Ben Moll Profile picture
Mar 20 5 tweets 3 min read
Thanks for the thread @ChristianKopf. But why would you deliberately ignore our main macro analysis using the @DBaqaee-Farhi model which addresses some of your criticisms and features exactly the types of production chains that people are worried about in popular debate?
Point of "beer mat model": provide intuition and model some worst-case scenarios in a simple & transparent way.



The main @DBaqaee-Farhi model gives smaller numbers even in very pessimistic scenarios. What can we say?
The criticism that we do not have nominal rigidities and ensuing Keynesian demand effects is fair. We are very clear about this in the paper.

These would need to be added on top of supply-side effects we model e.g. 0.5% or 3%.

It's important that they depend on policy though.
But the point stands: I have not yet seen any modeling that gives substantially larger numbers than ours. The largest one is 3.5% (Goldman)

benjaminmoll.com/GS_Russian_Gas/
A final thought: I personally find simple & transparent models useful (and you seem to have too I think?). So I will take "beer mat model" as a compliment.

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More from @ben_moll

Mar 21
In our import stop paper we emphasize that it makes a big difference how much people and firms can substitute for Russian energy inputs.

How might such substitution work in concrete terms?

A new supplement to our paper has some more thoughts

benjaminmoll.com/RussianGas_Sub…

Thread: Image
First, some real-world examples showing how firms do find ways to substitute & sometimes even to their own surprise.

Particularly relevant: the Chinese embargo of rare earths exports to Japan and how Japanese producers adapted and substituted in response.

1/ Image
Perhaps even more relevant for the discussion at hand: shutdown of the Druzhba pipeline due to contamination. Response: ship the oil instead.

This is example is borrowed straight from @jakluge's excellent thread



2/ Image
Read 15 tweets
Mar 13
The important thing is to have a quantitative debate based on data, empirics & models rather than people's "gut feelings".

In the spirit of elevating the debate, here are some thoughts, particularly for journalists as well as politicians & citizens in favor of fact-based policy:
I'm not as pessimistic as @BachmannRudi. I think it can be done.

Perhaps I'm just naive...

But it's at least worth trying.



1/
#Habeck & @BMWK need to provide analyses backing up their statements. Some questions to ask, e.g. during next press conference:

1. When you say "5%" or "hundreds of thousands will lose their job, we're talking about poverty", what is this based on?



2/
Read 13 tweets
Sep 1, 2021
I finally read this & thought the following was interesting: exercises quite similar to this ("saving rates rise with income, hence inequality increases aggregate saving") were a prime motivation for Friedman to develop the permanent income hypothesis in the 1950s.

1/ ImageImageImage
The excerpts above are from the conclusion of Friedman's "A Theory of the Consumption Function"

nber.org/system/files/c…

Whole book here nber.org/books-and-chap…

2/
This 1975 Alan Blinder paper "Distribution Effects and the Aggregate Consumption Function" has a nice exposition of the evolution of economic thought up to the 70s

jstor.org/stable/1837107

3/ ImageImage
Read 12 tweets
Jul 3, 2021
OK I'll bite :-)

Off the top of my head, here are 6 reasons (in somewhat random order) why a heterogeneous agent model allows you do more than "just starting from the MPC>>0 and then going forward from there":

(I'm sure there are many others -- what else?) Image
1. The world is dynamic: future income affects current consumption and current income affects future consumption. This obviously matters for policy.

HA models provide a framework for this, see eg the nice exposition by @a_auclert Rognlie @ludwigstraub web.stanford.edu/~aauclert/ikc.… Image
2. We may want to compare different policy options within the same framework, e.g. how does fiscal policy compare to monetary policy?

Again HA models provide a framework for this, see e.g. this nice recent paper by @ChristianKWolf scholar.princeton.edu/sites/default/… Image
Read 11 tweets
May 13, 2021
Do wealthier households save a larger share of their incomes than poorer ones?

I suspect most people's prior is that the answer is "yes." Turns out that's incorrect, or rather: things are considerably more subtle, at least in our Norwegian wealth tax registry data.

A short 🧵:
The 🧵 is based on a major revision of "Saving Behavior Across the Wealth Distribution: The Importance of Capital Gains", which is joint with @AndreasFagereng @BlomhoffHolm & @GNatvik

benjaminmoll.com/SBWD/

1/
Why do saving rates matter? Answer: for (i) secular trends in income & wealth inequality and (ii) how such distributional shifts feed back to macro aggregates

See eg great work by @M_De_Nardi @ludwigstraub @AtifRMian @profsufi @ProfGreenwald @SVNieuwerburgh @HannoLustig

2/
Read 16 tweets
Feb 15, 2021
#EconTwitter hivemind: what are your favorite papers combining “causal” micro estimates (say from DiD or RCT) with a general-equilibrium macro model to answer an interesting macro question?

This is for my PhD teaching so the easier to read the better. Thanks in advance!
p.s. self-submissions are definitely welcome, i.e. your favorite paper can be your own (aren't they usually? 😃)
Read 6 tweets

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