but anything less then a full answer is really no answer at all
i could defend the dixie secession
so long as no one mentions slavery
"... let me just talk about one episode that convinced me
that one part of New Keynesian analysis,
the intertemporal consumer with rational expectations,
was much more useful than the ‘Old Keynesian’ counterpart
that I learnt as an undergraduate."
note the massive up top hedge
" one episode ...one part .....useful "
useful for what ??
read on ...
" In the mid 1980s I was working at
the National Institute for Economic and Social Research in London,
doing research and forecasting. "
research and forecasting ??
not policy generation ??
this debate is about guidance now
guidance to macronic action
guidance when pulling a large though open national economy
out of a deep liquidity trap
an economy that has just suffered a huge social balance sheet shock
as a house lot bubble burst
and burst in a global contractionary context
---------------------------
resuming ..
"UK forecasting models at the time ...used lags on income to proxy permanent income... I think they can be described as ‘Old Keynesian’. "
okay
"As the decade progressed, UK consumers started borrowing and spending
much more than any of these equations suggested. "
okay
"Model based forecasts repeatedly underestimated consumption over this period. "
okay that sez what you just said again ..
"Three main explanations emerged of what might be going wrong."
the National Institute for Economic and Social Research in London,
doing research and forecasting. "
research and forecasting ??
not policy generation ??
this debate is about guidance now
guidance to macronic action
guidance when pulling a large though open national economy
out of a deep liquidity trap
an economy that has just suffered a huge social balance sheet shock
as a house lot bubble burst
and burst in a global contractionary context
---------------------------
resuming ..
"UK forecasting models at the time ...used lags on income to proxy permanent income... I think they can be described as ‘Old Keynesian’. "
okay
"As the decade progressed, UK consumers started borrowing and spending
much more than any of these equations suggested. "
okay
"Model based forecasts repeatedly underestimated consumption over this period. "
okay that sez what you just said again ..
"Three main explanations emerged of what might be going wrong."
1) House prices. The consumption boom coincided with a housing boom. ..... thinking about an intertemporal consumer leads one to question why consumers in aggregate would spend more when house prices rise.
Subsequent work ...suggested that increased borrowing was not concentrated among home owners, casting doubt on this explanation."
---zoink ... bite the chased tail ...next !---
Subsequent work ...suggested that increased borrowing was not concentrated among home owners, casting doubt on this explanation."
---zoink ... bite the chased tail ...next !---
2) Credit constraints..... While such constraints represent a departure from the simple intertemporal model, I find it hard to think about how shifts in credit conditions like this would influence consumption without having the unconstrained case in mind.
-----you lost me there i'm afraid .....if you want to borrow but can't ...
.isn't that a case of what it is ..is what it is ? why bother to explicate a might have been ..the car hit a wall if the wall owever hadn't been there then the car would have ...hey the car hit the wall ..full stop ! we go to the repair shop by way of a transporter ..we don't now talk of the trip that might have been ---
-----you lost me there i'm afraid .....if you want to borrow but can't ...
.isn't that a case of what it is ..is what it is ? why bother to explicate a might have been ..the car hit a wall if the wall owever hadn't been there then the car would have ...hey the car hit the wall ..full stop ! we go to the repair shop by way of a transporter ..we don't now talk of the trip that might have been ---
"3) supply side changes (like reducing union power) had led to a permanent increase in the UK’s growth rate.....an increase in borrowing today to enjoy these future gains would have been part of the natural response given an intertemporal perspective....."
