Paul Krugman invented all of modern macro (and don’t you dare suggest otherwise.)
Here’s Paul Krugman:
I’m going to be a bit grouchy right now, and unfairly so. Via Mark Thoma, I see that David Glasner is worried about what appears to be a need for negative real interest rates, and suggests that this may be close to concerns about the liquidity trap.
OK, what I should do is welcome Glasner to the club “” and I do, I do.
But let me vent for a minute: the observation that a liquidity trap arises when the economy “needs” a negative real interest rate is at the heart of modern liquidity trap analysis; it’s where I came in back in 1998, when I started the whole thing (pdf):
David’s been aware of this problem for a long time. Indeed he likes to cite pre-WWII economists who discussed this issue.
BTW, Krugman’s 1998 paper that “started the whole thing” forget to cite my 1993 paper, which showed that temporary currency injections are not inflationary.
Paul Krugman continues:
I suspect that a lot of time and effort has been wasted because smart commentators like Glasner “knew” that Keynesians were crude thinkers using mechanical approaches “” I don’t know if that’s actually true for Glasner, but I’ve seen it a lot in others “” leading them to spend several years laboriously arriving at the same conclusions people like me, Woodford, Eggertsson, Svensson etc. had already laid out in detail a decade ago.
Yup, nothing to learn from us market monetarists. That must be why Eggertsson’s famous 2008 AER paper on the role of expectations in the Great Depression cited three of my papers, including two written before Krugman’s 1998 paper that invented all of modern macro.
BTW, I’m not complaining; nobody does “grouchy” better than Paul Krugman.
PS. Because I’m both egotistical and paranoid, whenever Krugman mentions “others” I assume he must mean me.
PPS. Here’s a golden oldie from Greg Mankiw:
Update: A reader points out to me that Paul Krugman seems miffed that I failed to cite his contribution to the large literature on expectations management by the central bank. Sorry, Paul. I actually do like Paul’s paper on the topic quite a lot, and I cite it in my intermediate macro text when I discuss the liquidity trap (see footnote 5 on page 325 of the 6th edition).
It is funny. For academics, it is an occupational hazard to feel that your work is insufficiently cited. I had always assumed that the feeling would go away after winning a Nobel prize. I guess I was wrong.
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16. November 2011 at 17:55
maybe that only happens when you win a real nobel =)
16. November 2011 at 17:59
Scott, All in all, I prefer to be discussed by Krugman on his blog than ignored, but I have to admit that it was a little, you know, odd for him to get all bent out of shape like that. Our friend Kevin Donoghue called it bizarre. But, hey, even Nobel Prize winners can have their insecurities. In fact, I predict that even you will still have some after you win yours.
16. November 2011 at 18:05
For Krugman it´s “God in heaven and LT on earth”. And never doubt about who shone the light on it!
16. November 2011 at 18:19
The turf wars over this are not terribly helpful. The “Keynesianism vs. Monetarism” framing has never been particularly accurate. Keynes felt the need to differentiate his product from the rivals with a novel sales pitch, as did Friedman later on, but in reality these two competing schools adhere to Hoteling’s Law. They stand on two sides of the same intersection.
16. November 2011 at 18:50
c8to, By “real” I presume you’re excluding literature and peace as well–awards that have a much worse track record than economics. (I know, econ wasn’t in the original will.)
David, If they’d just give me one Nobel, I promise to stop whining about my ignored 1993 paper. Just one is all I ask for.
Marcus, That’s right.
Will, There are important similarities and important differences.
16. November 2011 at 19:30
Nobody does grouchy better than Paul Krugman, but no one tweaks him back with more self-assurance than Greg Mankiw. Of course, a professorship at Harvard can give you all the self-assurance you need.
16. November 2011 at 23:14
I think the people who dismissed Krugman’s seminal papers on expectations management probably did it along these lines:
Oh, Kay. It might be true, although it depends on consumers being very well informed. I don’t know anyone in the Princeton economics department, let alone Main Street USA, who does family budgeting based on perceptions about how reforms in [central bank policies] will affect incomes five years from now. But whatever.
(Who can tell me who wrote the above, with the part in brackets altered by me?)
16. November 2011 at 23:18
Regarding Mankiw’s funny line, I actually think it’s the other way around. I think people who are really insecure and need their professional accomplishments to bolster their self-esteem would tend to publish more and to do whatever other things you have to do to advance your career and end up winning the Nobel.
Other things equal, who is going to have a better professional career? The guy who doesn’t care about his name, or the guy who spends a lot of time making sure his contributions aren’t ignored, and who constantly reminds everyone that he makes the best predictions on the planet?
(I realize this sounds like a really huffy psychoanalysis of Krugman, but that’s not how I mean it. I’m just saying, Mankiw’s joke, though funny, is totally backwards I think.)
17. November 2011 at 03:23
Can you cite your 1993 paper directly, instead of through another blog post of yours?
17. November 2011 at 08:08
One almost wonders if Krugman – being the showman he is – stages some of these temper tantrums and tirades just to get his casual readers to dig a little deeper. If so I have to give him credit for that. The finer details of differences: were it not for ego, would anyone ever really figure them out? For the folks who are still learning, it can be lots more fun than a lecture on liquidity traps in a classroom. And as Marcus said, “You bet! And fun in real time!”
17. November 2011 at 08:41
John Thacker, That’s right.
Bob, That’s a clever judo move on Krugman. I’ve also noticed that his 1998 paper relies on a sort of “Ricardian equivilence” argument for money, which he would find far fetched if applied to taxes.
But I think his response would be that he now emphasizes the difficulty of getting the Fed to shift expectations about policy 5 years out.
You spoiled Mankiw’s joke!
Dilip, I was thinking about that, but I thought the average person would rather see me briefly discuss the relevant passage, and not have to wade through the whole thing. Maybe I should do both.
Becky, I don’t know. As Mankiw said lots of academics (including me perhaps) never think we get enough credit, no matter how much credit we get.
17. November 2011 at 11:18
When he amended that post, he gives mad props to Lars Svensson. What’d you call him, a market keynesian?
“Actually, people should really be looking at the work of Lars Svensson, who thought harder than anyone else about the problem of how to make inflation promises credible.”
http://krugman.blogs.nytimes.com/2008/12/17/a-whiff-of-inflationary-grapeshot/
17. November 2011 at 18:15
Charlie, At least he said “yuk,” so he recognized he went a bit overboard on that one. I also sometimes regret my posts.
18. November 2011 at 08:29
I just left a comment about coffee on another blog (they were talking about a coffee shortage) and when I came here there were coffee ads at the top of the page! Oh well, if I’ve been pegged that quickly I suppose it could be worse!
18. November 2011 at 18:44
Becky, It’s 1984–big brother is watching.
19. November 2011 at 11:43
“For academics, it is an occupational hazard to feel that your work is insufficiently cited. I had always assumed that the feeling would go away after winning a Nobel prize. I guess I was wrong.”
That’s hilarious.