tag:blogger.com,1999:blog-2546602206734889307.post7430469088089851512..comments2024-03-18T11:12:51.114+00:00Comments on mainly macro: A stimulus junkie's lamentMainly Macrohttp://www.blogger.com/profile/09984575852247982901noreply@blogger.comBlogger78125tag:blogger.com,1999:blog-2546602206734889307.post-65994823460690004692015-10-23T08:04:57.326+00:002015-10-23T08:04:57.326+00:00Prof. Wren-Lewis,
What about clearing up the uncl...Prof. Wren-Lewis,<br /><br />What about clearing up the unclearness in the post by Anonymous 21 October 2015 at 06:30?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-53540699646710556402015-10-21T13:30:59.406+00:002015-10-21T13:30:59.406+00:00"The stuff I talk about here is just material..."The stuff I talk about here is just material you will find in any undergraduate economics course in Germany."<br /><br />Yes, but they probably learn some things you do not talk about:<br /><br />Where is the money to avoid austerity to come from ?<br /><br />In your cultural lag of macroeconomics, it comes from the central bank, as was the practice of the BoE and Bank of France before their independence was introduced, sometime in the nineties.<br /><br />With the ECB, times have changed. They no longer accept Greek public debt to avoid austerity in Greece. So austerity is unavoidable there unless other countries lend them. And if those countries only lend under conditions, the Greeks have to accept either the conditions or far deeper austerity. Your idea that the Greeks will only have to default and everything will be allright some years after ignores what will happen during those years and Judge Griesa afterwards.<br /><br />What about an "aggiornamento" in your theories? At present they appear as irrelevant as medieval scholasticism.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-5551335127849877992015-10-19T15:13:14.317+00:002015-10-19T15:13:14.317+00:00Unnfortunately, the confusion is yours.Unnfortunately, the confusion is yours.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-34145982507213703212015-10-19T10:17:55.447+00:002015-10-19T10:17:55.447+00:00The rather better question is whether I am right t...The rather better question is whether I am right to assume that those making these comments are genuinely confused and need help, or whether they are just wasting my time. The stuff I talk about here is just material you will find in any undergraduate economics course in Germany.Mainly Macrohttps://www.blogger.com/profile/09984575852247982901noreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-24114449581595989922015-10-19T09:33:54.647+00:002015-10-19T09:33:54.647+00:00"The question is whether the public or foreig..."The question is whether the public or foreign partners will accept such money."<br /><br />" Look at how Turkey functioned for over a decade - quadrillions of liras of deficit spending, interest rate targets often at 100%, inflation nearly the same, continuous currency depreciation and no confidence whatsoever. Yet government “finance” in lira was never an issue. Government lira checks never bounced. "<br /><br />Did Turkey's imports collapse to zero during this period?<br /><br />http://www.theguardian.com/business/economics-blog/2015/may/21/now-the-bank-of-england-needs-to-deliver-qe-for-the-people#comment-52557292Postkeyhttps://www.blogger.com/profile/11747509012748106827noreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-52734464661149290212015-10-18T17:39:12.229+00:002015-10-18T17:39:12.229+00:00I looked up the links in the second paragraph of P...I looked up the links in the second paragraph of Prof. Wren-Lewis's post, which are almost exactly a year old. <br /><br />What do I find? This entire discussion is a repeat performance of the comments to those posts.<br /><br />Prof. Wren-Lewis is not willing to learn. He insists on repeating himself and leaves no choice to his critics but to repeat themselves. This can go on forever, and he has no one to blame but himself.<br />Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-15727125545548589942015-10-17T18:57:50.671+00:002015-10-17T18:57:50.671+00:00Mainly Macro14 October 2015 at 13:43
