Branko Milanovich on visions of inequality; shifting expectations of Federal Reserve rate cuts, are maniacal bubbles a good thing? sorta…; whimpering about how policy is not near-neutral even...
I wondered if Ezra Klein could survive the NYT. I have seen since that that was not the right question. Now the question for me would be: is he enthusiastically adapting to the NYT environment, or did they judge rightly what they were getting, in the first place? They made a mistake with Krugman, fortunately. What they want, basically, is David Brooks with some intelligence (which I suppose would be Tom Friedman).
The Milankovic site does not even let me complain about not having a transcript. :( The medium is the message and the message is , "if I wated YOU to know what I think, I would not have made this video only." My bad for growing up when video mean paying $0.09 for a ticket to a cowboy film at the Liberty Theater in Athen, Texas circa 1950. :)
In general, with video, I find that watching at speed 1.5 or 1.75 with CC on gives me a decent experience, at least if what is being said has sufficient content to make the exercise worthwhile. Really the browser ought to have some button that takes the stream and gives a full transcript. Something like Reader View in Safari.
Wait a minute: Why is Ken Rogoff citing all these grave headwinds to the economy, but, at the same time, was insisting in Davos that the bond market's expectation of five 25 basis points Fed Funds rate cuts is a "pipe dream"? Something about a cake and eating it comes to mind.
Branko Milanovich: That brought back memories of undergraduate courses in economic thought and economic systems. I have one minor issue, if I may. I couldn't help but detect a sense of, how should I put it, exasperation (?), about the representative agent in macro when there are in actuality distinct classes of people or an underlying heterogeneity. Please correct me if I'm wrong. My understanding of why we use Robinson Crusoe or a representative agent is not that we don't know or don't recognize that there's heterogeneity. We do it that way, first and foremost, to recognize a more important issue when we do Macro: The Economy Is Its Own Customer. It is not like a household, not like a business or any other micro-level metaphor you could find. The attempts to critique that framework by arguing that the shape of the utility function might be different (behavioral economics), or there is heterogeneity of preferences (or classes), or whatever else, may be besides the point. I could be wrong about this.
Like everybody else, the Fed too is searching. The arguments for policy shouldn't be framed in terms of an "embarrassment " at all. One can counter those arguments by saying that it would be far more embarrassing if the Fed had to suddenly cut interest rates a lot because deflation had become a major risk (inflation is already so close to 2% for god's sake; it won't take much to knock it down further). Instead, the argument should be framed -- as you have insisted for long -- in terms of the zero lower bound. The Fed can lower interest rates only by so much before the interest rate is zero. So it should be nimble at cutting interest rates so that the economy doesn't get into a situation where the Fed is forced to eventually to ower the rate to zero. In contrast, on the upside if rates need to be raised, the Fed can lift interest rates as much as the situation requires. Policy should recognize this asymmetry. People commenting on the Fed should recognize this asymmetry. Meanwhile, the Fed should discount the word-salad narratives of "last mile," "too early to declare victory," "haven't stuck the landing yet," and, lately, "I'm OK with cut in June, but not in May," and so on.
I wondered if Ezra Klein could survive the NYT. I have seen since that that was not the right question. Now the question for me would be: is he enthusiastically adapting to the NYT environment, or did they judge rightly what they were getting, in the first place? They made a mistake with Krugman, fortunately. What they want, basically, is David Brooks with some intelligence (which I suppose would be Tom Friedman).
I need a transcript of Branko. My fault of course, but old age and un-original sin has caught. up to me.
Definitely not your fault. You represent a significant population.
The Milankovic site does not even let me complain about not having a transcript. :( The medium is the message and the message is , "if I wated YOU to know what I think, I would not have made this video only." My bad for growing up when video mean paying $0.09 for a ticket to a cowboy film at the Liberty Theater in Athen, Texas circa 1950. :)
In general, with video, I find that watching at speed 1.5 or 1.75 with CC on gives me a decent experience, at least if what is being said has sufficient content to make the exercise worthwhile. Really the browser ought to have some button that takes the stream and gives a full transcript. Something like Reader View in Safari.
DioCassius: Two out of three.
Wait a minute: Why is Ken Rogoff citing all these grave headwinds to the economy, but, at the same time, was insisting in Davos that the bond market's expectation of five 25 basis points Fed Funds rate cuts is a "pipe dream"? Something about a cake and eating it comes to mind.
Branko Milanovich: That brought back memories of undergraduate courses in economic thought and economic systems. I have one minor issue, if I may. I couldn't help but detect a sense of, how should I put it, exasperation (?), about the representative agent in macro when there are in actuality distinct classes of people or an underlying heterogeneity. Please correct me if I'm wrong. My understanding of why we use Robinson Crusoe or a representative agent is not that we don't know or don't recognize that there's heterogeneity. We do it that way, first and foremost, to recognize a more important issue when we do Macro: The Economy Is Its Own Customer. It is not like a household, not like a business or any other micro-level metaphor you could find. The attempts to critique that framework by arguing that the shape of the utility function might be different (behavioral economics), or there is heterogeneity of preferences (or classes), or whatever else, may be besides the point. I could be wrong about this.
The Fed:
Like everybody else, the Fed too is searching. The arguments for policy shouldn't be framed in terms of an "embarrassment " at all. One can counter those arguments by saying that it would be far more embarrassing if the Fed had to suddenly cut interest rates a lot because deflation had become a major risk (inflation is already so close to 2% for god's sake; it won't take much to knock it down further). Instead, the argument should be framed -- as you have insisted for long -- in terms of the zero lower bound. The Fed can lower interest rates only by so much before the interest rate is zero. So it should be nimble at cutting interest rates so that the economy doesn't get into a situation where the Fed is forced to eventually to ower the rate to zero. In contrast, on the upside if rates need to be raised, the Fed can lift interest rates as much as the situation requires. Policy should recognize this asymmetry. People commenting on the Fed should recognize this asymmetry. Meanwhile, the Fed should discount the word-salad narratives of "last mile," "too early to declare victory," "haven't stuck the landing yet," and, lately, "I'm OK with cut in June, but not in May," and so on.