Krugman on R&R (pot, kettle, etc)

Steve pointed me to this:

OK, Reinhart and Rogoff have said their piece. I’d say that they’re still trying to have it both ways, on two fronts. They deny asserting that the debt-growth relationship is causal, but keep making statements that insinuate that it is. And they deny having been strong austerity advocates – but they were happy to bask in the celebrity that came with their adoption as austerian mascots, and never to my knowledge spoke out to condemn all the “eek! 90 percent!” rhetoric that was used to justify sharp austerity right now. Sorry, guys, but with so much at stake you have a responsibility not just to put stuff out but to make crystal clear what you think it implies for policy.

Yes, crystal clear.  For instance, think of the damage that might be done to policy in the US, Europe, and Japan if the world’s most widely-read economic pundit put out one statement after another leading paleo-Keynesians to believe that monetary stimulus is ineffective at the zero bound, while he or she actually believed that a higher inflation or NGDP target could be effective.  That might cause people like Ed Balls to oppose a higher inflation target.



38 Responses to “Krugman on R&R (pot, kettle, etc)”

  1. Gravatar of bill bill
    28. April 2013 at 08:25

    I agree with you 100%

  2. Gravatar of Patrick R. Sullivan Patrick R. Sullivan
    28. April 2013 at 09:23

    Has there ever been a less dignified Nobel laureate than Krugman?

  3. Gravatar of cournot cournot
    28. April 2013 at 09:37

    It works for PK. His troops rally round him even more strongly and the general public believes his views on macro represent the mainstream, slightly left of center consensus of the profession. Another few decades and Scott will be tagged a far right winger. Those further away will be seen as fascists.

  4. Gravatar of marcus nunes marcus nunes
    28. April 2013 at 10:01

    Like a professional trader, Krugman hedges his bets. He could never be accused for saying the MP doesn´t work because:
    “I’m not claiming that there is nothing the central bank can do; but as I’ve tried to explain before, monetary policy can, for the most part, gain traction under current circumstances only by changing expectations about future actions (and changing them a lot). Meanwhile, fiscal policy has a direct, current effect on the economy, which easily trumps attempts to move the economy by changing the Fed’s messaging.

    Sorry, guys, but as a practical matter the Fed – while it should be doing more – can’t make up for contractionary fiscal policy in the face of a depressed economy.”

  5. Gravatar of Becky Hargrove Becky Hargrove
    28. April 2013 at 10:26

    While I am no austerian, I greatly appreciated the fact that Reinhart and Rogoff worked so hard to bring an incredible amount of important information to the public with “This Time is Different.” From what I’ve seen of Krugman’s offerings in the bookstores, there’s not really that much new, that his audience hasn’t already figured out for themselves.

  6. Gravatar of John John
    28. April 2013 at 11:05

    I love how every Keynesian pretends to be super scientific and objective in proving that government spending causes growth by pointing to models that automatically assume that government spending is expansionary on net. You’d have to be stupid to fall for their idiotic tricks.

  7. Gravatar of AlanInAZ AlanInAZ
    28. April 2013 at 11:51

    The R-R paper was taken by many to show that above 90% debt/gdp the economic world collapsed. That is a lot different than saying monetary policy is marginally effective at the zero lower bound.

  8. Gravatar of ssumner ssumner
    28. April 2013 at 15:22

    AlanInAZ, Krugman’s posts were “taken by many” to claim that monetary policy is ineffective at the zero bound. I know, I’ve met many of these people. That was incredibly damaging as we didn’t use the most potent instrument available. Even Keynesians that Krugman praises, like Ed Balls, swallowed the koolaid–and caused lots of unemployment as a result.

  9. Gravatar of Ashok Rao Ashok Rao
    28. April 2013 at 15:29

    I think there’s an important distinction between “fiscal policy is only appropriate at the ZLB” and “monetary policy is useless at the ZLB”.

    Taking the latter to the conclusion, one might argue, there’s nothing wrong with tighter money, per se. But Krugman (as Konczal) has been a consistent advocate for monetary easing.

  10. Gravatar of ssumner ssumner
    28. April 2013 at 16:24

    Ashok, You said;

    “But Krugman (as Konczal) has been a consistent advocate for monetary easing.”

    He’s done far more to hurt the cause than help the cause. The vast majority of people believe monetary policy is ineffective when rates are zero, and Krugman is one reason why people believe that. I understand that Krugman doesn’t believe that, and that he favors monetary stimulus. But by constantly saying monetary stimulus is ineffective at zero rates, he’s hurt the cause. And he’s said this literally dozens of times.

