Stan Collender: Don't Believe The Reports Of Progress On The Fiscal Cliff
Mark Thoma Sends Us to Paul Krugman: Fighting Fiscal Phantoms

Antonio Fatas Scolds Greg Mankiw, Aparna Mathur, Sita Slavov, and Michael R. Strain

Antonia Fatas:

Ignorance as an excuse: Via Greg Mankiw I read a response to the argument by Peter Diamond and Emmanuel Saez that the top marginal tax rate in the US should be raised to about 73%…. The authors… present a contrast between the willingness of Peter Diamond to offer a concrete policy recommendation with the answers that two other Nobel Prize winners (Tom Sargent and Chris Sims) gave after receiving their prize. When asked in 2011 what should the government do to help growth, Sims answered…. "If I had a simple answer, I would have been spreading it around the world."

The authors praised Sims' answers as the "model of how academic economists should behave when facing questions about specific policy."… [T]his [is]… an odd and depressing conclusion…. I understand that some of what we do as academics is not useful enough for policy makers…. But, as Sims points out in his statement, one can find answers to those questions after careful thinking and a lot of data analysis. That's what Diamond and Saez have done…. The authors of the response… [say] "they can be pretty sure that the answer if significantly lower than 73%". Isn't this a simple answer?…

Diamond and Saez presents their arguments and data analysis in a way that is at least as competent as any other analysis on the same subject. They can be criticized on their assumptions or calculations, but not on their willingness to advance the knowledge on an issue of great policy relevance. If any, they should be praised.