A New Sidebar and a Badge of Honor

I know that many of you view supplysideliberal.com in ways that don’t let you see the sidebar. So I wanted to make sure you knew how many useful links and other things there are on the sidebar if you go to supplysideliberal.com itself on a device with a full screen. Following my technical expert Diana Kimball’s advice, I have tried to make the sidebar attractive to the eye by sprinkling thumbnail photos throughout the sidebar (often of the header illustrations of key posts).

The most important innovation on the sidebar are the “sub-blogs” of tagged posts. The sub-blogs look exactly like the blog itself, with one full post after another (not just links), but with only a subset of all the posts. Here are the sub-blogs I have so far (more to come):

http://blog.supplysideliberal.com/tagged/longrunfiscal

http://blog.supplysideliberal.com/tagged/shortrunfiscal

http://blog.supplysideliberal.com/tagged/money

http://blog.supplysideliberal.com/tagged/politics

http://blog.supplysideliberal.com/tagged/reviews

http://blog.supplysideliberal.com/tagged/humor

http://blog.supplysideliberal.com/tagged/happiness

http://blog.supplysideliberal.com/tagged/religionhumanitiesscience

Among the many useful things lower down on the sidebar that you can’t see in my two screen shots above, the most useful is the within-blog search box. I use that all the time to find posts. It has to be at the bottom of the sidebar because the search results appear underneath it.

Finally, another new addition is the “Top Economics Site" badge which clicks through to an aggregation site that lays out its selection of 100 other economics sites. I like the short description there of this blog so much that I quote it under the badge on my sidebar. Here is that description:

This unique blog by a University of Michigan economics professor applies market-driven and supply-side ideas to issues normally dominated by liberal activists. The result is a fascinating and well-written site that will challenge the assumptions of nearly any reader.

Love's Review

David Love, whom I only now learn goes by “Dukes,” was a star student in my very advanced “Business Cycles” class at the University of Michigan. He went on to get a Ph.D. in Economics at Yale and become a tenured macroeconomics professor at Williams College. We have stayed in touch over the years, but had not corresponded recently. I share his email a few days ago with his permission:  

Dear Miles,

After a week of continuously visiting and reading your blog, I thought I’d let you know that you’re providing a wonderful public service. There’s a gem in nearly every entry, and I’ve found myself eagerly returning to see whether you’ve posted anything new. If you want to know how influential a good blog can be, consider that I’ve read Chetty’s article on measuring risk aversion; your recent NBER paper on the fundamental aspects of well being; and I just ordered an exam copy of Weil’s textbook on Economic Growth – and all in the week since I started visiting Confessions of a Supply Side Liberal. I was especially touched by your sermon inspired by David Foster Wallace, and I sent it along to friends and family far removed from economics.

There are many economics blogs out there, but yours contains a rare mixture of fine writing, humanity, and Feynman’s pleasure of finding things out. Thanks for putting it out there!

Sincerely,

Dukes

A List of Macro Blogs from Gavyn Davies →

This blog, Confessions of a Supply-Side Liberal, made it onto Gavyn Davies’s list of macro blogs to follow. 

Another Reminiscence from My Ec 10 Teacher, Mary O'Keeffe

In 1977-78, I taught my first very class as a section-leader for Ec 10 (intro economics) at Harvard. There were 30 sections of Ec 10, but I taught one of the two “math sections” of that class, designed for students taking the minimum co-requisite of multivariable calculus or higher levels classes. (The other math section was taught by Larry Summers. Random chance divided which students each of us got since virtually all sections of the class met at noon M-W-F.)

Two very memorable students stand out in my head from that first class. One is now a very famous journalist, a writer and TV media pundit/personality, who shall remain nameless, because back then he was comping for the Crimson (i.e. Harvard-speak for freshmen competing to prove themselves as reporters for the student newspaper so they would be accepted as a member of their permanent staff)–this meant he spent many late nights in the Crimson offices. As a result, he was primarily memorable for frequently falling asleep in the back of my classroom, despite the noon meeting hour of the class. One day I had requested a Harvard videographer to tape my class (so I could improve my teaching) and I remember greeting this student at the door jokingly asking that–at least today–he attempt to stay awake in the class–so he would not be captured for posterity sleeping through the class. What I did not realize until seconds later was that it was “Parents Day,” a time when parents could visit and attend classes with their Harvard freshmen, and his horror-stricken parents were right behind him. Anyway, aforesaid student later made the Crimson staff, graduated, and went on to distinction in law school and journalism.

