Grasping Reality on TypePad, by Brad DeLong

Robert Waldmann writes:

I Think Noah Smith Gets One Wrong: State-of-Macroeconomics Weblogging: I'm going to be very pedantic. do the techniques of modern macro lead Williamson to include that low interest rates must lead to deflation ? Yes indeed they do, because one of those techniques is assuming a steady state and another is linearizing around it. The core assumptions of taste and technology do not imply a steady state (let alone a unique steady state). But assuming one is, like assuming rational expectations, standard practice.

Touché…