Monday, December 21, 2009

You Can't Quit Me...

A fourth (fourth!) e-mail from my new pen pal, N. Gregory Mankiw, who is no doubt happy I've moved on to pointing out that Paul Romer is deeply ignorant about growth and development.

Greg gives me permission to post his e-mails again, and writes: "This will be my last email to you. If at some point in the future, you are interested in open, civil discourse, let me know. --Greg"

Which I find strange given that my first e-mail said:

"Dear Professor Mankiw,

I'm a grad-student economist-blogger concerned about economic policy, and so am asking leading economists to comment publicly on current Fed policy for my blog readers.

Do you think the Fed's current Monetary Policy stance is too tight? Should the Fed adopt an inflation target of around 2.5-3%, and do more Quantitative Easing? The Fed's unemployment forecast for Q4, 2010 is 9.3-9.7%, while it expects inflation to be 1.4-1.7%. Is this acceptable? And if so, why/why not? Are the risks of doing too much and too little really symmetric?

I look forward to hearing you weigh in on this key economic policy question. I would also like to post your response on my blog.

Very Respectfully Submitted,

Thorstein Veblen"

What wasn't civil or respectful in the above? To recap, Greg responded to me by calling me a "coward".

In the future though, Greg, I might not respond so quickly to your emails as I'm finishing up my QJE submission, but I'm sure my blog readers at this point are hoping there is more where this came from and I have no doubt you'll furnish the goods.

Tiger Woods, who still dominates golf because he is a legitimate talent, has lost his position for violating cultural norms about sex. (OK, OK, he might have taken performance-enhancing drugs too, but I don't see how those drugs would have helped his short game -- putting and chipping. And everyone who has ever played golf knows that the short game is 90% of the sport, and that requires a delicate touch and hours of practice.)

Leading academic Macroeconomists never had such talents. Yet, as Matt Yglesias pointed out, because they have made and are making conventional mistakes, we have a Macroeconomist whose mistakes have effected millions of people celebrated on the cover of Time and Tiger, whose mistakes mostly hurt his wife, is now the worst person on the planet.

UPDATE: (edited typos above...)


  1. If you want the answer on where Mankiw stands on higher target inflation, he has already published his views on that. While he doesn't specifically give a numeric figure for what he thinks the Fed's target inflation rate should be, I wouldn't be surprised if he felt it should be in the 2.5% - 3% target.

    "Suppose that, looking ahead, the Fed commits itself to producing significant inflation. In this case, while nominal interest rates could remain at zero, real interest rates — interest rates measured in purchasing power — could become negative. If people were confident that they could repay their zero-interest loans in devalued dollars, they would have significant incentive to borrow and spend.

    Having the central bank embrace inflation would shock economists and Fed watchers who view price stability as the foremost goal of monetary policy. But there are worse things than inflation. And guess what? We have them today. A little more inflation might be preferable to rising unemployment or a series of fiscal measures that pile on debt bequeathed to future

    See: It May Be Time for the Fed to Go Negative

  2. I remember reading that article now -- and, actually, I like it. The proposal he suggests would never happen though, so it lacks realism, and second, it was published back in April when the Dow was still bottom feeding. As far as I know Greg Mankiw has been silent since his stock portfolio has begun recovering...

  3. "It May Be Time for the Fed to Go Negative"

    And the incentive for savers would be what exactly in this rosy scenario? I for one can't wait to park my money in an institution that will then loan it out at 0% (or less!). Sigh... if only we among the great unwashed could also create money out of thin air.

  4. i no smart enough to comment on econ, but i think tiger dominates golf, not gold.

    oh and i is pretty sure this proves you is cowardly to hide your name.

  5. I think you are a crazy Lefty (bigger fiscal stimulus? You crazy son.)

    But I wholeheartedly endorse your anonymity. There would be repercussions career wise if you used your name. Your ideas may or may not be bunk, but careers are not wholly determined by ideas alone.

    Also I enjoy reading your blog. Party on dude.

  6. I nominate that Summers be replaced by Dr. Iris Mack - the derivatives whiz he fired from Harvard Management Company when she tried to warn him of the risks that blew up the Harvard endowment!