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Totally off topic and self-indulgent. But to my surprise I find myself disagreeing with Simon Wren-Lewis, who argues that high housing prices are all about low interest rates and that supply constraints aren't important 1/ mainlymacro.blogspot.com/2020/01/eviden…
I guess this could be true for Britain. But it's absolutely not true for the US, where there has been huge divergence between metro areas that all face the same interest rates. Real house prices in SF and Atlanta 2/
The difference is that housing supply in the Bay Area is constrained, partly by geography but mainly by NIMBYism, while Atlanta has highly elastic supply. Hard to see why similar issues wouldn't apply in the UK 3/
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Paul Krugman
@paulkrugman
This is not a 5 AM tweet. I'm in London; and I have a few thoughts about the role of the media in warping policy debate 1/
Most of the time the big sin of mainstream media is bothsidesism: lies by political hacks are given the same weight as truths backed by overwhelming evidence. But there are exceptions — with the most notable example being fiscal policy 2/
As Ezra Klein noted way back , "For reasons I've never quite understood, the rules of reportorial neutrality don't apply when it comes to the deficit." Deficit scolds were held up as heroes, with no opposing voices 3/ washingtonpost.com/news/wonk/wp/2…
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Paul Krugman
@paulkrugman
Just two thoughts about the NH results: we have reached a point where the ACA is finally popular — and the leader wants to replace it with a new system about which the public has doubts 1/
We're also at a point where Trump has just demonstrated that pumping up the economy with deficit spending is good politics — and the second-place finisher is advertising his fiscal hawkery 2/
Maybe all this gets sorted out in time for the general election. But this sure doesn't look to me like a party sufficiently focused on winning 3/
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Paul Krugman
@paulkrugman
As I was saying 1/ cnbc.com/2020/02/07/pen…
So basically Pence is confirming and endorsing my Friday column 2/ nytimes.com/2020/02/06/opi…
Here's the IMF's estimate of the structural budget balance: we're getting as much deficit stimulus now as in 2012, when the unemployment rate was 8% 3/
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Radigan Carter
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Hollywood 🌹John Morrison
@J_MoAGoGo
Simon Wren-Lewis has written a good defence of Labour's Fiscal Credibility Rule and shown why it won't stop Labour from being the transformational government this country needs. However I still have strong objections to it and think it should be dropped.
He gets to the heart of the matter right away and I think this is mostly correct. However, even if we accept the conventional assignment that monetary policy can manage demand reliably, that doesn't mean it should.
That's because what monetary policy is essentially aiming to do is force other sectors to accommodate the government's budget stance. So if the UK has a CAD and is looking to balance the budget, monetary policy needs to incentivise the private sector to deficit spend
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