You say:
&q...Mainly Macro14 October 2015 at 13:43<br /><br />You say:<br /><br />"No problem if the ECB could hit 2%. But mainly because of EZ austerity encouraged/enforced by Germany they cannot."<br /><br />Kindly explain.<br /><br />The ECB has been continually taking decisions that were strongly disapproved of by the German government, German public opinion and the Bundesbank. So the ECB is impervious to German pressure.<br /><br />So please tell us the countries in the EZ where Germany managed to enforce austerity to a degree that the ECB could not raise inflation.. How did Germany accomplish that? Or were the countries practicing austerity simply unable to borrow? Then Germany had nothing to do with it.<br /><br /><br />Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-71163925664884478302015-10-17T16:58:43.436+00:002015-10-17T16:58:43.436+00:00"Public finances in Germany indeed are contri..."Public finances in Germany indeed are contributing noticeably to macroeconomic stabilisation. The German government has implemented discretionary measures in a magnitude of over 2% of GDP for the years 2009 and 2010. Most of the effects of these measures have still come into effect. With regard to fiscal stabilisation it is also necessary to keep in mind that its effects should not only be evaluated by discretionary measures alone. Built-in adjustments in public budgets – so-called automatic stabilisers – provide stimulus through a rule-based fiscal framework. These automatic stabilisers are more important in countries with larger social security systems and progressive tax systems. For example, in Germany the contribution of automatic stabilisers in 2009 and 2010 will be nearly 3 % of GDP (including developments in profit-related taxes)."<br />http://www.bundesbank.de/download/presse/reden/2009/20090513.weber.london.en.pdf<br />Postkeyhttps://www.blogger.com/profile/11747509012748106827noreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-65918338266139520062015-10-17T16:45:34.049+00:002015-10-17T16:45:34.049+00:00"Contrary to popular opinion, excessively hig..."Contrary to popular opinion, excessively high deficit spending and exorbitant government debt levels are not the primary cause of a hyperinflation. In most cases they have been the result of other exogenous events such as ceding of monetary sovereignty, war, rampant corruption or regime change. It is these exogenous events that result in the public’s rejection of the currency, a collapse in the tax system and the government response of printing more money to fill in the confidence void. Ultimately the confidence void cannot be filled and the currency is fully rejected by the public in the form of hyperinflation. In my treatise on the monetary system I discuss the importance of this unspoken agreement between the private sector and public sector." <br /><br /><br />http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1799102Postkeyhttps://www.blogger.com/profile/11747509012748106827noreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-18480016741001011072015-10-17T14:22:25.323+00:002015-10-17T14:22:25.323+00:00I said:
"4) Wages were not cut relative to t...I said:<br /><br />"4) Wages were not cut relative to those in other EZ countries. It was the other countries who exceeded German wages. The strategy of the German unions was well known, The other countries ignored it and now are paying the price."<br /><br />You say:<br /><br />"I think your (4) above illustrates the problem very well."<br /><br />So why don't you put it that way instead of speaking of stealing or considering theft to be a term that can be used after "getting decent macro advice and (with) some political courage".<br /> Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-39503220659054875232015-10-17T11:24:21.802+00:002015-10-17T11:24:21.802+00:00I think your (4) above illustrates the problem ver...I think your (4) above illustrates the problem very well. Mainly Macrohttps://www.blogger.com/profile/09984575852247982901noreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-6703730940187855902015-10-16T21:39:57.656+00:002015-10-16T21:39:57.656+00:00Still puzzled.
