Sunday, July 19, 2009

Stiglitz Article

As you might suspect from a blog pushing for the ouster of Larry Summers, we absolutely LOVE Joseph Stiglitz. (See Krugman post on Stiglitz article.)

The big problem with liberal economists, we think, is that there are simply not enough of us to go around... We hail Paul Krugman, hail Bradford Delong, hail... ???

And while we love Krugman, Stiglitz just operates on a slightly higher plane. He's the best economist of his generation.

I found one small example of this when I was doing research on the Asian Tigers. The rise of the Asian Tigers (+China) is probably THE big event in recent economic history. Yet, it really doesn't get all that much attention from economists. Most Econ PhD's these days are minted without ever being asked to think at all about the rise of East Asia in a class setting. Anyway, in the mid 1990s, there were a couple flashy papers by Alwyn Young claiming that the Asian Tigers had gotten rich merely via capital accumulation, and had had no TFP growth over a quarter of a century in which their economies were growing at nearly 10%/year. Krugman wrote up a piece based on Young's work in Foreign Affairs in 1995...

While it all sounded convincing at first -- East Asians did save a ton, and had impressive improvements in education and such -- when I delved deeply into Young's work (he's now at U of Chicago), I found that it to be complete garbage, and that much of his work was in fact fabricated. While I did find some critiques of it (South Koreans argued that TFP estimates for South Korea were too low; Taiwanese argued that TFP estimates for Taiwan and Hong Kong were too low, etc... TFP being a matter of national pride), the only complete dismissal of Young's approach I could find -- the only one who understood that the "study" was crap -- was Joseph Stiglitz.

Like I said -- the guy just operates on a higher plane...


  1. Larry Summers quotes Google search as a sign the "recession" is coming to an end. Hopefully he wasn't serious. However, there's really no excuse. The economy's current condition isn't funny.

  2. Stiglitz has also been a strong moral compass for the US, for example speaking out about the long-term cost of the Iraq War.

  3. Ummm...What about Chang-Tai Hsieh's work? (Which showed that it was crap...and Hsieh, incidentally, is now also at Chicago).

  4. No it didn't, Tai Hsieh, who, by his spelling, must be Taiwanese, said that Young's estimate of Taiwanese TFP was too low. There was no wholesale rejection.