Scott Sumner is the foremost defender today of austerity. For you MMers out there I put no stock in your denials to the contrary on this. He has taken it upon himself to defend fiscal austerity at every turn.
http://diaryofarepublicanhater.blogspot.com/2015/01/sumner-continues-to-spike-ball-over.html
He is claiming that austerity is expansionary. Again, that's his implicit point. He never puts it quite this way explicitly-because he's way too shrewd politically or that-but that is obviously the implication. So he's no less an advocate of it than Albert Alesina-who he has also defended on occasion.
https://www.imf.org/external/pubs/ft/wp/2011/wp11158.pdf
http://www.nextnewdeal.net/rortybomb/its-alberto-alesinas-world-and-were-all-just-unemployed-it
Again, the difference is explicit-Alesina makes it explicit, Sumner makes the case implicitly. He never says 'We need some fiscal austerity' but what he does is criticize anyone who criticizes austerity. He claims that Market Monetarism 'won a bet with Krugman' in 2013 because the economy didn't fall into a recession after we had a sequester though that's setting the bar awfully low-if there's no recession, austerity isn't a drag on growth?
The idea of monetary offset means that taking this idea to its absurd conclusion means that the more austerity you do the better the recovery will be as it will force the Fed to do more QE-yes, I know Sumner says QE isn't his first choice but in reality this is what it will be.
Right now, the Greek people seem very close to rejecting Sumner's austerity and maybe the Euro system itself.
UPDATE: Hot off the presses it seems that it may be a done deal and the anti austerity-anti euro?-candidate has won according to exit polls.
http://www.theguardian.com/world/live/2015/jan/25/greek-election-syriza-confident-of-victory-live-updates
The changes could be huge, totally altering if not ending Greece's spot as a euro nation.
http://www.nytimes.com/2015/01/26/world/europe/greek-election-syriza.html?_r=0
The impliciations for the rest of the world could be huge.
http://www.huffingtonpost.com/2015/01/23/greece-election-world-implications_n_6517014.html
One of the problems with economics as a social science is that it's very hard to come by real natural experiments. When we do get natural experiments they can often be unpleasant. We learnt for instance from the Nazis that forced labor can help you get out of a derpession faster. Obviously not something we'd repeat. Here in what might bring a lot of pain we might learn quite a lot.
P.S. I remember John Cochrane recently wondering what's wrong with Keynesians: they say WWII was a great fiscal stimulus yet they opposed the Iraq war. In his mind that shows that Keynesianians are 'internally inconsistent.'
Sumner actually praised this Cochrane piece. Yet he mocks other people for being ignorant of economics.
http://diaryofarepublicanhater.blogspot.com/2014/12/sumner-and-cochrane-vs-krugman-and.html
http://diaryofarepublicanhater.blogspot.com/2015/01/sumner-continues-to-spike-ball-over.html
He is claiming that austerity is expansionary. Again, that's his implicit point. He never puts it quite this way explicitly-because he's way too shrewd politically or that-but that is obviously the implication. So he's no less an advocate of it than Albert Alesina-who he has also defended on occasion.
https://www.imf.org/external/pubs/ft/wp/2011/wp11158.pdf
http://www.nextnewdeal.net/rortybomb/its-alberto-alesinas-world-and-were-all-just-unemployed-it
Again, the difference is explicit-Alesina makes it explicit, Sumner makes the case implicitly. He never says 'We need some fiscal austerity' but what he does is criticize anyone who criticizes austerity. He claims that Market Monetarism 'won a bet with Krugman' in 2013 because the economy didn't fall into a recession after we had a sequester though that's setting the bar awfully low-if there's no recession, austerity isn't a drag on growth?
The idea of monetary offset means that taking this idea to its absurd conclusion means that the more austerity you do the better the recovery will be as it will force the Fed to do more QE-yes, I know Sumner says QE isn't his first choice but in reality this is what it will be.
Right now, the Greek people seem very close to rejecting Sumner's austerity and maybe the Euro system itself.
UPDATE: Hot off the presses it seems that it may be a done deal and the anti austerity-anti euro?-candidate has won according to exit polls.
http://www.theguardian.com/world/live/2015/jan/25/greek-election-syriza-confident-of-victory-live-updates
The changes could be huge, totally altering if not ending Greece's spot as a euro nation.
http://www.nytimes.com/2015/01/26/world/europe/greek-election-syriza.html?_r=0
The impliciations for the rest of the world could be huge.
http://www.huffingtonpost.com/2015/01/23/greece-election-world-implications_n_6517014.html
One of the problems with economics as a social science is that it's very hard to come by real natural experiments. When we do get natural experiments they can often be unpleasant. We learnt for instance from the Nazis that forced labor can help you get out of a derpession faster. Obviously not something we'd repeat. Here in what might bring a lot of pain we might learn quite a lot.
P.S. I remember John Cochrane recently wondering what's wrong with Keynesians: they say WWII was a great fiscal stimulus yet they opposed the Iraq war. In his mind that shows that Keynesianians are 'internally inconsistent.'
Sumner actually praised this Cochrane piece. Yet he mocks other people for being ignorant of economics.
http://diaryofarepublicanhater.blogspot.com/2014/12/sumner-and-cochrane-vs-krugman-and.html
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