The other student who stands out in my head was the polar opposite of the aforementioned nameless student. He always arrived very bright-eyed and eager to absorb all he could of what little I had to offer at the time. He sat in the front row of the classroom, right under my nose, wearing a brightly colored jacket (my memory says it was royal blue with his name in vivid gold embroidery: Miles Kimball, but Christopher Chabris has taught me enough about the tricks that memory plays that I could be wrong. Maybe it was a red jacket with white embroidery? Anyway, it was distinctive and I can still see it in my mind’s eye today, as well as his sparkling engaged eyes.) 

I was Miles’ teacher then, but reading this last post on his blog makes me wish that I myself had had the good fortune to have a professor like him early in my own development–one who blended math so beautifully with economics as well as music. I teach public finance, not macroeconomics, but logarithms are important everywhere in economics, yet the word all too frequently makes the eyes glaze over (especially if one has been up late comping for the Crimson–or partying–or working on assignments for other classes.)

This post [“The Logarithmic Harmony of Percent Changes and Growth Rates”] from Miles’ blog is so awesome that I am tagging it to share with my students in Eco 339 Public Finance as well as my mathy students in Albany Area Math Circle and Math Prize for Girls.

[Note: Mary’s memory is good: my brother Chris had that royal blue running jacket made in Korea, where he served as a Mormon missionary. You may remember Chris from the post “Big Brother Speaks: Christian Kimball on Mitt Romney,”]

The Best Kind of Review

Not a Q, just wanted to share my feelings. Feel free to post publicly. As I think you know, I am a finance PhD student. For past 2 years I have suffered from a severe lack of confidence, especially in my ability to research. My task this summer was to complete a 2nd year paper. It was a rough slog, but thanks in part to reading your blog & interacting with you I got through it (& impressed faculty!). Your upbeat attitude is infectious & your positive feedback to my comments most welcome. Thanks! – docstocks

Thanks for the kind words, and thanks for reading. Good luck in the rest of your studies! –Miles

By the way, DocStocks is the alias for Matt Stambaugh. This is Matt’s Twitter thread. Matt has a tweet as nice as the note above here.

My Ec 10 Teacher Mary O'Keeffe Reviews My Blog

Mary O'Keeffe

Mary O'Keeffe taught my section of Ec 10 (Harvard’s full-year introduction to economics) back in the 1977-1978 school year. (Ec 10 is taught almost entirely in section, with the big lectures only icing on the cake, so she was my main instructor.) She gave me permission to reprint these thoughts that she posted on her Facebook page:

I don’t agree with everything the brilliantly eclectic Miles Kimball writes, but this piece [“Scott Adams’s Finest Hour: How to Tax the Rich”] resonates very deeply with my soul. (For those who don’t remember my earlier reference, Miles was a student in the very first intro econ class I taught at Harvard as graduate teaching fellow in the late 70s.)

He is far more nuanced and thoughtful than I would have guessed from those days–but I suppose that I too have grown more nuanced and thoughtful. I think both of us realize that there is good and bad in everything and everyone, and try to find ways to elicit the good in ourselves and others.

(Miles, who was raised a Mormon and is now a UU [Unitarian-Universalist] with a deep reverence for the good parts of his upbringing, thinks there are both good and [bad] things about his cousin Mitt Romney as well as good and bad things about President Obama. I think the same is true of everyone–some good things and some bad things–we are all flawed human beings operating in a highly imperfect world, and though I think I come down far more clearly on the side of President Obama than on the side of Mitt Romney, I think there is value in trying to understand everyone’s ideas and point of view and trying to find the best of what is within each of us.)

