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January 1, 2015

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Posted: 01 Jan 2015 12:06 AM PST

'On the Stupidity of Demand Deficient Stagnation'

Posted: 31 Dec 2014 09:43 AM PST

Simon Wren-Lewis:

On the Stupidity of Demand Deficient Stagnation: In my last post I wrote about "why recessions caused by demand deficiency when inflation is below target are such a scandalous waste. It is a problem that can be easily solved, with lots of winners and no losers. The only reason that this is not obvious to more people is that we have created an institutional divorce between monetary and fiscal policy that obscures that truth." I suspect I often write stuff that is meaningful to me as a write it but appears obtuse to readers. So this post spells out what I meant. ...

'Here's What Economics Gets Right'

Posted: 31 Dec 2014 09:42 AM PST

I'm pretty sure my dissertation advisor (Greg Duncan, a McFadden student at Berkeley) helped to create the model used to make the BART prediction discussed below (I think they used a program called QUAIL, and precursor to LIMDEP):

Here's What Economics Gets Right, by  Noah Smith: Criticizing economics for not being scientific enough is a crime of which many of us -- I've done it -- are guilty.  But there's a right way to do it and a wrong way to do it.  Alex Rosenberg and Tyler Curtain, writing in the New York Times, have done it the wrong way.

Here are Rosenberg and Curtain:

Over time, the question of why economics has not (yet) qualified as a science has become an obsession among theorists, including philosophers of science like us...The trouble with economics is that it lacks the most important of science's characteristics — a record of improvement in predictive range and accuracy...In fact, when it comes to economic theory's track record, there isn't much predictive success to speak of at all.

Economics doesn't have predictive success, eh? This is something a lot of people claim, but once you look beyond the well-publicized fact that economists can't predict recessions, you can see that the claim just isn't true. Economics can predict plenty of things.

My favorite example is the story of Daniel McFadden and the BART...

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