tag:blogger.com,1999:blog-3621026.post6119779344600500505..comments2024-03-28T10:25:22.825+01:00Comments on Robert's Stochastic thoughts: Debating BernankeRoberthttp://www.blogger.com/profile/14455788499385673507noreply@blogger.comBlogger2125tag:blogger.com,1999:blog-3621026.post-65413232853617507082012-09-02T04:21:03.546+02:002012-09-02T04:21:03.546+02:00It is not analogous to conservative criticisms of ...It is not analogous to conservative criticisms of Obama's stimulus. Advocates of further fiscal stimulus argue that the ARRA added about $1,000,000,000,000 to US national income. No one claims that $1,000,000,000,000 is economically insignificant.<br /><br />In contrast I know of no one, except perhaps for you, who claims that a reduction of interest rates of 0.15% is economically significant. Bernanke certainly made no such assertion -- he claimed that the combined effect of QE I, QE II and operation twist on interest rates was large enough to be economically significant.<br /><br />Notice that I am accepting at face value the estimates cited by Bernanke. Note that Bernanke didn't assert that QE II had an economically significant effect. He clearly claimed that QE I had a significant effect and that the sum of the effects of QE I, QE II and QE III was significant. <br /><br />Your analogy is similar to asking if I agree that a minnow is about as big as a whale. Roberthttps://www.blogger.com/profile/14455788499385673507noreply@blogger.comtag:blogger.com,1999:blog-3621026.post-82665323807227364292012-09-01T15:32:14.492+02:002012-09-01T15:32:14.492+02:00Krugman tells us that Woodford believes - tentativ...Krugman tells us that Woodford believes - tentatively - that QE worked through the expectations channel.<br /><br />"Woodford parses the evidence, and concludes tentatively that most of the apparent effects of QE actually come through the expectations channel — that is, that QE works, to the extent it does, largely because markets see it as a form of forward guidance."<br /><br />http://krugman.blogs.nytimes.com/2012/09/01/woodford-on-monetary-policy-sort-of-wonkish/<br /><br />" I do not think a 15 basis point decline in the 10 year rate is economically significant. "<br /><br />Could this be analogous to conservative criticisms of Obama's stimulus? It depends what your baseline is. Just because the economy isn't back up to trend growth, doesn't mean the stimulus didn't work to the extent it did given its size relative to the economy.<br />Peterhttps://www.blogger.com/profile/08272747870634233567noreply@blogger.com