Has Macro Policy Been Different since 2008?

Hoisted from the Archives from Five Years Ago: Progress in David Andolfatto's Economics Education Department

Noah Smith periodically asks me why I feel that I do not have time to read David Andolfatto--why what he writes goes never to the top but always to somewhere lower, in the middle of the too-read pile...

Here is one sufficient reason:

David Andolfatto, February 2009:

Here we go again.... Many governments appear to be taking seriously the notion that a massive government 'electric shock therapy' is needed…. Is there any merit in the view that a massive government fiscal action can rescue the day? Apparently, there must be. Why would all these learned people be advocating a policy prescription that is not solidly backed by economic theory and the historical evidence?… I am especially eager to learn how this evidence might be construed as supporting the notion that fiscal policy 'works'…

David Andolfatto, March 2009:

Multiplier Mischief: The current debate over the size of the 'government spending mulitiplier' is a perfect measure of the sway that conventional economic theorizing continues to grip the minds of people who should know better.... The only puzzle remaining is why it takes 4 full years of training to receive a PhD in macroeconomic theory; and why it should take a further 6 years to become a tenured professional by publishing papers examining what we all know to be the self-evident truth embedded in this 'really useful ad hoc model.' Unfortunately, I am apparently one of few who have trouble absorbing this simple theory…

David Andolfatto, November 2011:

A bridge over the macroeconomic divide.... I am generally sympathetic to the idea of expanding the supply of U.S. treasury debt.... A big question is what to do with the funds acquired.... I'm with Krugman that heck, we may as well use it to build physical capital (public infrastructure).... These provisional policy recommendations suggest themselves to me by way of a class of 'new monetarist' models that I like to use to organize my thinking about things…

From my perspective, the most depressing things are:

  1. That it took 31 months for Andolfatto to stop making fun of fiscal expansion and to remember (some of) the lessons of Knut Wicksell's Interest and Prices--which was cutting-edge economics in its day, but that day was 1898...

  2. That even in November 2011 Andolfatto was claiming that the idea that expansionary fiscal policy is a way of raising the natural rate of interest is a 'new monetarist' rather than a pre-Keynesian 'old Stockholm school' theoretical point...

  3. That not only had Andolfatto in 2009 not even bothered to do enough of his homework to understand that he had homework to do, he drew no lessons from his experience--so that in 2011 he already saw himself as having moved so quickly from ignorance to expertise without ever considering that he might still be in the intermediate stage of, you know, a student needing to do his homework...

There are a lot of smart hard-working homework-doing people out there competing for my attention. How many strikes can someone have before they automatically do not go to the top of the pile?


Hoisted from Fall 2011: Progress in Economics Education Department: Yes, a Temporary Fiscal Expansion Would Be a Good Thing:

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