For the latest on the Sumner-Kimel dispute please see http://diaryofarepublicanhater.blogspot.com/2011/11/i-try-to-get-to-bottom-of-sumner-kimel.html
For the future developments of Sumner-Kimel and where it all may go next I have another post that will come out soon-hopefully today.
Now, however, I see that Sumner has being having something of a back and forth with Krugman. Or really more back than forth, Krugman for his part seldom mentions Sumner's name in print-though he did in a major move recently suggesting he sees validity in Sumner's NGDP target approach for the Fed.
Yesterday, Sumner wrote a few posts that seemed to direct some snark at Krugman. Again, Krugman rarely responds to Sumner and may not again. First Sumner wrote a piece entitled "Paul Krugman invented all of modern macro (and don't you dare suggest otherwise)"
http://www.themoneyillusion.com/
He chided Krugman for making this statement
"I’m going to be a bit grouchy right now, and unfairly so. Via Mark Thoma, I see that David Glasner is worried about what appears to be a need for negative real interest rates, and suggests that this may be close to concerns about the liquidity trap."
"OK, what I should do is welcome Glasner to the club — and I do, I do."
"But let me vent for a minute: the observation that a liquidity trap arises when the economy “needs” a negative real interest rate is at the heart of modern liquidity trap analysis; it’s where I came in back in 1998, when I started the whole thing (pdf):"
Sumner takes him to task for kind of having a big head and argues that he may be overstating it a little, that he "started the whole thing" that Sumner himself had prefigured him by something he wrote back in 93.
"David’s been aware of this problem for a long time. Indeed he likes to cite pre-WWII economists who discussed this issue."
"BTW, Krugman’s 1998 paper that “started the whole thing” forget to cite my 1993 paper, which showed that temporary currency injections are not inflationary."
Sumner quotes more Krugman
"I suspect that a lot of time and effort has been wasted because smart commentators like Glasner “knew” that Keynesians were crude thinkers using mechanical approaches — I don’t know if that’s actually true for Glasner, but I’ve seen it a lot in others — leading them to spend several years laboriously arriving at the same conclusions people like me, Woodford, Eggertsson, Svensson etc. had already laid out in detail a decade ago."
Sumner retorts,
"Yup, nothing to learn from us market monetarists. That must be why Eggertsson’s famous 2008 AER paper on the role of expectations in the Great Depression cited three of my papers, including two written before Krugman’s 1998 paper that invented all of modern macro"
He then quotes Greg Mankiw about Krugman's touchy vanity, " A reader points out to me that Paul Krugman seems miffed that I failed to cite his contribution to the large literature on expectations management by the central bank. Sorry, Paul. I actually do like Paul’s paper on the topic quite a lot, and I cite it in my intermediate macro text when I discuss the liquidity trap (see footnote 5 on page 325 of the 6th edition)."
I mean to me it's all kind of an ado about nothing. I mean potato- potayto. Probably everyone who achieves anything needs something of an ego. If Krugman has one too, so what? In part I think that Sumner himself is feeling kind of unrecongnized-by Krugman himself.
Consider an article he published later in the day, entitled "EC101: The fallacy of composition."
Sumner begins, "
I get tired of correcting Keynesians who don’t understand how to estimate the multiplier. But as long as they keep saying things like this, I’ll have to keep doing so:
In general, cross-sectional comparisons are proving to be a very good way to test some propositions in macroeconomics. I’d cite, for example, the Nakamura-Steinsson paper (pdf) that uses fluctuation defense spending — which has very unequal impacts across states — to estimate the multiplier on fiscal policy (it’s about 1.5).
Sumner answers, "Actually cross-section studies are a lousy way to test for the multiplier, as they suffer from the fallacy of composition. I’ve pointed this out many times, but Paul Krugman obviously doesn’t read my blog, otherwise he wouldn’t keep making these elementary errors. Of course he’s told us that he doesn’t like to read conservative blogs because they contain nothing of value."
Hmmm. Postmodernist studies show sometimes the important part of a paragraph is not the presumed theme or main point. Maybe the real complaint is the perpherial little aside about how Krugman obviously doesn't read my blog. I guess here is one the therapist comes in and says, "Ok Scott, good! Now how does that make you feel?"
Honestly I'm not sure why Sumner's claim that cross-sectional studies always contain the "fallacy of composition" is true.What got me to thinking though was something John Thacker wrote in the comments section. Here it is with my rebuttal.
John Thacker To your comment
"If you tax A, B, and C to give to A, determining that A is relatively better off than B and C afterwards doesn’t prove that A, B, and C as a whole are better off."
John, I'd say the way you frame it we don't know enough to say whether A,B, and C as a whole are or are not better off. I live in NY and there were two women at the train station today discussing how it's really tough moving around the city by Wall St right now.
A friend of there's said her boss told her not to even bother coming in today with all the disorder.
Even if B and C see their taxes raised to give to A there are many scenarios where it could be in their best interest and the interest of the whole. Like if B and C are both part of the top 1 percent of earners and A is part of OWS.
A society with less disorder may well be worth a small tax increase.
By the way this is just one scenario in which it would benefit the whole. It is certainly not the only one.
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