  11. Gravatar of ssumner ssumner
    28. April 2013 at 16:25

    Ashok, BTW, he advocates fiscal stimulus for Europe, and they aren’t even at the zero bound, Indeed the ECB may cut rates next week.

  12. Gravatar of J J
    28. April 2013 at 16:40

    Professor Sumner,

    I’m not sure Krugman does advocate fiscal stimulus in Europe. He certainly acknowledges the difficult budget situation that many periphery countries. He has advocated euro exit, but I’m not sure he thinks Greece should be running massive budget deficits right now. Opposing austerity is not the same as pushing for stimulus. And, probably every time he complains that Germany should be running deficits to match Greece’s cutbacks, he mentions that the ECB is run by people who don’t know what they are doing.

  13. Gravatar of J J
    28. April 2013 at 16:42

    Anyway, I do wonder how much more aggressive the Fed might be if Krugman had spent all his time over the last few years pushing for monetary stimulus instead of fiscal stimulus. Certainly, his attacks on austerity have not made much of a difference, so it’s hard to see how the result could have been worse (even from his point of view).

  14. Gravatar of gofx gofx
    28. April 2013 at 17:55

    I’m trying to figure out if Krugman’s definition of austerity is a negative sign on the second or the third derivative of federal spending…..

  15. Gravatar of Benjamin Cole Benjamin Cole
    28. April 2013 at 19:45

    The Fed needs to take the advice of Sumner and Beckman: Not only QE, but a QE program that enlarges as targets are missed (and they are being missed).

    Inflation is still well under 2 percent and unemployment—and worse, total employment—remain real problems.

    Obviously, QE is helping, the Fed just needs to pour it on. In this regard, Krugman has failed. He has not said, “Might as well really get aggressive on monetary policy.. Why all the tweetybirding and diddling around?”

  16. Gravatar of Vivian Darkbloom Vivian Darkbloom
    28. April 2013 at 23:58

    Krugman’s skills at slippery (except when it comes to personal slanders) rhetoric surely now exceed his expertise as economist. Read any Krugman piece with an eye towards identifying the escape hatches he builds into what he writes. You’ll always find one, or several and, as a result, Krugman rarely says anything that he can’t later amend or deny. A classic example of this is Krugman’s 2009 recommendations to Paul Summers regarding the amount of “necessary” fiscal stimulus as reported in Larry Summers’ memo to the President and later revealed by Ryan Lizza in the New Yorker:

    “Progressive Economists:

    -Robert Reich believes it should be $1.2 trillion over two years, but also indicated it could be larger.
    -Joe Stiglitz believes it should be $1 trillion over two years.
    -Paul Krugman: at least $600 billion in one year.
    -Jamie Galbraith: $900 billion in one year.
    -Institute for America’s future (signed by Dean Baker, Andy Stern, Leo Gerard, John Sweeney and others, at least $900 billion.

    Republican Economists:

    -Marty Feldstein was an early proponent of a spending-only package and currently believes it should be $400 billion in the first year;
    -Larry Lindsey, a former Federal Reserve Governor and NEC Director, estimates $800 billion to $1 trillion is desirable;
    -Ken Rogoff (widely respected macroeconomist, former chief economist of the IMF, former McCain adviser): $1 trillion over two years.
    -Mark Zandi (widely quoted economist, former McCain adviser, at least 600 billion in one year.
    -Greg Mankiw is the only economist we consulted who refused to name a number and who was generally skeptical about stimulus.”

    So, Krugman recommends at least $600 billion *in one year* (not in *year one *or in the *first year*). Krugman would later claim, of course, that he said at least which was of course meant to be much more than $1 trillion (or anything he might later think he should have said) and he would later claim that this was only meant to apply to the *first year*. But, careful readers will note that the formulation of these recommendations was different. Some recommended the stimulus extend over two years and others, including Krugman, recommended that it extent over one year. Only one economist, Feldstein, is quoted as saying his estimate was for the first year.

    So, Krugman recommends $600 billion in one year and comes in at the low end of those progressives polled, and even lower than Rogoff!!. And now, Krugman charges Rogoff of being a lackey of austerians. What cheek.

    Of course, Krugman could later conveniently argue (and he did) that this was just the first year (and not “in one year”) and of course he meant the ultimate stimulus package should have been much, much more. But, he left himself the option of cutting it off at $600 billion and also that the high end could have been anything he later claimed it should be. Also, one must view this in the context that Summers went out to the economists with the objective of getting high estimates so as to get the stimulus bill through Congress. Thus, if anything, the job of these economists (particularly a Keynesian fully believing in the powers of fiscal stimulus and a “progressive economist” friendly to the administration, to boot) would be to overstate what they thought was actually needed.