In short, I like this essay [“Scott Adams’s Finest Hour: How to Tax the Rich”] very much.

I am especially pleased that Mary likes my post “Scott Adams’s Finest Hour: How to Tax the Rich” yesterday since that matches my own judgment about the importance of that post compared to most of my other posts. I tweeted that it was “My most important post in a long time”–though since my blog has been in existence less than three months, “most important post in a long time” here means “best of the 62 posts after both ’You Didn’t Build That: America Edition‘ on July 24th and ’Teleotheism and the Purpose of Life' on July 25th.”

Mary wrote this addendum to her review:

Your post [“Scott Adams’s Finest Hour: How to Tax the Rich”]–by the way–reminded me of the sense of pride I feel in being part of a community of taxpayers that collectively finance public goods that exhilarate me and that I can share with the community at large. 

The sudden joy of the realization one day that everyone in our community could have access to the breathtaking views from Thatcher State Park overlooking the Capital District and the bike-hike path running along the Mohawk River and the stunningly gorgeous roses in Schenectady’s Central Park Rose Garden and our great public libraries and nonprofit volunteer theater groups’ free performances in the public parks and the community spirit of all the varied denominations of churches that work together in service projects filled me with such exhilaration that I wrote this post on my own blog:

http://bedbuffalos.blogspot.com/2010/09/why-i-teach-public-finance.html

Matt Yglesias on How the "Stimulus Bill" was About a Lot More Than Stimulus →

Rahm Emanuel (as can be seen in this 13-second video) famously said

You never want a serious crisis to go to waste. And what I mean by that is it’s an opportunity to do things you could not do before.

Here, Matt Yglesias reviews a new book by Michael Grunwald documenting the ways in which the Obama administration used the American Recovery and Reinvestment Act (the “Stimulus Bill”) to accomplish many of its other legislative priorities in addition to trying to stimulate the economy. Though many of those other legislative priorities were arguably in the right direction, I think the commingling of stimulus with other efforts having a more partisan coloring accounts for some of the Republican hatred of the Stimulus Bill. This is a good example of the political economy issues I discuss in my post “Preventing Recession-Fighting from Becoming a Political Football.”

Adam Ozimek: What "You Didn't Build That" Tells Us About Immigration

Mexican immigration

Adam Ozimek has a new post agreeing with my take on immigration in my post “You Didn’t Build That: American Edition.”  He begins:

University of Michigan economist Miles Kimball has a novel and important and take on President Obama’s “You Didn’t Build That” statement and the ensuing debate.

What Adam adds is to the moral case that I make is to point out how small the costs to current citizens are of allowing additional immigration:

I think this is one of the most important and underemphasized ideas right now. I am constantly humbled at how fortunate any of us are to have been born here, and disappointed at how shamefully entitled we act towards this luck. The idea, for instance, that we should block millions from moving here and vastly bettering their lives because there may be a small statistical impact on some subset of us. On the basis of a 5% wage premium for high school dropouts (who we otherwise neglect in so many other ways) we’re going to exclude others from a privilege we did nothing to inherit? Just as egregious is excluding them because we refuse to either design a policy that allows low-skilled workers to enter and pay their on way (which they could!) or just let them enter and bear the minor cost like we do for low-income natives. (Of course we don’t exempt the high-skilled from paying more than their share, which they do).

It is hard to reconcile the selfish attitudes embodied in the kind of mindset that would lock someone out of this unbelievable American system for the sake protecting an unearned privilege, and for the sake of trying to capture every last ounce of luck for themselves…

And I interpret the following passage from Adam’s post as making the point that the cost to current citizens of allowing additional immigration is especially low, or nonexistent if one includes the dynamic benefits to the economy from immigration:

Ironically it is this open, free, and welcoming attitude we turn our backs on that in large part has made us a great and powerful nation. Where would we be if we pulled up the drawbridge in 1800? Or in 1900? This country would be a shadow of itself, and would’ve turned away many of the great Americans, or their parents or grandparents, who made us who we are.

