Over at Grasping Reality: David K. Levine vs. Chris Sims as Refereed by Paul Krugman, with Additional Thoughts

Over at Grasping Reality: David K. Levine vs. Chris Sims as Refereed by Paul Krugman, with Additional Thoughts:

Paul Krugman is the picador…. And Chris Sims is the matador…. Krugman sums up:

By any normal set of intellectual criteria… the evidence that monetary shocks have real effects was and is overwhelming, and it’s very difficult to write down a model in which this is true but in which fiscal policy is never effective at least [at the zero lower bound]. The spectacular success of liquidity-trap predictions these past 6 years is just icing on the cake. To understand why anti-Keynesian delusions persist, then, we need to turn to other social sciences, and try to make sense of the sociological forces that keep these delusions alive.