1) It was you who brought up the s...Still puzzled.<br /><br />1) It was you who brought up the short term: "cutting wages might have helped reduce unemployment in the short term."<br />Now you say it's a question of a decade. If the unions managed to reduce unemployment for a decade It seems to have been pretty good business for them and their country. And as you say, this is a case where Keynesians can afford to ignore Keynes since it is in accordance with classical macroeconomics.<br /><br />2) Taken care of by the above.<br /><br />3) "Paying off higher debt need not be a problem if it is done sensibly." True. The cost can be borne.But you said " This has no long term cost". There's a difference between bearable cost and no cost. You yourself have pointed out the possible weight of that cost for future generations. And if voters do not want that it is their decision. <br /><br />4) Wages were not cut relative to those in other EZ countries. It was the other countries who exceeded German wages. The strategy of the German unions was well known, The other countries ignored it and now are paying the price.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-8984341297999895802015-10-16T17:38:30.449+00:002015-10-16T17:38:30.449+00:001) We are talking about within a decade, so Keynes...1) We are talking about within a decade, so Keynes's comment is beside the point.<br />2) ? No contradiction that I can see<br />3) Paying off higher debt need not be a problem if it is done sensibly<br />3) Wages were cut relative to those in other EZ countriesMainly Macrohttps://www.blogger.com/profile/09984575852247982901noreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-72536989158638358842015-10-16T17:32:19.296+00:002015-10-16T17:32:19.296+00:00"So even if you put aside the implications fo..."So even if you put aside the implications for those outside Germany, wage cutting when you are already competitive enough is not a great way of solving unemployment."<br /><br />Here you lost me. The discussion started in Germany around 1997, I still remember how high rank union memebers steted that they had two alternatives, fewer well paid jobs and higher unemployment or more less well paid jobs. In 1998 Krugman wrote his (in)famous "Why Germany kant kompete". <br /><br />BTW Germany's umemployment increased until 2005.<br /><br />"An alternative method of dealing with German unemployment would be a temporary fiscal expansion. This has no long term cost, no future need for above average inflation."<br /><br />You do not see any political issues with this suggestion let's say in 1998??<br /><br />UlenspiegelAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-28658817512470268582015-10-16T13:36:59.395+00:002015-10-16T13:36:59.395+00:00Mainly Macro14 October 2015 at 11:24
So theft is ...Mainly Macro14 October 2015 at 11:24<br /><br />So theft is not a term an economist would use.<br /><br />But an economist like you can say "steal"?<br /><br />Above you said:<br /><br />" It is a demand stimulus, but (unlike fiscal stimulus) one that steals demand from other countries."<br /><br />Where's the difference between stealing and theft? <br /><br />Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-55313846904354621482015-10-16T13:29:36.131+00:002015-10-16T13:29:36.131+00:00Prof. Wren_Lewis,
I am puzzled by your response.
...Prof. Wren_Lewis,<br /><br />I am puzzled by your response.<br /><br />1.<br />"cutting wages might have helped reduce unemployment in the short term,"<br /><br />Remember what Keynes said about the short and the long term. It seems to have been pretty good business for Germany and its unions.<br /><br />2.<br /><br />"Before 2008, German unions did not know there was going to be a Great Recession. So while cutting wages might have helped reduce unemployment in the short term, it would then have led to a German boom and offsetting additional inflation in Germany subsequently."<br /><br />By your own account, that is what is happening. You said below:<br /><br />Mainly Macro14 October 2015 at 11:09<br />"But Germany is gradually losing its competitive advantage that it had in 2008."<br /><br />3.<br />"An alternative method of dealing with German unemployment would be a temporary fiscal expansion. This has no long term cost, no future need for above average inflation."<br /><br />You've lost me there.<br /> Fiscal expansion means borrowing or not repaying debt. Both new and continuing debt has to be repaid or at least rolled over, and interest has to be paid.<br /><br /> How can you possibly say that there is no long term cost? <br /><br />You yourself have pointed out in the past that public debt, if not repaid by the generation that consumed the money, can be a burden on coming generations.<br /><br />3.<br />"wage cutting when you are already competitive enough is not a great way of solving unemployment".<br /><br />Wages are rising in Germany, and, as you point out, it is losing its competitive edge.<br /><br />Anyway, wages were not cut. All the unions agreed to in the past, as you say yourself. were low wage increases. <br /><br />As for unemployment, look at the numbers. Even as Germany's competitive advantage has been eroding since 2008 (7 years!) and wages are rising, unemployment is lower than it has been for a long time.