discussion at a long ago conference. Krugman doesn’t even bother to have an RA dig up a direct link so he can pretend he’s reading anything but DeLong.
The economics is dull but I’m enjoying the theater.