Do any modern macro economists ever think about Georgism? I’m just in this journey of discovery and it seems fundamentally so necessary. Almost too easy and obvious and I’ve been seeking counter arguments.
I loved this and how it lays out the issues at play. Now can you do the Laffer Curve so I have something to shut up the next person who tries to cite it?
People have been trying to replicate Shalizi and McDonald conclusions. It seems that their results won’t replicate ( https://twitter.com/joshuabrault3/status/1588861757027938305?s=46&t=YTJt3sPHqOS77LYVNMn8Mw) and might be caused by a coding mistake (they decided to code everything from scratch in R). In fact standard packages like Dynare do recover true estimates pretty well.
Also, the similar exercise with opposite results was done by Iskrev (2010), whom CS does not cite (they also do not cite Canova and Sala and are in general dismissive of the identification in DSGE literature, for reasons I cannot understand).
All that time DSGE people in Econotwitter are writing humble and engaging threads like this:
CS decided not to engage with this critique, unfortunately.
Overall DSGE has a number of problems, but I do not think that strangely coded paper that does not engage with the lit and reaches conclusions opposite to other peer reviewed results moves us to the right direction
Really helpful summary for me. Explains why I detest the entire macro-project beyond really basic things like gross national income trends. I am not surprised that microeconomic models have been much more useful and easily validated. They reduce the chance of not knowing the relevant variables. By reducing the scale of the investigation.
So are many other economists. I prefer the economists that are good at research and reality. Claudia Sahm is an example of this. Unlike Sahm, Summers name will not be attached to any empirically based model that has use in the real world. For the record, he treated Sahm horribly when he was her boss. As well as the other realists who also did research and warned of the danger of a mountain of derivatives, e.g., Brooksley Born, Shelia Bear. Summers and his crowd had nothing but scorn for these researchers. If he’s so good at research, how is it he couldn’t see a financial freight train coming down the tracks?
The idea that currency-issuing governments can issue debt free money, without taxing or borrowing from the private sector, on behalf of public sector spending - who cares if it's a theory or not.
The important thing is the necessity for the total of public and private spending to not exceed the nation's productive capacity., to avoid inflation.
As for Turkey: in MMT a ZIRP is recommended, along with a JG to act as a price anchor.
Nothing to do with Turkey.
And re "Biden's inflation": in a pandemic, money shouldn't be given to people who don't need it....
Noah, in becoming a science, aren't the first methods, methods of measurement? (i.e., going from qualities of motion, getting to quantities; going from qualities of force to quantities of force; going from feelings of temperature to repeatable effects of temperature).
The desire for the micro-to-macro transmission to be elegantly tractable seems to be where the importance of the above gets stripped out... premature mathematization.
True to form, make sure you cite Larry Summers in any post in re economics. But maybe this is apt for the universe of economic modeling; because in the real world of economic policy-making, few economists have done as much damage as Larry Summers. I get the feeling that writing columns about economics is a poker game and Larry Summers is the ante. Personally, I’d rather read Carlota Perez or Ray Dalio on the 50-year business cycle. Keep up the great work but consider going on a serious Larry Summers diet. Surely, you can find other economists with the same ideas.
"That doesn’t mean macro is a “science” yet — I’d say it’s more a proto-science, maybe a bit like medicine in the 1600s. " Maybe more like political science, still highly an art with some science.
Whatever happened to good old Keynesean Economics. In bad times, one spent and built up debt. In good times, one increased taxes, controlled spending and paid off debt?
This is the reason I subscribed to your blog: to try to understand more about how macroeconomists think and why they don't understand stuff. I love your realism and honesty about the state of the field.
My training is in science and biology and I never thought much about money until my late 20s. When I started reading the business pages for the first time I was absolutely stunned to discover that there were vastly differing opinions in the field of economics. If humans are so intelligent and have managed to learn so much about the physical world around them that was created by Who Knows What, then how could they not understand and agree on something created by humans!!
There are a couple of possible explanations. One is that economics is about human interaction and the reason we don't understand it is that we have a very poor understanding of ourselves. The other is that we don't want to understand it. I would go for a mixture of both. What do you think?
The discussions around the science of Covid and the climate demonstrate a vitally important lesson. When we talk about something really important and the conclusion affects large numbers of people, this thing called politics becomes involved. I believe that in fact early discussions about the subject were called political economy.
I don't follow you that closely because I believe that macroeconomics is impossible. You have a massively complex, chaotic system that is self-referential, so the best any of us have are stabs at history and philosophy etc., but never a science.
I guess that's why I've never read your essential humility about all of this, and I applaud it. (As far as I'm concerned, this is the best thing you've written here.)
Go out and preach this to your fellows so they'll get out of the business of trying to affect the world.
Is it actually the case that the Fed didn't use DSGEs in 2008? The staff prepares forecasts for every board meeting and simulates the effects of possible policy paths using FRB/US. I don't think anyone actually thinks these models tell the exact truth, but they do seem to play some sort of role in decision-making.
IS-LM macro still works well enough. Macro was in a better state in 1958 than it now. https://johnquiggin.com/2013/01/05/the-state-of-macroeconomics-it-all-went-wrong-in-1958/
As for DSGE, you know my view from Zombie Economics.
Do any modern macro economists ever think about Georgism? I’m just in this journey of discovery and it seems fundamentally so necessary. Almost too easy and obvious and I’ve been seeking counter arguments.
I loved this and how it lays out the issues at play. Now can you do the Laffer Curve so I have something to shut up the next person who tries to cite it?
