Like Rand Paul

Twitter parody account @JohnCornyn plagiarized @LOLGOP joke. @LOLGOP 3:14 AM @LOLGOP 3:14 Rome time Nov 24 2013 @JohnCorny 4:15 AM Rome time Nov 24 2013 Wait what do you mean when you say that's not a parody account ?!?!?? You say that's Texas's more nearly sane Senator ?!?!!!!?

New Keynesian Good Two Keynesian Better

New Keynesian Good Two Keynesian Better Oddly Paul Krugman seems to have perceived my observation that he is a two Keynesian rather than a new Keynesian as a criticism.

In fact I much prefer simplest new Keynesian models to standard obscure new Keynesian models. Oh hell, my damn comment was waaay too long. here it is

I understand that hoping to read my name two times on your blog in one day is too optimistic. But really, I much prefer two Keynesian models to new Keynesian models. As you mention from time to time some people think the main purpose of models is to clarify thought. I am another one of those people.

More to the point simple models make clear which assumptions are key. As you mentioned in the New Keynesian ... fiscal policy post there are two key things to say about new Keynesian model dynamics

1) it is assumed that the economy gets back to the steady state (you wrote "a steady state" but it in the work horse models there is only one steady state)

2) there is no reason to think this is realistic. In fact leading new Keynesian OJ Blanchard has written about hysteresis not so long after figuring out how to deal wtih anticipated shocks in a model with a saddle path equilibrium.

I was thinking of commenting on those two points. In (almost all of ?) contemporary macro, it is assumed that there is a unique steady state and saddle dynamics around it. This means it is assumed that, excpet for exogenous shocks, the economy is predictable. That seems to me to be a problem right there given how badly contemporary macroeconomists (including the oversigned) forecast. But it provides a key insight to policy makers (in scare quotes)

"In the long run, macro policy doesn't affect real variables. So the very serious statesman who focuses on the long run should target inflation and ignore unemployment and output. "

The problem is that this policy relevant conclusion is an arbitrary assumption. The fearful plumbing is all analysis of the short run. Since it is not assumed a priori it is complicated. Since there isn't a standard (plainly false) assumption there is a lot of controversy. Since it is fearflul plumbing it makes policy makers queesy.

I think the impact of the analysis on actual policy is all due to the assumption and not the fancy math, clever modelling innovation or well anything whcih wasn't shoved aside as something we don't have to worry about.

What's worse, while, the serious statesman ignores the Keynesian parts of new Keynesian economics, the political hack ignores all of it. The short term political effect of policy proposals is based entirely on economically illiterate conventional wisdom. The case that good policy is good politics is an argument that even politicians who care only about winning elections should consider the medium run impact of policy.

The NK case for Keynesian policy is that it will be politically costly in the short run and won't help the economy in the long run but in the in between run it would be good for the economy and the politicians who implemented it. I can't explain the failure of the not the short run, not the long run, but roughly somewhere in the middle run analysis to convince policy makers.

Two many links too Angry Bear

Brad DeLong linked to a post in which I translated his diplomatc comments on Cochrane into rbert rudeness. Now krugman linked there too. Many people who do not find Krugman an DeLong two diplomatic claim that DeLong is part of a Krugman claque which makes me part of a claquer's clague. If it quacks like a duck it's probably a claques. Question to Cochrane: would you rather debate one horse sized Krugman or a hundred duck sized Krugman's. I Tried to comment at Krugman's but ended up complaining that the soun written "tu" in French and Italian is written two too many ways in English. Fortunately I didn't say it has three too many meanings, because it has at least 6 meanings 1) two = 2 = due 2) too = excessively = troppo 3) too = in addition = anche 4) to X makes an infinitive from the verb stem X = Xare, Xere, Xire ore Xurre 5) to is the generic dative proposition so to Y is the dative of the noun Y 6) to is a preposition implying movement towards which is acusative As in I can't go to Rome because I am in Rome right now. Obligatory Monte Python reference