I do not have the expertise to comment as knowledgeably as I would like on what the actual costs and benefits of immigration to current citizens are, so I very much hope that others in the economic blogosphere will continue to clarify these costs and benefits, so that misconceptions can be dispelled. But I also hope that in talking about the evidence about those costs and benefits that we don’t lose sight of the ethical point that those who desperately want to immigrate to the United States are human beings too, whose welfare counts just as much, ethically, as the welfare of citizens of the United States. Here is the comment I made to Adam’s post on the Modeled Behavior blog: 

Thanks, Adam! 

In my post, I didn’t emphasize how small the costs to current citizens are from immigration, because I wanted to make a full-throated moral argument that we should allow open immigration even if the costs to current citizens were relatively large: even substantial costs to current citizens could not possibly be anywhere close to the magnitude of the benefit to those allowed to immigrate. Also, I understand that there are many who will never be convinced that the costs of additional immigration to current citizens are modest.

But of course the fact that the costs to current citizens are relatively modest makes the case that much stronger. I have thought about what I would say if someone said to me “But you are a well-off professor, you aren’t the one who would bear the costs of additional immigration.” Given how many times greater the benefits to the immigrants are compared to the costs to current citizens (10, 100, or more times greater, I would think, for immigrants from very poor countries), I would say it was as if my challenger were saying “But it wouldn’t be your suit that would get wet if I jumped in to save the drowning man!"

Bill Greider on Federal Lines of Credit: "A New Way to Recharge the Economy"

Bill Greider with Bill Moyers, July 18, 2008 (video)

In my second post, “Getting the Biggest Bang for the Buck with Fiscal Policy,” I wrote about my interview with Bill Greider and promised I would let you know when his article came out. Bill Greider is national affairs correspondent for The Nation, and the author of Secrets of the Temple, a history of the Federal Reserve. And at the link under the picture, you can see a short clip of Bill Greider talking to Bill Moyers that will give you some of the experience I had in meeting Bill Greider. Bill’s article is out now, on The Nation’s blog. Here it is. The simple summary is that Bill is pushing my proposal of Federal Lines of Credit as hard as he can, while connecting it to some of his own longstanding interests. 

Let me say what I hope is obvious: this blog and my relatively accessible academic paper “Getting the Biggest Bang for the Buck in Fiscal Policy” are authoritative about what I am proposing in relation to Federal Lines of Credit, not Bill Greider’s post. (See also the Powerpoint file for my presentation at the Federal Reserve Board.) But though Bill’s nuances are very different from mine, the only serious issue I have with his post is that Bill makes it sound as if I want to have a less independent Fed. Far from it! What I actually said in my paper “Getting the Biggest Bang for the Buck in Fiscal Policy” is this:

The lack of legal authority for central banks to issue national lines of credit is not set in stone. Indeed, for the sake of speed in reacting to threatened recessions, it could be quite valuable to have legislation setting out many of the details of national lines of credit but then authorizing the central bank to choose the timing and (up to some limit) the magnitude of issuance. Even when the Fed funds rate or its equivalent is far from its zero lower bound at the beginning of a recession, the effects of monetary policy take place with a significant lag (partly because of the time it takes to adjust investment plans), while there is reason to think that consumption could be stimulated quickly through the issuance of national lines of credit. Reflecting the fact that national lines of credit lie between traditional monetary and traditional fiscal policy, the rest of the government would still have a role both in establishing the magnitude of this authority and perhaps in mandating the issuance of additional lines of credit over the central bank’s objection (with the overruled central bank free to use contractionary monetary policy for a countervailing effect on aggregate demand).

Let me explain that “National Lines of Credit” is just another name for “Federal Lines of Credit” that I use in the paper because that name of the program works better in Europe, where it is most likely to be done by individual nations rather than by the Eurozone as a whole.