<br /><br />Perhaps you can expand your arguments to make them more convincing. I am willing to be convinced.<br /><br /><br /><br />Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-62079354128003953952015-10-16T11:52:37.947+00:002015-10-16T11:52:37.947+00:00Before 2008, German unions did not know there was ...Before 2008, German unions did not know there was going to be a Great Recession. So while cutting wages might have helped reduce unemployment in the short term, it would then have led to a German boom and offsetting additional inflation in Germany subsequently. The competitive advantage, and associated current account surpluses, have to be unwound.<br /><br />An alternative method of dealing with German unemployment would be a temporary fiscal expansion. This has no long term cost, no future need for above average inflation.<br /><br />So even if you put aside the implications for those outside Germany, wage cutting when you are already competitive enough is not a great way of solving unemployment. Mainly Macrohttps://www.blogger.com/profile/09984575852247982901noreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-42283936635516461602015-10-16T09:11:07.283+00:002015-10-16T09:11:07.283+00:00Mainly Macro14 October 2015 at 11:11
"Becaus...Mainly Macro14 October 2015 at 11:11<br /><br />"Because they say they are - read the article! I have talked to some German Keynesians, and they definitely believe that they have a minority voice in German policy debates."<br /><br />So you're basing your statement on what minority Keynesians in Germany said?<br /><br />If the German government has acted in a Keynesian manner, that means that those German "Keynesians" are trying to appropriate Keynes's great name for their line of policy, i.e. fine-tuning the economy.<br /><br />And you fell for that.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-13515703016168338952015-10-16T09:02:02.981+00:002015-10-16T09:02:02.981+00:00Mainly Macro14 October 2015 at 13:43
Now it is yo...Mainly Macro14 October 2015 at 13:43<br /><br />Now it is you talking about the 2% - something ypu objected to above.<br />Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-81925468641158554962015-10-16T08:55:44.437+00:002015-10-16T08:55:44.437+00:00Mainly Macro14 October 2015 at 11:31
You ask: Sho...Mainly Macro14 October 2015 at 11:31<br /><br />You ask: Should unions take that opportunity?<br /><br />If that reduces unemployment, yes.<br /><br />Fritz Scharpf, usually considered more left-wing than not, said several times that the German unions acted in a strategically rational way when they did so.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-83555851060017941792015-10-16T08:41:24.501+00:002015-10-16T08:41:24.501+00:00Anonymous14 October 2015 at 22:14
So SWL and his ...Anonymous14 October 2015 at 22:14<br /><br />So SWL and his friends signed a letter to Angela Merkel promoting fiscal indiscipline?<br /><br />Perhaps SWL will explain to you the difference between austerity and fiscal discipline.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-70735829804577926482015-10-16T08:36:17.197+00:002015-10-16T08:36:17.197+00:00Prof. Wren_Lewis,
Kindly name the countries in th...Prof. Wren_Lewis,<br /><br />Kindly name the countries in the Euro Zone where Germany produced avoidable austerity. As you say, austerity means cutting government or raising taxes; that can only be avoided by government borrowing at affordable rates.<br /><br />So: Which are the governments that refused to borrow and instead cut spending or raised taxes?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-4885397786893613912015-10-15T12:25:41.399+00:002015-10-15T12:25:41.399+00:00Yes, I agree too. Only VSP should be listened...
N...Yes, I agree too. Only VSP should be listened...<br />Now, here some not serious persons at all, because these are only very good pieces of Deutsche Kabarett (english subtitled):<br />https://www.youtube.com/watch?v=2mnvKLoMC7Y (The Troika in Greece)<br />https://www.youtube.com/watch?v=jOKuNAdMIEI (Greece and German WWII Reparations - English)<br />And here some others videos by "Die Anstalt":<br />https://www.youtube.com/results?search_query=Die+Anstalt+sub<br />Enjoy, but - of course - don't take it at serious!<br />leprechaunhttps://www.blogger.com/profile/10443727686990760744noreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-40906864054340134642015-10-15T05:14:01.294+00:002015-10-15T05:14:01.294+00:00"There is no austerity programme in Germany. ..."There is no austerity programme in Germany. Tell me where you think you found it."<br /><br />OK austerity might be stretching it - would fiscally disciplined satisfy you? Austerity begins with fiscal discipline.<br /><br />HenryAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-63922578913539015332015-10-14T20:43:48.547+00:002015-10-14T20:43:48.547+00:00No problem if the ECB could hit 2%. But mainly bec...No problem if the ECB could hit 2%. But mainly because of EZ austerity encouraged/enforced by Germany they cannot. In which case Germany does not get its deserts - higher than 2% inflation - and the rest of the EZ pays that cost (much less than 2% inflation). Mainly Macrohttps://www.blogger.com/profile/09984575852247982901noreply@blogger.com