Stephen Williamson has tried to claim there's nothing there-no difference, it's a distinction wholly contrived by 'journalists'-by which he means Paul Krugman and Brad Delong.
http://diaryofarepublicanhater.blogspot.com/2013/12/stephen-wiliamson-we-are-all-saltwater.html
http://diaryofarepublicanhater.blogspot.com/2013/12/freshwater-economists-saltwater.html
However, I think that the style gives it away. By their style ye shall know them.
"Why do I have to read this? The paper contributes nothing - not even an opinion or belief - on any of the substantive questions of macroeconomics...One can speculate about the purposes for which this paper was written - a box in the Economist? - but obviously it is not an attempt to engage other macroeconomic researchers in debate over research strategies."
http://noahpinionblog.blogspot.com/2014/01/robert-barros-famous-polemic-against.html
http://www.scribd.com/doc/77085319/Lucas
This was the reaction of Bob Lucas regarding Greg Mankiw's 1994 'New Keynesian Manifesto.'
http://www.andrew.cmu.edu/course/88-301/new_keynesian/manifesto.pdf
Compare this to Tony Yates.
"There’s something irksome about defending micro-founded macro from the attack that it is ‘without merit’. A voice inside me says: if they aren’t doing macro, by which I mean, generating new empirical or theoretical work themselves, who are they to go about proclaiming whether something has merit or not, or how macro should be done? [I'm not singling out Adam here. Lots are at it.] And why should anyone care what they say?"
"In my time in central banks one definitely encountered a breed of policymaker that behaved as if they were above actually doing macro, but yet seemed to know all the answers for sure, and know how macro should be done [of course by someone else, not them]. It seemed to many of us who observed them as though they had fallen victim to the illusion that since they had done so well in life, their gut feelings about stuff must really be valuable, and that perhaps that’s where macroeconomic truth lay, in what they as great individuals felt and said. Many can tell stories of attempting to advise them, and being met with the condescending twinkle in the eye that translates as ‘Ah, so that’s what’s true in your silly little toy world, is it, tee hee, how quaint that you think such things worth repeating, well, I can only hope that one day you glimmer the real source of truth, namely, the instinctive knowledge of the chosen’. If the meme that microfounded macro has ‘no merit’ were to gain any more traction, I assert that great danger would lie ahead!: theorising that is incomplete and ‘accidental’ [in the sense meant by Krugman]; policy promises that are unverifiable; discretion untamable; and a search for new economic knowledge that is empty and futile (since the truth is already felt by the great policymakers, and the only way to divine it is to draw the few charts they ask us to plot, and sit around and wait until the charts work their inner magic and they are kind enough to write it down in speeches for us)."
http://diaryofarepublicanhater.blogspot.com/2013/12/tony-yates-inside-mind-of-your-average.html
It's funny that SW argues that the 'journalists' see this as Star Wars.
"In terms of what you have written in this post, you just haven't got it. Here, you've mischaracterized my motives, as if I'm driven by anger and emotion. I've thought about these issues carefully, and gone to some effort to try to correctly characterize what is going on. You seem to be embedded in some fantasy wrestling match world of smackdowns, good guys, bad guys, winners, and losers."
"I'll give your original post with Miles credit for being well-written. But, forget the nuance. It's primarily a work of fiction. What's going on in Minneapolis is pure Shakespearean tragedy. There are no winners in that episode. This ain't Star Wars."
http://diaryofarepublicanhater.blogspot.com/2013/12/freshwater-economists-saltwater.html
Well speaking of 'good guys and bad guys' listen to Robert Barro circa 1994.
"There has been some blog discussion lately (see Tyler Cowen and Scott Sumner) about Robert Barro, the famous Harvard economist who invented the controversial idea known as "Ricardian Equivalence", and who occasionally writes op-eds in the Wall Street Journal opposing fiscal stimulus. Cowen, Sumner, etc. are discussing whether Barro supports the idea of "aggregate demand" as a driver of business cycles. The paper most people know about is this one, but I thought it would be a good time to bring up Barro's epic polemic against New Keynesian model."
