Krugman writes: "I think I understand how being an official, surrounded by men (and some but not many women) who seem knowledgeable in the ways of the world, can create a conviction that you and your colleagues know more than is in the textbooks."
Paul Krugman. (photo: NYT)
03 December 16
rad DeLong, riffing off Larry Summers, asks about what is driving the Fed – and argues that Larry has it wrong, that the Fed’s problem is not an “excessive commitment to existing models.” On the contrary, the Fed seems to hold beliefs that are very much at odds with Macroeconomics 101, whose basic Hicksian models do not at all support the Fed’s eagerness to hike rates.
Indeed. This is a thesis I’ve tried to argue for a number of years; back in 2011 I noted that
[S]upposedly sober, serious people are actually radicals insisting that we can make the economy work in ways that it has never worked in the past … Meanwhile, the irresponsible bearded professors are actually the custodians of traditional wisdom.
