History of Economic Thought
Virtual Office Hours: John Yoo Edition

Best Thought of as an Elbow to the Ribs While He Thinks the Ref Isn't Looking...

Hoisted from Comments: Conor Clarke protests:

Grasping Reality with Both Hands: Ahem!: I'm confused, Brad. [My] full quote is:

[Greg Mankiw] says that there's some empirical evidence -- I think he cites the Christina Romer study from 15 years ago -- that a dollar of tax cutting has a larger impact than [a dollar of spending]."

This is a factual claim about Greg Mankiw, not a factual claim about Christina Romer.

Ah. Here we get to a knotty issue--Greg Mankiw did say this. But why is what Greg Mankiw says if interest unless it bears on the truth of the matter asserted?

In fact, Mankiw does not have any empirical evidence that tax multipliers are bigger than spending multipliers. He has Ramey multiplier estimates for spending and taxes. He has Romer multiplier estimates for taxes. His comparison of the Ramey spending multiplier estimate to the Romer tax multiplier estimate is apples to oranges. In my view, it's best understood as an elbow to Christie's ribs while Mankiw hopes the ref isn't looking.

Conor goes on:

[That Mankiw made this claim is] completely true. Here http://is.gd/bacx is Greg Mankiw saying there is some evidence that a dollar of tax cutting has a larger multiplier than a dollar of spending, and citing Christina Romer. Here http://is.gd/fh0r he is again. Mankiw did this in the New York Times and everyone blogged about it.

Should I have called Romer to ask about Mankiw before calling Barro to ask about Romer? I dunno, seems like a complicated burden for an on-the-fly interview. And I think Romer would have been pretty upset if I bothered her about this.

I assure you, neither Christie nor David Romer would be upset to be asked whether their paper suggests that tax multipliers are larger than spending ones. They would each say that that is a tendentious misreading of what their paper says.