Speaking of the Freshwaters I'm now reading a very interesting book by Thomas Sargent on Rational Expectations he wrote back in 1986.
http://www.amazon.com/Rational-Expectations-Inflation-Thomas-Sargent-ebook/dp/B00CL7MIKA/ref=sr_1_sc_1?s=books&ie=UTF8&qid=1390661649&sr=1-1-spell&keywords=thomas+sargent+inflaton+and+rational+expectatios
An example on pgs. 1 and 2 though on why models should keep in mind that behaviour change when the rules of the game change. The example he gives is interesting. He argues that if a football team-say the Seattle Seahawks punts 80% of the time when the ball is in their own territory should you expect them to do that in the future too-should you bet on this?
He points out that while you could make money betting on this without knowing anything about football at all, you could get caught unaware if suddenly the NFL changes the rules to 6 first downs per possession. It's an interesting example yet I think this example doesn't wholly work as-if you do know anything about football you know it's unlikely that this would happen. Maybe your assumption that the sun will rise tomorrow assumes a certain kind of 'rules of the game' but it's still a pretty secure assumption.
Also there's a very interesting discussion of monetary effects-do deficits have any impact on inflation or not? Full Ricardian Equivalence would say no but Friedman's argument back in 1949 would suggests the opposite extreme-any rise in the deficit is a total equivalent rise in inflation. Sargent suggests the answer must be somewhat in the middle. When the deficit rises the market assumes the govt will have to rise inflation at least somewhat to cut the deficit.
At the time-1986-we had the huge Reagan deficit. Sargent thought that this was a real inflation rate-so did many liberals, it's true-Mondale made it a centerpiece of his criticism of Reagan in 1984. However, we have to say in retrospect, that the Reagan and Bush Administrations-I'm thinking primarily about W. but it's also true of the H.W. Bush-we get a natural experiment of a sort of this and RE seems much closer than Friedman to the truth at least empirically as there was no inflation spike due to any of the deficits.
http://diaryofarepublicanhater.blogspot.com/2013/12/stephen-wiliamson-we-are-all-saltwater.html
http://diaryofarepublicanhater.blogspot.com/2013/12/freshwater-economists-saltwater.html
However, I think that the style gives it away. By their style ye shall know them.
"Why do I have to read this? The paper contributes nothing - not even an opinion or belief - on any of the substantive questions of macroeconomics...One can speculate about the purposes for which this paper was written - a box in the Economist? - but obviously it is not an attempt to engage other macroeconomic researchers in debate over research strategies."
http://noahpinionblog.blogspot.com/2014/01/robert-barros-famous-polemic-against.html
http://www.scribd.com/doc/77085319/Lucas
This was the reaction of Bob Lucas regarding Greg Mankiw's 1994 'New Keynesian Manifesto.'
http://www.andrew.cmu.edu/course/88-301/new_keynesian/manifesto.pdf
Compare this to Tony Yates.
"There’s something irksome about defending micro-founded macro from the attack that it is ‘without merit’. A voice inside me says: if they aren’t doing macro, by which I mean, generating new empirical or theoretical work themselves, who are they to go about proclaiming whether something has merit or not, or how macro should be done? [I'm not singling out Adam here. Lots are at it.] And why should anyone care what they say?"
"In my time in central banks one definitely encountered a breed of policymaker that behaved as if they were above actually doing macro, but yet seemed to know all the answers for sure, and know how macro should be done [of course by someone else, not them]. It seemed to many of us who observed them as though they had fallen victim to the illusion that since they had done so well in life, their gut feelings about stuff must really be valuable, and that perhaps that’s where macroeconomic truth lay, in what they as great individuals felt and said. Many can tell stories of attempting to advise them, and being met with the condescending twinkle in the eye that translates as ‘Ah, so that’s what’s true in your silly little toy world, is it, tee hee, how quaint that you think such things worth repeating, well, I can only hope that one day you glimmer the real source of truth, namely, the instinctive knowledge of the chosen’. If the meme that microfounded macro has ‘no merit’ were to gain any more traction, I assert that great danger would lie ahead!: theorising that is incomplete and ‘accidental’ [in the sense meant by Krugman]; policy promises that are unverifiable; discretion untamable; and a search for new economic knowledge that is empty and futile (since the truth is already felt by the great policymakers, and the only way to divine it is to draw the few charts they ask us to plot, and sit around and wait until the charts work their inner magic and they are kind enough to write it down in speeches for us)."
