Greg Mankiw is known to every economist and economics
student, if only because of his best selling textbook. John Taylor is known to
every macroeconomist, if only because of the large number of bits of macro with
his name on it (Taylor rule, Taylor contracts etc). Both are respected by other
academics because of the quality and influence of their academic work.
With two others, they recently wrote this
about the Obama administration’s attempts to stimulate the economy through
fiscal policy after the recession: “The negative effect of the administration’s ‘stimulus’ policies
has been documented in a number of empirical studies.” They then quote from two
studies. The first looks at a minor aspect of the stimulus packages, the Cash
for Clunkers attempt to bring forward car purchases. There are other studies
of this programme which are more favourable. The second study is co-authored by
John Taylor, and others
have interpreted his findings differently.
No other studies are directly referred to. That might just
be because the overwhelming majority suggest that the stimulus package worked. Dylan Matthews on Ezra Klein's blog documents them here.
As I wrote in a recent post, the evidence is about as clear as it ever is in
macro. Which is not too surprising, as it is what Mankiw’s textbook suggests,
and it is what the New Keynesian theory both authors have contributed to
suggests.
Now the quote comes from a paper prepared for the Romney
presidential campaign. It is clearly political in tone and intent. As both
academics are Republican supporters, it may therefore seem par for the course.
But it should not be. The Romney campaign publicised this paper because it was
written by academics – experts in their field. It allows those who oppose fiscal
stimulus to continue to claim that the evidence is on their side – look, these
distinguished academics say so.
It is one thing for economists to disagree about policy. It
would also be fine to say I know the evidence is mixed, but I think some evidence is more reliable. It is not fine to imply that the evidence points in
one direction when it points in the other. I say here imply, because the
authors do not explicitly say that the majority of studies suggest stimulus is
ineffective. If they chose their words carefully, then you have to ask whether ‘intending
to mislead’ is any better than ‘misrepresenting the facts’. Was that the intent,
or just an isolated unfortunate piece of bad phrasing? All I can say is read
the paper and judge for yourself, or this post
from Brad DeLong.
This is sad, because it tells us as much about economics as
an academic discipline as it does about the individuals concerned. In the past
I have imagined
something similar happening in physics. It actually stretches the imagination
to do so, but if it did, the academics concerned would immediately lose their
academic reputation. The credibility of their work would be questioned. Responding to evidence rather than ignoring it
is what distinguishes real science from pseudo science, and doctors from snake
oil salesmen.
What can economics as a discipline do about this sad state
of affairs? The answer is pretty obvious, to economists in particular, and that
is changing the incentives where we can. However we cannot do much about the
incentives provided by politics and the media. I have been pretty pessimistic
about this in the past,
but in a future post I will try and be more positive and talk about one
possible way forward.
