Monday, August 30, 2010

Stephen Williamson, Fool or Knave?

Stephen Williamson quotes Narayana Kocherlakota, apparently a very stupid person:
"Kocherlakota says this...:
'But over the long run, money is, as we economists like to say, neutral. This means that no matter what the inflation rate is and no matter what the FOMC does, the real return on safe short-term investments averages about 1-2 percent over the long run.'
Again, uncontroversial." -- Stephen Willaimson
This, of course, is false. Communities of economists exist who set their theories in historical time and dispute that money is neutral in any run. I prefer to point to Post Keynesians, but Austrian School economists satisfy these criteria also. Furthermore, economists within such schools surpassed mainstream economists in the current historical conjuncture by having pointed out the possibility of the global financial crisis before its occurrence.

I think economists should strive not to tell untruths abouts what economists believe.


BruceMcF said...

I vote willful ignorance: the received wisdom is that those economists who do not begin with a timeless equilibrium model and long-falsified utility maximizing models of behavior are by definition not economists.

Alex said...



The certainty with which these statements are uttered amazes me!


Robert Vienneau said...

Bruce, Peter Dorman recently agreed with your rejection of utility theory. I hope this is a growing belief among many mainstream economists.

Anonymous said...

None of you will ever influence the profession 1 millionth as much as Narayana or Steve. And nobody cares if you like it or not.