http://diaryofarepublicanhater.blogspot.com/2013/12/tony-yates-inside-mind-of-your-average.html
It's funny that SW argues that the 'journalists' see this as Star Wars.
"In terms of what you have written in this post, you just haven't got it. Here, you've mischaracterized my motives, as if I'm driven by anger and emotion. I've thought about these issues carefully, and gone to some effort to try to correctly characterize what is going on. You seem to be embedded in some fantasy wrestling match world of smackdowns, good guys, bad guys, winners, and losers."
"I'll give your original post with Miles credit for being well-written. But, forget the nuance. It's primarily a work of fiction. What's going on in Minneapolis is pure Shakespearean tragedy. There are no winners in that episode. This ain't Star Wars."
http://diaryofarepublicanhater.blogspot.com/2013/12/freshwater-economists-saltwater.html
Well speaking of 'good guys and bad guys' listen to Robert Barro circa 1994.
"There has been some blog discussion lately (see Tyler Cowen and Scott Sumner) about Robert Barro, the famous Harvard economist who invented the controversial idea known as "Ricardian Equivalence", and who occasionally writes op-eds in the Wall Street Journal opposing fiscal stimulus. Cowen, Sumner, etc. are discussing whether Barro supports the idea of "aggregate demand" as a driver of business cycles. The paper most people know about is this one, but I thought it would be a good time to bring up Barro's epic polemic against New Keynesian model."
Speaking of the Freshwaters I'm now reading a very interesting book by Thomas Sargent on Rational Expectations he wrote back in 1986.
http://www.amazon.com/Rational-Expectations-Inflation-Thomas-Sargent-ebook/dp/B00CL7MIKA/ref=sr_1_sc_1?s=books&ie=UTF8&qid=1390661649&sr=1-1-spell&keywords=thomas+sargent+inflaton+and+rational+expectatios
An example on pgs. 1 and 2 though on why models should keep in mind that behaviour change when the rules of the game change. The example he gives is interesting. He argues that if a football team-say the Seattle Seahawks punts 80% of the time when the ball is in their own territory should you expect them to do that in the future too-should you bet on this?
He points out that while you could make money betting on this without knowing anything about football at all, you could get caught unaware if suddenly the NFL changes the rules to 6 first downs per possession. It's an interesting example yet I think this example doesn't wholly work as-if you do know anything about football you know it's unlikely that this would happen. Maybe your assumption that the sun will rise tomorrow assumes a certain kind of 'rules of the game' but it's still a pretty secure assumption.
Also there's a very interesting discussion of monetary effects-do deficits have any impact on inflation or not? Full Ricardian Equivalence would say no but Friedman's argument back in 1949 would suggests the opposite extreme-any rise in the deficit is a total equivalent rise in inflation. Sargent suggests the answer must be somewhat in the middle. When the deficit rises the market assumes the govt will have to rise inflation at least somewhat to cut the deficit.
At the time-1986-we had the huge Reagan deficit. Sargent thought that this was a real inflation rate-so did many liberals, it's true-Mondale made it a centerpiece of his criticism of Reagan in 1984. However, we have to say in retrospect, that the Reagan and Bush Administrations-I'm thinking primarily about W. but it's also true of the H.W. Bush-we get a natural experiment of a sort of this and RE seems much closer than Friedman to the truth at least empirically as there was no inflation spike due to any of the deficits.
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