--- anything better then spectral evidence for this increased expectation effecting credit policy ?...and ..oh ya
do dah phrase animal spirits mean anything to ya ? that's GT if not hicks
the point is really about reality it is futile to try forecasting here
see its uncertain radically uncertain because its so damn complex
uncertain not prabablistic
not operating in a manner an actuary can model
rat ex is nothing here without perfect for sight
learning itself often fails to improve matters if the system is complex
and rapidly self transformative enough
yes the state of animal spirits is somehow determined by this
uncertain moving cloud of complex determinations of state of mind
but its not a determining complexity to be found in your rat ex rep agent
sticky price mechanical model dear horatio
--- anything better then spectral evidence for this increased expectation effecting credit policy ?...and ..oh ya
do dah phrase animal spirits mean anything to ya ? that's GT if not hicks
the point is really about reality it is futile to try forecasting here
see its uncertain radically uncertain because its so damn complex
uncertain not prabablistic
not operating in a manner an actuary can model
rat ex is nothing here without perfect for sight
learning itself often fails to improve matters if the system is complex
and rapidly self transformative enough
yes the state of animal spirits is somehow determined by this
uncertain moving cloud of complex determinations of state of mind
but its not a determining complexity to be found in your rat ex rep agent
sticky price mechanical model dear horatio
"Which of the second two explanations is more applicable
in this case remains controversial ..."
of course it does
because you haven't the means to demonstrate you've found the actual pattern of causation and without it
what have you ??
"however, I would suggest that neither can be analysed properly without the intertemporal consumer."
and in this ideal realm of as if olympia analysis
who would disagree ..who could disagree
the point is some one has to make a policy choice ..now
just how might your model sharpen that precision of that choice ?
if you can't even weigh out the contribution
to that determination
of various hypothetical causal factors ??
-------------------------------------------
" Why is this a lesson for Keynesian analysis? "
beats me chum ..then comes a pathetic try at a justification:
"in the late 1980s the boom led to rising UK inflation, and a subsequent crash. Underestimating consumption was not the only reason for this increase in inflation....but it probably helped. "
"probably helped " ?
how much more precise can you get then that old top ?
look if household spending this period is somehow related to income
such that more income will lead to more spending
what else nedd you know if you want to increase household spending
you increase household income with tax cuts and payments
---------------------------------
now the nugget of truth :
in this case remains controversial ..."
of course it does
because you haven't the means to demonstrate you've found the actual pattern of causation and without it
what have you ??
"however, I would suggest that neither can be analysed properly without the intertemporal consumer."
and in this ideal realm of as if olympia analysis
who would disagree ..who could disagree
the point is some one has to make a policy choice ..now
just how might your model sharpen that precision of that choice ?
if you can't even weigh out the contribution
to that determination
of various hypothetical causal factors ??
-------------------------------------------
" Why is this a lesson for Keynesian analysis? "
beats me chum ..then comes a pathetic try at a justification:
"in the late 1980s the boom led to rising UK inflation, and a subsequent crash. Underestimating consumption was not the only reason for this increase in inflation....but it probably helped. "
"probably helped " ?
how much more precise can you get then that old top ?
look if household spending this period is somehow related to income
such that more income will lead to more spending
what else nedd you know if you want to increase household spending
you increase household income with tax cuts and payments
---------------------------------
now the nugget of truth :
".. this episode convinced me that it was vital to model consumption along intertemporal lines."
so he built such a model and is of course now touting in eh ?
but not without more hedging .
so he built such a model and is of course now touting in eh ?
but not without more hedging .
"As I hope this discussion shows, I do not believe the standard intertemporal consumption model on its own is adequate for many issues. Besides credit constraints, I think the absence of precautionary savings is a big omission."
"However I do think it is the right starting point for thinking about more complex situations, and a better starting point than more traditional approaches."
" better starting point "?
what an assured thrust that has
---------------------------
comment at MT's
what an eye open-er
the defense of NK
comes down to forecasting household spending
well to direct a recovery from a liquidity trap-ed market economy as today "institutionalized
which is what we use K's GT for eh ?
that degree of fine tuning is completely un-necessary
you play hardy macro naut
tell the public you plan is
increase the fiscal deficit
by x now
and maintain that deficit rate
at that level thru n intermediate time intervals
till you hit your recovery target of y at time interval t(n)
then taper off the deficit thrust
as spontaneous spending recovers
the deficit x is an estimate
and the path actually followed as it deviates ..if it deviates from the plan path
will cause us to increase or decrease the deficit as needed to get back on plan path asap
forecasting is behind thye estimates of course
but hardly crucial
given the noisy signals the system gives of
and the radical uncertainty
of the real system's
" endogenous path"
and of its reactions
to" exogenous stimuli "...blah blah blah
where was that speech in february of 2009 ?