faulker020

John Cochrane has another excellent post explaining the Neo-Fisherian view of monetary policy. Some key grafs (I think "graf" means "excerpt"): Why is there so little inflation now? How will a rate rise affect inflation? How can we trust models of the latter that are so wrong on the former?  Well, why don't we turn to the most utterly standard model for the answers to this question -- the sticky-price intertemporal substitution model. (It's often called "new-Keynesian" but I'm trying to avoid that word since its operation and predictions turn out to be diametrically opposed to anything "Keyneisan," as we'll see.)  The basic simplest [New Keynesian] model makes a sharp and surprising [Neo-Fisherian] prediction...  I started with the observation that it would be nice if the model we use to analyze the rate rise gave a vaguely plausible description of recent reality.    The graph shows the Federal Funds rate (green), the 10 year bon...

Michael Lind wrote an article recently suggesting that universities abolish the social sciences. He unfairly credits me with the term "mathiness", which of course is Paul Romer's thing. But anyway, I tweeted the article (though I disagree with it pretty strongly), and that provoked an interesting discussion with Ryan Decker . When economists defend the use of mathematical modeling, they often argue - as Ryan does - that mathematical modeling is good because it makes you lay our your assumptions clearly. If you lay out your assumptions clearly, you can think about how plausible they are (or aren't). But if you hide your assumptions behind a fog of imprecise English words, you can't pin down the assumptions and therefore you can't evaluate their plausibility. True enough. But here's another thing I've noticed. Many economists insist that the realism of their assumptions is not important - the only important thing is that at the end of the day, the model...