Absolutely. As someone who began my academic career in the late 70s, as equilibrium macro was tightening its grip, we all knew that fundamental business cycle issues were a minefield nobody with a reality sense would enter 1/
Try to publish anything in which monetary policy — let alone fiscal policy — did what it clearly did in the real world, and you would be blockaded from the journals and frozen out of appointment committees. You had to keep yr views private and build your reputation elsewhere 2/
International macro was a bit better because Rudi Dornbusch's work kept sticky-price macro respectable. But even so you had to frame your work as being abt exchange rates or financial crises and hope people didn't notice the Keynesian core 3/ krugman.blogs.nytimes.com/2013/12/13/rud…
As I wrote elsewhere, central bank research depts kept the forbidden knowledge alive — "If we’re living in a Dark Age of macroeconomics,central banks have been its monasteries, hoarding and studying the ancient texts lost to the rest of
the world." 4/ princeton.edu/~pkrugman/keyn…
Truly a sad story all around. And still not over 5/

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More from @paulkrugman

17 Dec
Wondering whether David will get the kind of hate mail I've been receiving over my Kentucky piece 1/ nytimes.com/2021/12/17/bri…
The odd thing was that I didn't say anything negative about the people of Kentucky (as opposed to their politicians), or assert in any way that they were responsible for their state's problems. I just pointed out the arithmetic 2/ nytimes.com/2021/12/14/opi…
All I said was that KY should acknowledge that it benefits from a transfer union in which richer states subsidize poorer — as they should! Btw, I did a scatterplot on this a couple of years back 3/
Read 4 tweets
16 Dec
My long take on inflation. Timing was fortuitously good — right after the Fed's sort-of pivot, which I was able to incorporate 1/ nytimes.com/2021/12/16/opi…
I say sort-of pivot because while the Fed has stopped saying "transitory", it still seems to believe that much of the inflation we're currently experiencing will fade away without the need to impose a lot of economic pain 2/
One odd thing about this debate is that the actual policy demands of the inflation hawks have been pretty moderate: an end to bond purchases (which I've always supported) and a baseline of fairly modest rate hikes. And that's what the Fed just delivered 3/
Read 5 tweets
11 Dec
Aside from priorities, is this even true? Is there any good reason to believe that inflation hits low-income households especially hard? 1/
Inflation redistributes from creditors to debtors — not exactly a burden on the bottom half of the income distribution 2/
The great disinflation after the 1970s was associated with soaring, not falling, inequality — mostly not causal, but hardly supportive of the claim 3/
Read 4 tweets
10 Dec
Three rules for interpreting the CPI print coming in 10 minutes:

1. Don't make too much of one month's number
2. Don't make too much of one month's number
3. Don't make too much of one month's number

By the way, the same rules apply if it comes in lower than expected 1/
Also, of course, this report won't include the effects of the recent drop in oil prices 2/
The big questions won't be resolved today, although we're looking for clues. How much of what's happening is the bullwhip effect, i.e., shortages made worse by panic buying? 3/ bis.org/speeches/sp211…
Read 5 tweets
8 Dec
Willing to consider this. But I can't find any combination of numbers under which real wages are down enough to justify the extreme gloom consumers are reporting 1/
1 percent one way or the other surely can't be critical 2/
What I see 3/
Read 4 tweets
8 Dec
Still thinking about why Americans are so downbeat about the economy, inspired in part by this Simon Wren-Lewis piece about Britain — where voters say that the Tories are better for the economy, but Labour better for living standards (!) 1/ mainlymacro.blogspot.com/2021/12/they-l…
This seems to jibe with my suggestion that what people mean when they are asked about "the economy" doesn't connect very well to personal experience 2/ nytimes.com/2021/11/09/opi…
We are, after all, experiencing a rapid improvement in employment — actually an awesomely fast recovery in prime-age employment 3/
Read 6 tweets

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