What I want is amore powerful, but still fully independent Fed.  In particular, I want a Fed that is in charge of aspects of policy that are in between traditional fiscal policy and traditional monetary policy and a Fed permitted by law to purchase a wider range of assets, as the Bank of Japan is. (See my post “Future Heroes of Humanity and Heroes of Japan.”) I believe that the Fed is doing less stimulus than it otherwise would because it is not fully comfortable with balance sheet monetary policy on the scale required. (See my post “Trillions and Trillions: Getting Used to Balance Sheet Monetary Policy.”) In other words, I am claiming that if the Fed had been given the authority by Congress to use Federal Lines of Credit as a tool, it would have done more stimulus, and the economy would be in better shape. (On my respect for the Bernanke Fed, see the lead-in to my first list of “save-the-world” posts.)

Two things I hope that Bill mentions if he returns to this topic in the future, as I hope he does, are

1. the evidence from history that Federal Lines of Credit will work that is flagged in my post “Brad DeLong and Joshua Hausman on Federal Lines of Credit,” and 
2. my proposal to use the timing of the Federal contributions for Medicaid as a way of getting States to spend more in recessions.  See my post Leading States in the Fiscal Two-Step, and the comparison with Mark Thoma’s related proposal in my post “Mark Thoma on Rainy Day Funds for States.”

I hope to have many more interactions with Bill Greider in the future, both in cyberspace and in person.

Tyler Cowen Reminisces about Our Days in Graduate School

Tyler Cowen of Marginal Revolution

Because I was packing and in the air over the Atlantic yesterday on my way to Toulouse, I only now had a chance to read Tyler Cowen’s wonderful reminiscences of our time together in graduate school and the people we knew. He has some very kind words about me, my daughter Diana, and this blog that warm my heart. Tyler also reminisces about our classmates Abhijit Banerjee, Steve Kaplan, Mathias Dewatripont, Alan Krueger, Nouriel Roubini and Brad Delong.

P.S. Reports of my death in the comment thread for Tyler’s post are greatly exaggerated.

Brad DeLong and Joshua Hausman on Federal Lines of Credit

World War I veterans in 1920, who later had the chance to borrow against their bonus

Brad Delong not only praises Federal Lines of Credit, he managed to identify some empirical evidence that suggests they should indeed be more powerful than tax rebates! Here is what he says:

The interesting thing is that we have done this before. In 1931 and 1936 the Congress (over the objections of President Hoover in the first case and President Roosevelt in the second) gave World War I veterans the option to borrow against the WWI Veterans’ Bonus that they were going to be paid in the future:

Then Brad cites a study of letting veterans back then borrow against their bonus by Berkeley graduate student Joshua Hausman. Here is Brad’s summary of the results:

Because the bonus was paid to veterans and only veterans, Josh has substantial cross-section identification off of the different proportions of veterans in the several states. The (preliminary) figures and regression results are, to my eye, awesome: a cash-flow multiplier that looks to be 0.8 or so.

Federal Lines of Credit are an extraordinarily effective recession-fighting policy when mental accounts or liquidity constraints are important, and it looks as though they were very important in the 1930s.

My Corner of the Blogosphere: As of July 1, 2012

I find it interesting to see how the blogosphere is interconnected. Not counting RSS feed subscribers, there were 14,956 total visits to my blog between when I first had Google Analytics set up on June 3 and June 30th. Of those 9,174 were referrals from a link on some other site. I have listed the top 30 sources of referrals. I also listed the 65th, since like the 17th, it illustrates that some blogs are so big that even a comment on them can be a noticeable source of referrals. In the caption for “Mark Thoma on Rainy Day Funds for States” I wrote that Mark’s Economist’s View blog is the center of the economics blogosphere. It is indeed the largest source of referrals to my blog, followed by Greg Mankiw, Google, Twitter, and Noah Smith.

