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That was not the view I expressed in my thread yesterday, so I’ll try to explain for those who misunderstood.
My view is that we should acknowledge we have a problem with output gap estimation and we should work to improve our measures.
1/7
My view is that we should acknowledge we have a problem with output gap estimation and we should work to improve our measures.
1/7
But we should also distance ourselves from the temptation to use the resulting space in ways that would actually be counterproductive (or from supporting, even unintentionally, the pursuit of such waste). 2/7
Keeping issues 1 and 2 that @RobinBrooksIIF refers to separate is easy for us (trained economists in economics conversation). But things become less easy when the conversation gets outside the seminar room. 3/7
Especially when what we say on issue 1 is used by interested actors with political power to pursue ill-designed, counterproductive policies motivated only by rent-seeking and the pursuit of short-term electoral consensus. 4/7
When this happens, it is incumbent on us to distance ourselves from policy ideas that could cause disasters even worse than the problems caused by poor output gap measurement. 5/7
And we can distance ourselves from bad ideas on how space should be used while also continuing to point out the problems with the current methodology to measure output gaps. 6/7
Just in case you want to read it, here’s the thread I posted yesterday: 7/7
