Must-Read: Tony Yates: With Enemies Like These?

Must-Read: Tony Yates: With Enemies Like These?: “DeLong and Krugman think you can and should get along fine without nonlinearities….

…Krugman’s latest offers an argument that is a version of Occam’s razor. I don’t agree, but… they are extremely clever, and both have lots of prior experience…. Blanchard makes the following point.  We should aspire to stabilising the economy.  [Surely one can’t argue with that.]  And if we succeed [we might not, but if], and assuming it’s not done perfectly, but just quite well, then the small movements left over will be described well enough with a linear model.  He’s not saying we definitely will be able to bring this about.  Just that we might be able to.  And, if we can, he states a result in words from function approximation, which again is unarguable.  [With the caveat that this small range should not cross over some crucial point of inflection/attraction/repulsion… ]

April 23, 2015

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