There are different ways of looking at the world of Mainstream Macro. Yes, it closes ranks to outsiders-the various heterodox schools that question it's deepest assumptions. On the other hand there is a major rivalry within Macro: the Freshwater vs.Saltwater divide.
What I notice is that FWs like Stephen Williamson don't eve like to agree that such a divide exists anywhere but in a figment in Krugman's deranged imagination. Only Saltwaters admit that the divide exists which tells you something important right away.
One interesting faultine for the divide has been the rise of Neo-Fisherianism that I see as a lot more simple than most within Macro seem to want to have it. The NFers are just FWs who were Krugman's inlfationphobes for years who have now adjusted and come up with the opposite reason now for raising interest rates: before the threat was a burst of inflation. Now, paradoxically the NFers argue that low interest rates are actually restraining inflation too much.
Brilliant tactical maneuver. Give credit where credit is due.
http://lastmenandovermen.blogspot.com/2015/08/why-is-fed-so-antsy-to-raise-rates.html
Listen, it's a great misdirection as it's got the most influential monetary economist in the world-Mike Woodford-involved in writing a huge paper just to show where NF is wrong. Their claim is so obviously absurd that it's kind of sad Woodford feels forced to deliver this kind of heavy artillery to show it's wrong.
"The Neo-Fisherians believe that, by way of this insight, they have overturned at least two centuries of standard monetary theory, dating back at least to Henry Thornton, instructing the monetary authorities to raise interest rates to combat inflation and to reduce interest rates to counter deflation. According to the Neo-Fisherian Revolution, this was all wrong: the way to reduce inflation is for the monetary authority to reduce the setting on its interest-rate instrument and the way to counter deflation is to raise the setting on the instrument. That is supposedly why the Fed, by reducing its Fed Funds target practically to zero, has locked us into a low-inflation environment.
"Unwilling to junk more than 200 years of received doctrine on the basis, not of a behavioral relationship, but a reduced-form equilibrium condition containing no information about the direction of causality, few monetary economists and no policy makers have become devotees of the Neo-Fisherian Revolution. Nevertheless, the Neo-Fisherian argument has drawn enough attention to elicit a response from Michael Woodford, who is the go-to monetary theorist for monetary-policy makers. The Woodford-Garcia-Schmidt (hereinafter WGS) response (for now just a slide presentation) has already been discussed by Noah Smith, Nick Rowe,Scott Sumner, Brad DeLong, Roger Farmer and John Cochrane. Nick Rowe’s discussion, not surprisingly, is especially penetrating in distilling the WGS presentation into its intuitive essence."
http://uneasymoney.com/2015/07/24/neo-fisherism-and-all-that/
Another entertaining FW-SW debate is Paul Romer's charge of 'mathiness' which clearly is directed at the FWs.
Noah Smith takes the trouble of boiling the mathiness debate a little. What's it all about?
"I love what Paul Romer is doing on his blog. It's great to see someone recounting the old 80s/90s macro debates, and criticizing the "freshwater" folks, who is not a "Keynesian". I mean, Romer was in the thick of it all. He got his PhD from Chicago in 1983, and Lucas was his advisor! Plus he's been working in macro for decades. If Romer doesn't know what was up with the Macro Wars of the 80s and 90s, nobody does. And he's telling it like he sees it and pulling no punches. As The Dude would say, that's far out."
What I notice is that FWs like Stephen Williamson don't eve like to agree that such a divide exists anywhere but in a figment in Krugman's deranged imagination. Only Saltwaters admit that the divide exists which tells you something important right away.
One interesting faultine for the divide has been the rise of Neo-Fisherianism that I see as a lot more simple than most within Macro seem to want to have it. The NFers are just FWs who were Krugman's inlfationphobes for years who have now adjusted and come up with the opposite reason now for raising interest rates: before the threat was a burst of inflation. Now, paradoxically the NFers argue that low interest rates are actually restraining inflation too much.
Brilliant tactical maneuver. Give credit where credit is due.
http://lastmenandovermen.blogspot.com/2015/08/why-is-fed-so-antsy-to-raise-rates.html
Listen, it's a great misdirection as it's got the most influential monetary economist in the world-Mike Woodford-involved in writing a huge paper just to show where NF is wrong. Their claim is so obviously absurd that it's kind of sad Woodford feels forced to deliver this kind of heavy artillery to show it's wrong.
"The Neo-Fisherians believe that, by way of this insight, they have overturned at least two centuries of standard monetary theory, dating back at least to Henry Thornton, instructing the monetary authorities to raise interest rates to combat inflation and to reduce interest rates to counter deflation. According to the Neo-Fisherian Revolution, this was all wrong: the way to reduce inflation is for the monetary authority to reduce the setting on its interest-rate instrument and the way to counter deflation is to raise the setting on the instrument. That is supposedly why the Fed, by reducing its Fed Funds target practically to zero, has locked us into a low-inflation environment.
"Unwilling to junk more than 200 years of received doctrine on the basis, not of a behavioral relationship, but a reduced-form equilibrium condition containing no information about the direction of causality, few monetary economists and no policy makers have become devotees of the Neo-Fisherian Revolution. Nevertheless, the Neo-Fisherian argument has drawn enough attention to elicit a response from Michael Woodford, who is the go-to monetary theorist for monetary-policy makers. The Woodford-Garcia-Schmidt (hereinafter WGS) response (for now just a slide presentation) has already been discussed by Noah Smith, Nick Rowe,Scott Sumner, Brad DeLong, Roger Farmer and John Cochrane. Nick Rowe’s discussion, not surprisingly, is especially penetrating in distilling the WGS presentation into its intuitive essence."
http://uneasymoney.com/2015/07/24/neo-fisherism-and-all-that/
Another entertaining FW-SW debate is Paul Romer's charge of 'mathiness' which clearly is directed at the FWs.
