What we’ve learned about inflation.
WSJ oped on what theories account for 2021-2022 inflation.
Or my title, “Victory Laps.” A WSJ oped August 2 2023. How fiscal theory makes sense of inflation, and other common stories do not.
Fair tax oped
WSJ Oped on consumption taxes. The “fair tax” is introduced in Congress. Sure it will lose, but that’s progress.
“A consumption tax is the shock our system needs.” An oped on the “fair tax” at WSJ. Again, a simple consumption tax is the right answer. The “fair tax” is introduced in Congress. Sure it will lose, but that’s progress.
The government ditched inflation-protected bonds – companies should start issuing their own
With Jon Hartley. Globe and Mail Jan 31 2023
With Jon Hartley. Globe and Mail Jan 31 2023
The most important source of Canada’s inflation: The government borrowed more than $700-billion
Globe and Mail. Nov 14 2022 WIth Jon Hartley. Inflation and fiscal policy, Canada edition
Globe and Mail. Nov 14 2022 WIth Jon Hartley. Inflation and fiscal policy, Canada edition.
Nobody Knows How Interest Rates Affect Inflation
Wall Street Journal August 24 2022.
Wall Street Journal August 24 2022. Do higher interest rates raise or lower inflation? Can inflation go away if the Fed leaves interest rates alone? Surprisingly, we don’t really know.
The Federal Reserve Can’t Cure Inflation by Itself
Wall Street Journal July 28 2022. Ending inflation will require fiscal and monetary policy acting together.
Wall Street Journal July 28 2022. Inflation was sparked by fiscal policy. The Fed’s tool to offset that is blunt: The Fed can try to cause a little bit of recession, and hope via Phillips curve that recession lowers inflation. To end inflation will require fiscal and monetary policy acting together, to fix the US long-run fiscal problem.
Why Isn’t the Fed Doing its Job?
Project Syndicate Jan 19 2022. Account for the grand bailout of 2020, and think a little bit about incentives, please. Blog post
Project Syndicate Jan 19 2022. Account for the grand bailout of 2020, and think a little bit about incentives, please. Blog post
The Ghost of Christmas Inflation
Project Syndicate December 23 2021. Blog Post. They dropped $5 trillion of debt from helicopters, what do you expect?
Project Syndicate December 23 2021. Blog Post. They dropped $5 trillion of debt from helicopters, what do you expect? Future inflation will depend on future fiscal and monetary policy, and whether people believe debt will be repaid.
Tax Consumption Through A VAT
Wall Street Journal. Local Copy.
Wall Street Journal. Local Copy.
Here's what Genuine Tax Reform Looks Like
Wall Street Journal. Separate the tax code, the subsidy code, the transfer code, and the overall level of taxation. Local copy
Wall Street Journal. Separate the tax code, the subsidy code, the transfer code, and the overall level of taxation. Local copy
America Needs an Alternative Maximum Tax
Wall Street Journal. Local Copy.
Wall Street Journal. Local Copy.
Stimulus: Neither Needed nor Free
Los Angeles Times. 300 words on "does the economy need more stimulus," with 8 other sages. No.
Los Angeles Times. 300 words on "does the economy need more stimulus," with 8 other sages. No.
Stimulus, RIP
A last piece on fiscal stimulus, as we all decide whether it was the great savior of the recession, or an ineffective idea ready to go on the ash-heap of bad ideas. Guess what I think. I explain the Barro theorem, how it constrains the debate even if it isn't literally true (how it's false matters a lot), and I respond to Krugman and Delong's latest outrages, in particular the claim that stimulus opponents have no model.
A last piece on fiscal stimulus, as we all decide whether it was the great savior of the recession, or an ineffective idea ready to go on the ash-heap of bad ideas. Guess what I think. I explain the Barro theorem, how it constrains the debate even if it isn't literally true (how it's false matters a lot), and I respond to Krugman and Delong's latest outrages, in particular the claim that stimulus opponents have no model.
Are we all Keynesians Now?
Link to Economist. The Economist had an online debate on this proposition, headlined by Luigi Zingales and Brad Delong. This was my two cents on the issue. Of course not, right? Some good Keynes quotes and a defense that economics has in fact advanced a bit in 70 years.
Link to Economist. The Economist had an online debate on this proposition, headlined by Luigi Zingales and Brad Delong. This was my two cents on the issue. Of course not, right? Some good Keynes quotes and a defense that economics has in fact advanced a bit in 70 years.
Fiscal Stimulus, Fiscal Inflation or Fiscal Fallacies?
An analysis of fiscal stimulus. Dropping money from helicopters is “fiscal stimulus,” and that will surely goose demand before it quickly leads to inflation. Usually though, “stimulus” means by debt that the government plans to pay back, and is supposed to work without inflation. Does it? Many arguments reflect classic fallacies. Most of all, the usual arguments imply that our current troubles come from inadequate borrowing and spending! No, our current troubles come instead from a credit crunch, and a “flight to quality” and “precautionary demand” for government debt. Fiscal stimulus could in principle help to quench that demand, but that problem can be more easily and reversibly solved by expanding the Fed and Treasury’s asset purchases.
Update: Paul Krugman and Brad Delong wrote very critical blog posts. However, neither seems to have read past the first few paragraphs. Brad says I think the velocity of money is constant. Keep reading, Brad, down to “A monetary argument for fiscal stimulus..” where it says “if money demand increases dramatically…”. Paul says I treat S=I as an identity, not an equilibrium condition. Keep reading, Paul, down to “aggregate demand has fallen.. deflationary pressure…” where nominal GDP is adjusting to equilibrate S and I. OK, I can’t condense all of macro down to 300 word blog posts, but if you can’t read more than that, don’t write nasty comments. Greg Mankiw and Dani Rodrik had nicer things to say. Greg’s blog is the place to go for intelligent stimulus skepticism. Declan McCullagh of CBS news wrote a nice article collecting many academic stimulus skeptics.
An analysis of fiscal stimulus. Dropping money from helicopters is “fiscal stimulus,” and that will surely goose demand before it quickly leads to inflation. Usually though, “stimulus” means by debt that the government plans to pay back, and is supposed to work without inflation. Does it? Many arguments reflect classic fallacies. Most of all, the usual arguments imply that our current troubles come from inadequate borrowing and spending! No, our current troubles come instead from a credit crunch, and a “flight to quality” and “precautionary demand” for government debt. Fiscal stimulus could in principle help to quench that demand, but that problem can be more easily and reversibly solved by expanding the Fed and Treasury’s asset purchases.
Update: Paul Krugman and Brad Delong wrote very critical blog posts. However, neither seems to have read past the first few paragraphs. Brad says I think the velocity of money is constant. Keep reading, Brad, down to “A monetary argument for fiscal stimulus..” where it says “if money demand increases dramatically…”. Paul says I treat S=I as an identity, not an equilibrium condition. Keep reading, Paul, down to “aggregate demand has fallen.. deflationary pressure…” where nominal GDP is adjusting to equilibrate S and I. OK, I can’t condense all of macro down to 300 word blog posts, but if you can’t read more than that, don’t write nasty comments. Greg Mankiw and Dani Rodrik had nicer things to say. Greg’s blog is the place to go for intelligent stimulus skepticism. Declan McCullagh of CBS news wrote a nice article collecting many academic stimulus skeptics.