07 Aug 2014

Krugman Admits His Model Has Been Wrong Since Great Depression

Inflation, Krugman, Shameless Self-Promotion 1 Comment

Them’s fighting words, huh? It’s not worth summarizing; if you are into this stuff, click the link and read.

One Response to “Krugman Admits His Model Has Been Wrong Since Great Depression”

  1. Major.Freedom says:

    “The lesson for now, surely, is that we should not begin tightening based on hypothetical measures of slack, because this might lead to a terrible decision — keeping the economy depressed for no good reason. Instead, we should wait until there’s really clear evidence of overheating in the form of sharply rising prices. The risks of moving too soon versus too late are not symmetric.”

    This is the nugget he’s getting at.

    He wants more “stimulus”. Period. End of story. But the orthodox Phillips curve suggests that we’re at full employment and have been at full employment for many years.

    The lesson is, if a model cannot gel with one’s ideology, then jettison the model.

    Krugman is still “right”, because he’s a good guy who wants more government spending to help poor people.

Leave a Reply