Number of Visits from Each Referral Source

1. Mark Thoma: 1558

2. Greg Mankiw (US): 1213

3. Google: 850

4. Twitter: 844

5. Noah Smith (US):  803

6. Mike Konczal (Rortybomb at nextnewdeal):   313

7. Ezra Klein (washington post): 300

8. Tyler Cowen (Marginal Revolution): 233

9. Facebook: 212

10. Scott Sumner (The Money Illusion): 202

11. Stephen Williamson: 143

12. Brad DeLong: 119

13. Karl Smith and Adam Ozimek (Modeled Behavior): 92

14. Clive Crook (theatlantic.com): 83

15. David Andolfatto: 75

16. Noah Smith (UK):  75

17. Comment on a Matthew Yglesias slate.com article: 68

Adam: Yup. Miles Kimball has an excellent post on this topic too: http://blog.supplysideliberal.com/post/25423469963…

18. Greg Mankiw (Germany): 62

19. Evilsax (DiaryofaRepublicanHater): 57

20. Real Clear Policy: 57

21. Stephen Williamson (Spain):  56

22. Greg Mankiw (UK): 52

23. Tumblr: 50

24. Greg Mankiw (Australia): 43

25. Greg Mankiw (India): 41

26. Stephen Williamson (Germany): 39

27. Greg Mankiw (Italy): 38

28. Greg Mankiw (Canada): 37

29. Noah Smith (Germany):  37

30. Noah Smith (Canada): 35

…

65. Comment on Mark Shea (patheos.com): 14

So, I as a “progressive” and a Catholic have always had a lot of suspicion of free-market Economics, be it Austrian or Chicago school. My first Economics class came as a sophomore in college after some snobby Republican sniffed at me “You just don’t understand Economics.” My plan was to make sure no-one could tell me that with a straight face again. So I took an Economics class with an extreme libertarian professor (who currently writes at this blog:

http://www.thebigquestions.com/blog/.

I couldn’t help it, I liked him (still do). He would indulge me after class in long conversations about trade, taxation, redistribution, utility theory, etc. I also discovered that I really liked Economics. One Economics class became two, two became a double major, and a double major in Math and Economics became a three year stint in a PhD program in another “conservative” Economics department. Now I would call myself a “supply-side liberal.”

http://blog.supplysideliberal.com/post/23959666073/what-is-a-supply-side-liberal

I still believe strongly that our society has a basic responsibility to minister to the poor, provide health care for the sick, educate the young (all of them!), and so on. However, I now believe (and the evidence for this appears overwhelming) that taxation and regulation have real manifest costs to economic growth, which is necessary for social welfare for rich and poor alike. I think it’s irresponsible to consider a policy without considering those costs.

I am also quite irritated with the self-entitled attitude so many wealthy people appear to have. Accusations of “class war” from the wealthy to the poor are absurd. The wealthy in this country have it great. They will continue to have it great no matter who runs our government. Their concerns have no relevance to me, it’s how our policies impact their actions that I consider relevant. As one more link (and beware of profanity), I think this video sums up their point of view quite well.

The physical geography of visitors to supplysideliberal.com is also interesting. It shows how international the blogosphere is. Here is the breakdown of visits by city:

1. New York: 936
2. Ann Arbor: 667
3. Washington: 650
4. London: 313
5. Chicago: 293
6. Toronto: 154
7. Seattle: 149
8. Los Angeles: 142
9. San Francisco: 142
10. Boston: 134
11. Sydney: 118
12. Houston: 114
13. Cambridge: 111
14. Borlange, Sweden: 101
15. Philadelphia: 100
16. Minneapolis: 98
17. Singapore: 94
18. Arlington: 93
19. Bonn: 92
20. Columbia, MD: 92
21. Tucson: 91
22. Montreal: 90
23. Berlin: 89
24. Austin: 87
25. Miami: 83
26. Paris: 75
27. Melbourne: 74
28. San Diego: 71
29. Atlanta: 71
30. Canberra: 67
31. Nei-Hu (near Taipei): 63
32. Ottawa: 60
33. Berkeley: 59
34. Dunn Loring: 58
35. Brisbane: 57
36. Oakland: 55
37. Buenos Aires: 54
38. Goteborg: 54
39. Portland: 53
40. Bethesda: 52
41. Jakarta: 51
42. Barcelona: 49
43. Hong Kong: 49
44. Vienna: 45
45. Copenhagen: 45
46. Madrid: 43
47. Amsterdam: 43
48. Munich: 42
49. Staten Island: 42
50. Dallas: 42

