Monday, June 3, 2013

Even Krgthulu nods

- by New Deal democrat

Paul Krugman, yesterday:
So as I see it, we should first of all be evaluating models, not individuals; obviously we need people to interpret those entrails models, but we’re looking for the right economic framework ....

So, as I’ve made very clear on this blog, my view is that a pretty standard IS-LMish macro model has done very well in recent years.
Paul Krugman, October 13, 2009:
[T]his is a really, really bad time to be relying on conventional indicators.

So historical correlations, to the extent that they exist — and as Shedlock points out, ECRI is claiming a much better record than it really has — can’t be counted on to prevail. There’s really no alternative to making fundamental analyses of the macro situation.
Perhaps others will disabuse me, but it seems clear to me that this is:
  • (a) a direct contradiction, on
  • (b) a pretty fundamental point.
Either we should or should not have paid attention to models of economic behavior. Now, in retrospect, Krugman is saying that we should have, but four years ago it certainly seems that he took a strong stand that we shouldn't. If a Nobel Prize winner, over time, isn't sure on this point, how can we poor mortals be expected to put our trust in economists?

P.S. In 2009 ECRI responded to Krugman, making a gentleman's bet that one year later they would be proven more right than Shedlock. I kept track, and ECRI won the bet.