Noah Smith takes the trouble of boiling the mathiness debate a little. What's it all about?
"I love what Paul Romer is doing on his blog. It's great to see someone recounting the old 80s/90s macro debates, and criticizing the "freshwater" folks, who is not a "Keynesian". I mean, Romer was in the thick of it all. He got his PhD from Chicago in 1983, and Lucas was his advisor! Plus he's been working in macro for decades. If Romer doesn't know what was up with the Macro Wars of the 80s and 90s, nobody does. And he's telling it like he sees it and pulling no punches. As The Dude would say, that's far out."
"The problem is that Romer's writing style is not exactly ideal for what he's doing. He's writing blog posts like academic papers - very careful to specify definitions, cover all bases, and speak in a dry, neutral tone. That makes sense when you're writing a paper, because you're writing to a highly selective audience - i.e., the tiny handful of people in the world who are specialized enough to care about your research topic, and experienced enough to know all the background. It also makes sense because of the way papers get published - it's a long process, and you can't easily go back and change things, write addenda, write quick follow-ups, respond to arguments point-by-point, etc. Blogging is a whole different animal. Romer could get his message across more effectively, I think, if he would just take greater advantage of the format"
Smith then goes on to translate a Romer post into blog-ese.
Romer:
"In my conversations, the freshwater sympathizers generally have not disagreed with my characterization of the facts in assertion #1–that specific freshwater economists did X. In their response, two themes recur:
Romer:
"In my conversations, the freshwater sympathizers generally have not disagreed with my characterization of the facts in assertion #1–that specific freshwater economists did X. In their response, two themes recur:
"a) Yes, but everybody does X; that is how the adversarial method works."
"b) By selectively expressing disapproval of this behavior by the freshwater economists that you name, you, Paul, are doing something wrong because you are helping “those guys.”
In the rest of this post, I’ll address response a). In a subsequent post, I’ll address response b). Then in a third post, I’ll observe that in my AEA paper, I also criticized a paper by Piketty and Zucman, who are not freshwater economists. The response I heard back from them was very different from the response from the freshwater economists. In short, Piketty and Zucman disagreed with my statement that they did X, but they did not dispute my assertion that X would be wrong because it would be a violation of the scientific method.Blog-ese:
"The freshwater sympathizers generally don't deny that the freshwater people do the things I accused them of doing. Instead, their response was basically "Everybody's doing it." Also, they told me that by calling them out on it, I was giving aid and comfort to the forces of darkness.
For right now, let's talk about the defense that "Everybody's doing it."
http://noahpinionblog.blogspot.com/2015/08/translating-paul-romer.html
"Everybody is doing it so why can't I? That certainly sums up this Stephen Williamson post. Of course, for SW, 'Everybody is doing it' is translated into 'Krugman is doing it, so you can't criticize anyone else doing it.' Even though Krugman certainly doesn't use mathiness-his posts have virtually no math."
http://newmonetarism.blogspot.com/2015/06/economics-and-deception.html
However, Smith ends things on a for him typically conservative note:
"Personally, I think his theory about the freshwater folks sounds a bit far-fetched - it relies on some pretty persistent heterogeneous beliefs. Surely the freshwater folks wouldn't take too long to realize that they were doing things very differently than others..."
In the rest of this post, I’ll address response a). In a subsequent post, I’ll address response b). Then in a third post, I’ll observe that in my AEA paper, I also criticized a paper by Piketty and Zucman, who are not freshwater economists. The response I heard back from them was very different from the response from the freshwater economists. In short, Piketty and Zucman disagreed with my statement that they did X, but they did not dispute my assertion that X would be wrong because it would be a violation of the scientific method.Blog-ese:
"The freshwater sympathizers generally don't deny that the freshwater people do the things I accused them of doing. Instead, their response was basically "Everybody's doing it." Also, they told me that by calling them out on it, I was giving aid and comfort to the forces of darkness.
For right now, let's talk about the defense that "Everybody's doing it."
http://noahpinionblog.blogspot.com/2015/08/translating-paul-romer.html
"Everybody is doing it so why can't I? That certainly sums up this Stephen Williamson post. Of course, for SW, 'Everybody is doing it' is translated into 'Krugman is doing it, so you can't criticize anyone else doing it.' Even though Krugman certainly doesn't use mathiness-his posts have virtually no math."
http://newmonetarism.blogspot.com/2015/06/economics-and-deception.html
However, Smith ends things on a for him typically conservative note:
"Personally, I think his theory about the freshwater folks sounds a bit far-fetched - it relies on some pretty persistent heterogeneous beliefs. Surely the freshwater folks wouldn't take too long to realize that they were doing things very differently than others..."
Typical Noah Smith, don't step on anyone's toes, keep on everyone's good side-you don't know who'll you will need in the future. Smith is clearly a smart guy, but he always strikes me as pretty complacent. He seems like the type who would rather we get along than get it right.
But it's an easy attitude to take when you have a secure place in academia like he does. Economics never seems like a life and death issue that it's worth getting all bent out of shape over. In that sense I even respect Sumner more: at least he sees these ideas as being of consequence.
His gloss that surely this couldn't be going on for such a long time in a fine upstanding field like Macro seems to have no historical perspective at all. Scholastism can continue a long time. The original Scholastics in the Catholic Church were at it for centuries before any sunlight came in.
No comments:
Post a Comment