Usual Rude Comment on Wren-Lewis

Prof Wren-Lewis discusses being a New Keynesian and an old Keynesian at the same time. I note that NKs spend a lot of time being purely NK and analysing models which do not at all fit the basic comovements of GDP and consumption and which are clearly not at all useful approximations ( as they know as shown by their policy advice). Also I ask for any evidence that the NK-OK hybrid fits any data better than the OK models. It is a fact that there are many new Keynesian models in the literature which have Ricardian equivalence ( say Smetts-Wouters). I hope no one takes the policy implications of such grossly unrealistic models seriously. It may be rude to call the analysis of such models insincere lip service to applied math dressed up as economics. However I see no other way to describe the phenomenon. Also you and Cochrane know more about this than I do, but I know of no evidence of superiority of the hybrid model over a model of complete myopia and habit formation. It is certainly true that all of the classical (e.g. Noted ny Friedman) evidence for the PIH fits a model of myopia and habit formation just as well. Since NK DSGE models all include habit formation (to fit the otherwise excess smoothness) the question of what of any empirical vlue is added by forward looking expectations is to my limited knowledge open. The fact that no one uses adaptive expectations is an appeal to authority not evidence. It is simply a fact that the variation TIPs breakevens can be explained in part assuming adaptive expectations R squared of 0.5 is the crazy period 2008-9 is excluded. I contrast thre is no hint of any trace of any explanatory power of forward looking expectations for the very boring reason that achieved inflation rates to maturity of the bonds have hppened to be almost constant since the introduction of TIPs (about 2.5%). Your post suggests that the NK glass is half full with useful insights from both NK and OK models. I am honestly not aware of significant evidnce that the NK glass isn't almost exactly empty. Data here http://angrybearblog.com/2013/02/more-on-adaptive-inflation-expectations.html

Sometime's I feel like somebody's watching me

OK i can handle the fact that, on my birthday, google appears with letters made of cakes and cupcakes on my computer but not on my daughters (file under kinda cute but creepy) but now I am getting paranoid (almost wondering if the NSA is spying on me). A obvious twitter 'bot followed me with tweets consisting only of advertising for, among other thingsm wasabi flavored ice cream. Now, I think you will agree that wasabi flored ice cream is rather a niche product. Ou may not know that it exists (in Rome to which all roads lead). I hope with some (but rapidly declining) confidence that you don't know that I really like wasabi flavored ice cream HOW does a twitter 'bot know I like wasabi flavored ice cream ??? I feel we have skipped artificial intelligence and gotten straight to artificial ESP.

Rising to the Challenge

What with show props and alligators (h.t. @skennison), the US airline industry is facing challenges today. Fortunately Virgin America is up to the task of making me not bored in advance at the thought of boarding.

Chait Too

In a generally good post countering the Frum post which I denounce below, Jon Chait manages two impressive howlers. One is really for the ages (the middle ages) "You may pose a low actuarial risk today, but you cannot be certain your luck will continue for the rest of your life (or until you qualify for Medicare). Even people living the healthiest lifestyles suffer illnesses and accidents, or marry people who have a uterus." Some of the people living the healthiest lifestyles were born with uteruses. Chait accidentally proposes that being born with a uterus is like smoking or eating too much. Then the lesser howler which is the same as Frum's " That is what Obamacare advocate Jon Gruber is getting at when he concedes that 3 percent of Americans will be worse off under the new law. " Gruber conceded no such thing. In fact Chait explained very clearly why many of the people who will be forced to buy more complete coverage by the ACA will be better off starting in 2014 (even if they don't come anywhere near any risky uteruses) . I now feel bad that I calle Frum a liar. Chait is not lying (I think he is honest and in any case the error works against his argument). He is literate (at a level I can't even dream of).. But he just can't associate words with numbers. He concedes to Frum et al that Gruber wrote 3% but does not note that Gruber didn't concede those roughly 9 million would be financially harmed by the ACA. I link to an explaination plain English to help a second master of the language (who is a much better writer than Frum who is a much much much better writer than I) in the post below.

David Frum Lies & Sun Rises in East.

Quotes of the day Igor Bobic at Talking Points Memo ""POTENTIAL losers" (will have to buy a higher quality health plan with no annual cap)" I quote another passage "Gruber summarized his stats: ninety-seven per cent of Americans are either left alone or are clear winners, while three per cent are ARGUABLY losers. (caps mine) I quote Frum "Talking Points Memo today offers a chart suggesting that the losers under Obamacare will number about 3 percent of the population. Why, that’s only…9 million people." I comment. The number 9 million makes the false claim a plain simple lie. The number of losers is definitely not equal to the number of people who will be forced to buy a higher quality health plan, because many forced to buy such a plan will pay less themselves since they will get a subsidy. Also the 3% will get better insurance. Your insinuation that Gruber, Lizza, Wolfers and Bobik said that 3% of people will, like you, pay more for insurance which is no better (in your case worse) is plainly false. You go on to assert that the 3% have high income. There is no basis whatsoever for this assertion. Your description of the TPM post is plainly obviously false. You are not functionally illiterate. You are a shameless liar,