I look to Harry Seldon.
Which I probably read a few years before that real economist. 🤗
On the other hand, micro isn't in the clear. In the absence of full employment, general equilibrium doesn't work, and that undermines lots of micro. You get a mention in this post https://johnquiggin.com/2013/10/25/the-macro-foundations-of-micro-crossposted-at-crooked-timber/
People have been trying to replicate Shalizi and McDonald conclusions. It seems that their results won’t replicate ( https://twitter.com/joshuabrault3/status/1588861757027938305?s=46&t=YTJt3sPHqOS77LYVNMn8Mw) and might be caused by a coding mistake (they decided to code everything from scratch in R). In fact standard packages like Dynare do recover true estimates pretty well.
Also, the similar exercise with opposite results was done by Iskrev (2010), whom CS does not cite (they also do not cite Canova and Sala and are in general dismissive of the identification in DSGE literature, for reasons I cannot understand).
All that time DSGE people in Econotwitter are writing humble and engaging threads like this:
https://twitter.com/otiliaboldea/status/1588900104735719425?s=46&t=YTJt3sPHqOS77LYVNMn8Mw
https://twitter.com/hpfilter/status/1589319404478951424?s=46&t=YTJt3sPHqOS77LYVNMn8Mw
https://twitter.com/javiergc14/status/1588191441913876483?s=46&t=YTJt3sPHqOS77LYVNMn8Mw
CS decided not to engage with this critique, unfortunately.
Overall DSGE has a number of problems, but I do not think that strangely coded paper that does not engage with the lit and reaches conclusions opposite to other peer reviewed results moves us to the right direction
Really helpful summary for me. Explains why I detest the entire macro-project beyond really basic things like gross national income trends. I am not surprised that microeconomic models have been much more useful and easily validated. They reduce the chance of not knowing the relevant variables. By reducing the scale of the investigation.
Great writeup. The 14 other likes this post has received so far agree with my sentiments.
So are many other economists. I prefer the economists that are good at research and reality. Claudia Sahm is an example of this. Unlike Sahm, Summers name will not be attached to any empirically based model that has use in the real world. For the record, he treated Sahm horribly when he was her boss. As well as the other realists who also did research and warned of the danger of a mountain of derivatives, e.g., Brooksley Born, Shelia Bear. Summers and his crowd had nothing but scorn for these researchers. If he’s so good at research, how is it he couldn’t see a financial freight train coming down the tracks?
The idea that currency-issuing governments can issue debt free money, without taxing or borrowing from the private sector, on behalf of public sector spending - who cares if it's a theory or not.
The important thing is the necessity for the total of public and private spending to not exceed the nation's productive capacity., to avoid inflation.
As for Turkey: in MMT a ZIRP is recommended, along with a JG to act as a price anchor.
Nothing to do with Turkey.
And re "Biden's inflation": in a pandemic, money shouldn't be given to people who don't need it....
Noah, in becoming a science, aren't the first methods, methods of measurement? (i.e., going from qualities of motion, getting to quantities; going from qualities of force to quantities of force; going from feelings of temperature to repeatable effects of temperature).
The desire for the micro-to-macro transmission to be elegantly tractable seems to be where the importance of the above gets stripped out... premature mathematization.
True to form, make sure you cite Larry Summers in any post in re economics. But maybe this is apt for the universe of economic modeling; because in the real world of economic policy-making, few economists have done as much damage as Larry Summers. I get the feeling that writing columns about economics is a poker game and Larry Summers is the ante. Personally, I’d rather read Carlota Perez or Ray Dalio on the 50-year business cycle. Keep up the great work but consider going on a serious Larry Summers diet. Surely, you can find other economists with the same ideas.
"That doesn’t mean macro is a “science” yet — I’d say it’s more a proto-science, maybe a bit like medicine in the 1600s. " Maybe more like political science, still highly an art with some science.
Whatever happened to good old Keynesean Economics. In bad times, one spent and built up debt. In good times, one increased taxes, controlled spending and paid off debt?
This is the reason I subscribed to your blog: to try to understand more about how macroeconomists think and why they don't understand stuff. I love your realism and honesty about the state of the field.
My training is in science and biology and I never thought much about money until my late 20s. When I started reading the business pages for the first time I was absolutely stunned to discover that there were vastly differing opinions in the field of economics. If humans are so intelligent and have managed to learn so much about the physical world around them that was created by Who Knows What, then how could they not understand and agree on something created by humans!!
There are a couple of possible explanations. One is that economics is about human interaction and the reason we don't understand it is that we have a very poor understanding of ourselves. The other is that we don't want to understand it. I would go for a mixture of both. What do you think?
The discussions around the science of Covid and the climate demonstrate a vitally important lesson. When we talk about something really important and the conclusion affects large numbers of people, this thing called politics becomes involved. I believe that in fact early discussions about the subject were called political economy.
I don't follow you that closely because I believe that macroeconomics is impossible. You have a massively complex, chaotic system that is self-referential, so the best any of us have are stabs at history and philosophy etc., but never a science.
I guess that's why I've never read your essential humility about all of this, and I applaud it. (As far as I'm concerned, this is the best thing you've written here.)
Go out and preach this to your fellows so they'll get out of the business of trying to affect the world.
Leave that to poets and warriors.
Is it actually the case that the Fed didn't use DSGEs in 2008? The staff prepares forecasts for every board meeting and simulates the effects of possible policy paths using FRB/US. I don't think anyone actually thinks these models tell the exact truth, but they do seem to play some sort of role in decision-making.