That everything he sees proves him right suggests he needs glasses. Now he is brandishing this chart to show that fiscal policy has no effect.
http://www.themoneyillusion.com/?p=29600
I mean what is this supposed to prove? You would expect the British economy to be doing better in 2013 than 2010 the height of the recession regardless. No one denies that when output collapses as deeply as Britain's did in 2009-2010 it will see some recovery 3 years down the road.
For Sumner, all cats are grey-everything shows that fiscal stimulus doesn't help and that austerity doesn't hurt. Well then I guess we should do as much austerity as possible as the Fed will just offset it.
Simon-Wren Lewis wonders why with the consensus among economists that austerity harms output that David Cameron and friends are so mad for austerity.
"In this post I talked about the Knowledge Transmission Mechanism: the process by which academic ideas do or do not get translated into economic policy. I pointed to the importance of what I called ‘policy intermediaries’ in this process: civil servants, think tanks, policy entrepreneurs, the media, and occasionally financial sector economists and central banks. Here I want to ask whether thinking about these intermediaries could help explain the continuing popularity amongst policy makers of austerity during a liquidity trap, even though there is an academic consensus behind the idea that austerity now would harm output."
http://mainlymacro.blogspot.com/2015/06/austerity-as-knowledge-transmission.html
Maybe they all talk to Sumner, the one macroeconomist who doesn't think it does harm ouput. Him and Alesina. Tyler Cowen defends Alesina here:
"They have a new NBER working paper on this topic, here is one key part of the abstract:
- See more at: http://marginalrevolution.com/marginalrevolution/2015/01/alesina-and-co-authors-respond-on-european-fiscal-austerity.html#sthash.UwhmGEz8.dpuf
http://marginalrevolution.com/marginalrevolution/2015/01/alesina-and-co-authors-respond-on-european-fiscal-austerity.html
To the contrary, it is useful to describe them as defending austerity but only of a certain type. It can be read as 'anti tax hike'-though they probably have no trouble with consumption taxes. It could also be read as pro spending cuts.
What they do is not oppose austerity but support it but offer a further qualification-spending cuts are what is wanted not tax hikes-or at least the wrong type.
http://www.themoneyillusion.com/?p=29600
I mean what is this supposed to prove? You would expect the British economy to be doing better in 2013 than 2010 the height of the recession regardless. No one denies that when output collapses as deeply as Britain's did in 2009-2010 it will see some recovery 3 years down the road.
For Sumner, all cats are grey-everything shows that fiscal stimulus doesn't help and that austerity doesn't hurt. Well then I guess we should do as much austerity as possible as the Fed will just offset it.
Simon-Wren Lewis wonders why with the consensus among economists that austerity harms output that David Cameron and friends are so mad for austerity.
"In this post I talked about the Knowledge Transmission Mechanism: the process by which academic ideas do or do not get translated into economic policy. I pointed to the importance of what I called ‘policy intermediaries’ in this process: civil servants, think tanks, policy entrepreneurs, the media, and occasionally financial sector economists and central banks. Here I want to ask whether thinking about these intermediaries could help explain the continuing popularity amongst policy makers of austerity during a liquidity trap, even though there is an academic consensus behind the idea that austerity now would harm output."
http://mainlymacro.blogspot.com/2015/06/austerity-as-knowledge-transmission.html
Maybe they all talk to Sumner, the one macroeconomist who doesn't think it does harm ouput. Him and Alesina. Tyler Cowen defends Alesina here:
"They have a new NBER working paper on this topic, here is one key part of the abstract:
Fiscal adjustments based upon cuts in spending appear to have been much less costly, in terms of output losses, than those based upon tax increases. The difference between the two types of adjustment is very large. Our results, however, are mute on the question whether the countries we have studied did the right thing implementing fiscal austerity at the time they did, that is 2009-13.
They also consider, and cannot reject, the possibility that the output declines of recent times were due to additional negative variables, such as credit crunches, rather than higher values for the fiscal multiplier."
"I predict this paper will be ignored rather than responded to. For a while now it has been the practice to criticize “austerity” rather than to disaggregate the policies, or describe them with greater specificity, even though that is easy to do. And it is incorrect to describe this paper as defending austerity, rather I read it as being anti-tax hike, and suggesting that “austerity” is not a very useful concept."
http://marginalrevolution.com/marginalrevolution/2015/01/alesina-and-co-authors-respond-on-european-fiscal-austerity.html
To the contrary, it is useful to describe them as defending austerity but only of a certain type. It can be read as 'anti tax hike'-though they probably have no trouble with consumption taxes. It could also be read as pro spending cuts.
What they do is not oppose austerity but support it but offer a further qualification-spending cuts are what is wanted not tax hikes-or at least the wrong type.
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