Ken rogoff paul krugman articles
Ken Rogoff is one of the world’s best macroeconomists, so I take whatever he says seriously. But — you know that’s the kind of statement that is followed by a “but” — I’m having a hard time understanding his demands for a world slowdown.
Ken tells us that
The huge spike in global commodity price inflation is prima facie evidence that the global economy is still growing too fast.
And then he calls for
a couple of years of sub-trend growth to rebalance commodity supply and demand at trend price levels
Um, why? Basically, the world is employing rapidly growing amounts of labor and capital, but faces limited supplies of oil and other resources. Naturally enough, the relative prices of those resources have risen — which is the way markets are supposed to work. Since when does economic analysis say that the way to deal with limited supplies of one resource is to reduce employment of other resources, so that the relative price of the limited resource returns to “trend”?
Presumably there’s some implicit argument in the background about why a sharp rise in the relative price of oil is more damaging than leaving labor and capital underemployed. But that argument isn’t there in Ken’s recent pieces. Model, please?
I agree that
Dollar bloc countries have slavishly mimicked expansionary US monetary policy
and that’s a real issue: the Fed is pursuing very loose policy to deal with a US financial crisis, and that’s inflationary in countries that are pegged to the dollar without facing our problems. But that’s an argument for breaking up Bretton Woods II; it’s not an argument for tighter Fed policy.
Since this is coming from Ken Rogoff, I assume that there’s some deeper analysis here. But I can’t infer it from the articles I’ve read. Please, sir, can I have some more?
ECONLIB Articles
Jul 1 2013
An Economist Looks at Europe
“I can see now where the source of my mistake lay: I reasoned as if society was a sentient being, whose national debt had to be seen as a mere transfer between different parts and organs of a single entity, governed by an all seeing planner, whose job is to maximize a social welfare function.”
Economists, especially in Europe, seem to be divided into two irreconcilable camps over the question of ‘growth versus austerity’. From 2008 to 2012, the talk was all of consolidating public budgets, increasing taxes, closing down or merging unsafe banks, selling their assets at fire-sale prices, cutting down on pension and health entitlements, firing public employees, reducing trade union privileges and opening labor markets to competition—the classic panoply of measures the IMF used to demand of Third World countries when it moved in to rescue them. This time and for the Eurozone, the IMF was content to play second fiddle: the rescuers were Germany and other northern and central European countries; the peccant countries they had to rescue were those on the outer fringes of the Eurozone. The expectation was that this hard medicine would bear fruit at the latest in 2013 and bring renewed growth and employment after four years of contraction. Unexpectedly, and for reasons we hope to discover someday, there was a second dip in the recession. Public opinion, especially in countries suffering from high unemployment, became restless. In despair many Europeans leaders turned their eyes towards the United States, hoping to learn the lessons of its money-printing Federal Reserve and bond-issuing Treasury. The European Central Bank chief Signor Draghi promised to do “whatever it takes” to save the euro; Signor Monti was dealt a sharp lesson by Italian voters; the French President and the Spanish Prime Minister demanded growth-fostering measures to ease public deficit reduct
The Debate Over Public Debt
To the Editors:
In his review of books by Mark Blyth, Neil Irwin, and David A. Stockman [NYR, June 6], New York Times columnist Professor Paul Krugman continues his attack on me and Carmen Reinhart. Never mind that only one of the three books even mentions us. This is no obstacle to Krugman’s relentless campaign narrowly to circumscribe and grossly to misrepresent our research and its influence. His goal seems to be to paint us as extremists whose work is only referred to by conservatives. In reality, our long-standing position has been as centrists in the economic policy debate.
One would never know from Krugman’s writings that our studies on the history of financial crises helped provide the intellectual basis for the 2012 Obama campaign’s claim that the president’s policies were not the main cause of the long, slow recovery. Bill Clinton made frequent and extensive references to our 2009 book This Time Is Different, for example, in campaign speeches on October 29 and November 1. By contrast, the Romney-Ryan campaign routinely dismissed our results in press briefings by its top economists.
This is hardly a two-way debate on a level playing field. Between April 16 and May 19, when Krugman’s New York Review piece was posted, Krugman had already attacked us in over two dozen print and online pieces in his influential New York Times column, with its million-plus Twitter followers. This is not counting his many appearances on television, and articles since. Oddly, Krugman has never once cited the 2012 paper that is our most important statement on the relationship between debt and growth, or our favored 2010 analogy with speed limits and driving accidents.
By contrast, Reinhart and I have never referenced Krugman, save for an occasional passing compliment to his earlier brilliant academic research. We broke our silence only in a May 25 open letter after Krugman’s baseless and grotesque charge that we did not share da
.