Mike Sax: Review of (Some) Economics Blogs

It is always interesting to read reviews. Google Analytics helped me find Mike Sax’s very interesting review as a significant source of referrals. I thought I would share this with you. Let me give a disclaimer: the opinions about other blogs are Mike’s, not mine.  Consider my level of endorsement the same as if I had approved it as a comment. Also, the title of Mike’s blog, “Diary of a Republican Hater” does not apply to me. I like Republicans very much and I like Democrats very much. I hope that each side feels I agree with them on those views that they think can most clearly be defended by rational argument. Thanks to Mike for permission to reprint this review:

NGDPLT, ‘Wallace Neutrality" and Related Matters

I can now stand out of a limb and say that the start of Miles Kimbal’s Supply Side Liberal blog is a very positive development for all of us who want a better and deeper understanding of all matters Econ. Since the crisis one positive has been a veritable flowering of Econ blogs along the lines of what the French Salons were back in the 18th century for intellectual discourse on the news of the day. 

Many as I do read Sumner’s Money Illusion and other MMers like Nick Rowe, Lars Christensen, et al as well of course as the “Saltwater” guys like Krugman and Delong. Then of course you have the MMTers-today’s Post Keynesians-at places like Economic Perspectives and the Center of the Universe-Walter Mosler’s blog. Another good one is Cullen Roch who is even within MMT heretical breaking up into yet another school-MMR. There are many others I’m not mentioning that are tremendous-Noahpinion, Bill Woolsely…

Through all of it what I’ve personally sought certainly is for true teachable moments-I want to learn and understand the marcro and monetary system better. Of course whether you are reading an MM blog, an MMT or a New Keynesian blog of course the author usually has a strongly advocated point of view. This is not a problem as far as I’m concerned-I too have a point of view. I’m basically I’d say a Post Keynesian though I’m not sure I’m ready to embrace the MMT tag-it seems somewhat cultish too me.

I think it can’t be denied that if any one person comes closet to epitiomizing the flowering of Econ since 2009 it may be Sumner himself. Certainly no one doubts his point of view but I don’t see how you can deny he’s been a “tree shaker.” I use that phrase thinking of what Jesse Jackson used to say-“I’m a tree shaker not a jelly maker!”

This doesn’t mean Sumner’s right. I think it’s still very open to question whether he’s right about NGDP level targeting working exactly the way he assures us it will. But no doubt he has captured the imagination of many Econ bloggers no doubt. 

What NGDPT has going for it is for one thing the “vaccuum effect.” No other theory in the Macro world right now is so suggestive, intuitive, and has such reach in terms of explanatory power. It does remind in me in some way of Chomsky’s linguistic revolution in the 60s. Whether he was right or not, Chomksy couldn’t be beaten because no one else could suggest a system that seemed to explain so much. Here I can’t but think of Kuhn's Structure of Scientific Recvolutions. 

In this way Sumner is very much like his hero-he is Friedman 2.0 in the sense that his NGDPLT idea is probably the most intuitive and trendy single monetary idea since Friedman’s 3% money supply growth rule. 

Still as Noah Smith has suggested, intuitiveness is not in itself proof of truth. Friedman’s Rule was also highly intuitive and yet it was a disaster. That doesn’t mean I can tell you right now what might be the hole in NGDPLT. I’m not certain there is one that it will go as badly askew as Friedman’s Rule just that it could. 

As I understand Noah, this is the problem with going by intuition alone and why models are also helpful. They offer us a way to check ideas without the trial and error of seeing whether or not it fails empirically. David Andolfatto recently dida post that used the OLG model to test NGDPLT that-depending on which assumptions are used, doesn’t get it done. As to whether or not OLG is an acceptable model, well that’s of course another discussion but Andolfatto suggests that those who have a problem should read a Woodford piece that shows its soundness. 