Frakt like the Marcellus Shale

I missunderstood a tweet by Austin Frakt I read "impossible to defend" as "indefensible" using its first dictionary definition when he wrote it thinking of the second. More embarrassingly, I persistently remembered it as "indefensible" not as "impossible to defend" until I just checked. The Xchange Austin Frakt ‏@afrakt 30 Oct I maintain, the admin's line on this is impossible to defend. http://www.forbes.com/sites/theapothecary/2013/10/30/no-david-axelrod-the-vast-majority-of-people-in-this-country-are-not-keeping-their-plan/ … (note I red this as "is indefensible" and so on down a slippery slope to special pleading. robertwaldmann ‏@robertwaldmann 30 Oct @afrakt @delong In fact defensible. Obama used the present tense re plans which existed then & were grandfathered. robertwaldmann ‏@robertwaldmann 30 Oct @afrakt @delong "indefensible" does not mean that the defence will convince people who ignore rules of grammar Austin Frakt ‏@afrakt 30 Oct @robertwaldmann @delong Seems like a judgement call. I've made mine. Good luck! (I still support the law.) robertwaldmann ‏@robertwaldmann 30 Oct @afrakt @delong I too still support the law. Sorry for my tone.@robertwaldmann @delong Appreciated. Ending well is all it takes! Let's move on. There are better things to discuss. OK I call it a total victory for Frkt who gets extra cool points @robertwaldmann @delong Appreciated. Ending well is all it takes! Let's move on. There are better things to discuss. The questiona are 1) what administration position (it depends when Obama sait it which depends on what statement "if you like your plan you can keep it" is 100% true. Later similar statements were false as things had changed becaues post March 23 2010 plans were not grandfathered. I now know that Obama kept saying things whcih had ceaed to be true so he earmned at least 3 of his 4 pinocchios (the fourth is a soft inherently subjective Inochio made of scoffed pine). Time to admit he said something false and move on except for the part about admitting he said something wrong (re Roy Hattersley's rule about holes -- "When you ar in a hole stop digging". He seems to have, more or less, as well as could be hoped, pulled it off which is why he is President. Frakt meant c"can't be defended" as in "indefensible as the word is used as a term of art in military strategy" as in "time for a strategic withdrawal" as in "Quote Roy Hattersley who never got to numbr 10 Downing street but sure knew what not to do when in holes". I read it can't be deferended" as "indefensible" (reading comprehension problem) as in "not arguably true" or "no one can honestly and in good concience claim it might reasonably be interepreted so that it is true". Let's ask the Google which sends us to Merriam and Webster

in·de·fen·si·ble adjective \-ˈfen(t)-sə-bəl\ : not able to be thought of as good or acceptable : not able to be kept safe from damage or harm Full Definition of INDEFENSIBLE 1 a : incapable of being maintained as right or valid : untenable b : incapable of being justified or excused : inexcusable 2 : incapable of being protected against physical attack

The question is whterh it can't honestly be defended (ef 1) or if attempting to defend it is bad rhetorical strategy because people won't be convinced. He meant the second and I read the first. His "impossible to defend" meant "indefensible in the militray sense" not "unarguably false". Twitter restricts the text to 140 characters and the context to what shows up clicking "view converstation" and searching terms beginning with @ and #. SEcond engagement. I debate with Brad about the meaning of "you" J. Bradford DeLong ‏@delong 30 Oct .@robertwaldmann then Obama should have said: “If U and Ur insurance company wish to keep your current plan, you can” shouldn’t he? @afrakt What do you mean by "U" White man ? I go to join my coparties. robertwaldmann ‏@robertwaldmann 30 Oct @delong @afrakt It depends on what the definition of "you" is. In general when we say a contract is allowed by law = "if both parties agree" Expand robertwaldmann ‏@robertwaldmann 30 Oct @afrakt @delong The statement "no one will take thy plan from thee" would be false. Now THIS is a tortured defence To go on with my "enhanced" tweeting techniques. Is it true that you can marry whichever adult you please in California ? No you can only marry people who are willing to say "I do" (plus neither can be married at the time). It goes without saying that a fixed term contract can't be unilateraly extended by one party against the will of the other. President Obama, will I be able to play the piano after the operation ?

The Zero Lower Bound and the great Max

The Protestant Ethic and the Crisis of Capitalism: An alternative title for "The General Theory of Employment, Interest and Money" Don't you hate it when you have a title and no post to go with it ?