Friday, September 18, 2020

For the Record: Stupid Economist Tricks

Nice example of what Bos called a "Marshall McLuhan moment" ("You know nothing of my work," said the Canadian sage, appearing out of nowhere in the ticket line):

Fairly clear what happened here: Chris Edwards of the Cato Institute (where he edits Downsizing Government) is testifying before the Congressional Oversight Commission, a new body set up in April to monitor the workings of the CARES act, of which Bharat Ramamurti, just off his service as one of the top economic aides to Elizabeth Warren's presidential campaign is the only so far appointed commissioner, and he is explaining that according to this extremely authoritative paper by Valerie Ramey, government spending does not grow the economy very much, and Ramamurti says well, how about this spot in the paper where it says it does, and Edwards says, approximately, "Homina homina homina—uncertainty!—homina homina," and Ramumurti, says, approximately, "Because I called her up the other night and she said, yeah, that's exactly what she meant."

But that's not how the economics frat boys saw it: they saw Ramamurti as having sprung some kind of dishonorable trap on the witness:

Edwards: "Ramey says a dollar of federal spending would result in less than a dollar of economic growth." 

Ramamurti: "Later in the paper Ramey says not in a sustained period of extremely low interest rates such as we are now in."

Because Ramamurti was quoting from exactly the same paper, of course, as he said, but the attacking economists are somehow unable to hear this. It's a "letter"!

Selgin hunted through Ramey's publications and couldn't find anything suggesting what Ramamurti suggested. Well, maybe this one thing...

Actually, that was the paper Edwards had been quoting from, and it just happened to be the paper Ramamurti had been quoting from too, as he said:

Which you might think would be the end of the story—note that Ramey not only said what Ramamurti said she said, in the paper Edwards quoted

but he decided instead to switch around to litigating the point:

Bullshit, he clearly meant to hide it. I could have kept arguing too, because those "initial explorations" have a much broader base than you might think—

The situation is different with respect to periods when interest rates are near the zero lower bound or when monetary policy accommodates government spending increases (such as during World War II in the United States). Numerous New Keynesian DSGE models show that multipliers can be higher than one when monetary policy is constrained by the zero lower bound on interest rates. At the zero lower bound, an increase in government spending provides extra stimulus by increasing expected inflation, which lowers the real interest rate (Farhi and Werning 2016). Calibrated models such as the ones analyzed by Christiano, Eichenbaum, and Rebelo (2011) and Coenen et al. (2012) can produce multipliers that range between 2 and 3 when the period of monetary accommodation is sufficiently long [as seems to be the intention of the Fed, judging from recent statements]. Some recent empirical work has found some evidence of higher multipliers, ranging from 1.5 to 2.5 at the zero lower bound for Japan (Miyamoto, Nguyen, and Sergeyev 2018) and around 1.5 for historical samples in the United States (Ramey and Zubairy 2018). 

but the hell with it, the whole thing has made me too angry, in a somewhat self-righteous way. The thing is, I was right on the basic question—Ramamurti was quoting from the text Edwards claimed was the big evidence on his side, and positively demonstrating Edwards was misreporting it, before he went to the length of talking about his phone call—not because I have any kind of superior knowledge of these issues, of which I indeed have no knowledge at all, but just because I listened to the guys and the content of what they said; and Selgin and co. were wrong, because they didn't—they listened instead for debate points they could use to back up their guy, and as a result actually did not know what had happened in a two-minute video and chased instead through a whole bibliography of irrelevant evidence before coming, with my help, to the facts.

And then Selgin added insult to injury by acting as if he'd found it himself! Oh, hahaha, "it was the same study I found, eventually!" That's what I've been telling you all day, asshole.

I think he still doesn't understand it, because he's so full of himself, and I don't want to talk to him any more.

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