“Even though the model delivers a plausible interpretation of some recent macroeconomic developments, a NGDP target is not an obvious solution. But of course, as I said, the model is highly abstract. It is likely missing some features of the real world that NGDP target proponents think are important. If this is the case, then I’d like to hear what they are, and how these elements might be embedded in the model above. If nothing else, it would be a contribution to the debate if we could just get straight what assumptions we are making when stating strong propositions concerning the desirability of this or that policy.”

http://andolfatto.blogspot.com/2012/06/ngdp-targeting-in-olg-model.html?showComment=1338923968907#c1452928314545044264

My reservations of NGDP come more on the side of MMTers like Dan Kervick. What I can’t help but noitce is that Sumner insists on the idea that the fiscal multiplier is zero if the central bank does it’s job. This certainly makes it reasonable to ask if he has a political agenda. But what Kervick and company argue is that what is considered “monetary” vs. “fiscal” operations is itself a political question on the level of definitions. You could say that it’s the Morgan Warstler version of NGDPLT-what it offers is simply backdoor austerity. In addition I think there’s a case to be made that monetary and fiscal policy refer to different parts of the body so to speak. You could argue that monetary policy pertains largely to the financial system-the stability of banking-while fiscal policy relates to the real economy. 

His big question right now is “Wallace Neutrality” a term quite honestly that I’m not too familiar with but seems based on its use to be related to the liquidity trap:

“Although I plan to keep tight editorial—and for the most part, authorial—control over this blog itself, in a broader sense I view supplysideliberal as a collective enterprise. I hope readers of this blog will gel into an online community that goes beyond this blog. This will be a community of thoughtful people who do not all think alike; they need not be “Supply-Side Liberals” by the definition given in my first post “What is a Supply-Side Liberal? Anyone who comes to this website frequently belongs to the supplysideliberal community (which means, for example, that the 535 people who have put this blog on their RSS feeds automatically qualify)." 

"It is my hope that in some way, the supplysideliberal community becomes something more than just this blog. But it is good to take things in small steps, even if the small steps follow each other in quick succession. So I have a proposal for a medium-sized undertaking as our first collective project outside of this blog: bringing into existence a wikipedia entry on “Wallace Neutrality.”

"If you think this is a good idea, the key step will be to get the entry started, which I think can be done based on Noah Smith´s post “Does Steve Williamson Think Printing Money Can´t Cause Inflation?” and the comments on my post “Is Monetary Policy Thinking in Thrall to Wallace Neutrality?”Once the entry is started, it can be revised in the light of further comments on this blog, reading of one or more of Wallace´s papers, etc. Because of the importance of highlighting the assumption of Wallace Neutrality behind much of the discussion of monetary policy during our current economic troubles, I believe this would be a great service to the world.”

“Could one of you take the lead on this?”

“I definitely can´t do it all myself. In terms of my personal priorities in relation to monetary policy, in the next while I will be writing about how people’s views on Wallace neutrality inform their views on current monetary policy debates, and what I think should be done given my belief in departures from Wallace neutrality. In setting out the nature of Wallace neutrality itself, I need help. I think a wikipedia entry would be a great way to collate our collective wisdom on this. And I think it would be a great start toward our becoming something more than just this blog”

So Wallace Neutrality evidently informs an answer to Noah’s question about Stephen Williamson not thinking monetary policy can cause inflation among others. So if so it would seem to offer some pretty high stakes. 

I myself don’t know much about starting a Wiki paper-it isn’t hard but hopefully this will give us a real opportunity for a meeting of the minds. I probably could start a Wiki paper-it’s easy. We’ll see if others have an interest. 

Diana Kimball on the Beginnings of supplysideliberal.com →

My dad’s an Economics professor, and Confessions of a Supply-Side Liberal is his new blog—and I’m crazy about it. Not just because I’m crazy about him (I am), and not just because I helped him set it up (I did…on Tumblr, even!), but because I truly believe he’s found his medium. ”I think I’ve always thought in hypertext,” he told me a few days in. Read his first post and check out his Twitter account at @mileskimball, and see what you think. I’m beyond happy he’s doing this.

First shared in the latest letter.

Noah Smith: "Miles Kimball, the Supply-Side Liberal" →

Very kind words from Noah, plus an excellent summary of several of my posts.

The existence of this blog is due in part to the encouragement I received from Noah and from my daughter Diana.  Thanks to both of them.  I learned blogging style from reading Diana’s excellent blog.