    Summers of course indicated in that memo that further stimulus could be added later, if needed, and the other economists could also have conveniently later altered the perceptions of their recommendations. But, Krugman still came in at the low end and I can’t think of another economist on that list who tried so hard to later conveniently change the meaning and perception of what they had initially recommended as Krugman did.

    This is a great example of leaving yourself the possibility of “having it both ways” and then later aggressively exploiting that possibility. And, at this, Krugman is truly the all star of “having it both ways”. Rogoff and Reinhardt are not even in the same league.

  17. Gravatar of Vivian Darkbloom Vivian Darkbloom
    29. April 2013 at 00:05

    “Paul Summers” is obviously a typo, but an interesting amalgam nonetheless. Readers might ponder which is the mercury and which is the tin.

  18. Gravatar of Kevin A Kevin A
    29. April 2013 at 02:42

    “And they deny having been strong austerity advocates…”

    I can’t comment on Reinhart, but a casual reading of financial news is enough to know that Rogoff was never a “strong austerity advocate”

    Rogoff 2011:
    -Ken Rogoff, the Harvard economist, suggested central bankers consider “the option of trying to achieve some modest deleveraging through moderate inflation of, say, 4 to 6 percent for several years.”

    In fact, heres a video of Krugman WITH Rogoff. Rogoff dismisses additional fiscal stimulus, but offers an expressly non-austere plan:
    1. Use US credit to bring down mortgage debt
    2. Higher inflation
    3. Structural reforms (4:50).

    Clearly Rogoff was pushing for more monetary stimulus, how does Paul conflate him with an austerity advocate?

  19. Gravatar of Ashok Rao Ashok Rao
    29. April 2013 at 03:10


    Interesting point. His blogs aren’t as widely read (by a margin) as his columns, and perhaps he assumes a certain level of familiarity with both his positions and economic principles in general. As I said, the logical conclusion of his purported belief would be very tight money. Not sure..

    Re: Europe, his argument is much more anti-austerity than pro-stimulus. And while double negatives do make a positive, he probably does not have the confidence that the ECB will offset any and all fiscal contraction.

  20. Gravatar of ssumner ssumner
    29. April 2013 at 04:45

    Thanks Vivian, That’s very interesting.

  21. Gravatar of J J
    29. April 2013 at 07:17


    Except you are ignoring his many blog posts from BEFORE the stimulus was enacted, saying that it would be too little. I don’t know what the context of Krugman’s recommendation to Summers was. But, what we do know is that Krugman did not just change his mind after the fact. He said repeatedly, before the results were in on the Obama stimulus, that it would not be enough.

    The idea that Krugman likes to have it both ways more than other economists is not quite right. Economics is not an exact science, so no economist makes repeated strong predictions unless they want to lose credibility. Krugman does make broad predictions such as: austerity will hurt economic growth in Europe and the US, and low interest rates will not cause inflation.

    Whether the first prediction is right is another story. Nonetheless, it’s hard to find other serious economists who make more predictions and more precise predictions than Krugman.

  22. Gravatar of Patrick R. Sullivan Patrick R. Sullivan
    29. April 2013 at 08:02

    It’s also hard to find a prominent economist who has made as many spectacular blunders as Krugman, and when exposed responds thus;

    ‘We have all seen the way that a good story that happens not to be true can take on a life of its own, and I realize that they [Stan Liebowitz and Steve Margolis] are frustrated with the way that an overstated version of the QWERTY story has spread despite their efforts to stop it. That frustration does not, however, justify the hectoring and unprofessional tone of their piece or the way it misrepresents what those of us who take path dependence seriously have said.’

    ‘hectoring and unprofessional tone’? Heal thyself, Doktor.

    By the way, what was the offense of L&M, you ask? A few mentions of his name in a paper they wrote. Here they all are;

    ‘Paul Krugman’s new book, Peddling Prosperity, is
    a popularization of economic ideas that bear on
    public policy issues. He titles his chapter on path
    dependence “The Economics of QWERTY,” referring to the widely reported story of the typewriter keyboard.’


    ‘It is hard to overstate the significance of the
    typewriter keyboard example for the path depen-
    dence literature. Krugman has it right: this
    movement in economic policy is the “economics
    of OWERTY.”‘


    ‘…Krugman, and some others argue that markets, which might have done well at organizing the manufacture of old-technology things like steel and sailing ships, are ill suited to organize the manufacture of new-technology items like silicon chips and software because of network effects.

    ‘There are problems with both parts of that

    and, in the conclusion of the paper;

    ‘As stated by Paul Krugman: “In a QWERTY world, markets cannot be relied upon to get things right.” That in itself says nothing about the correctness of the theory
    of path dependence, but it does suggest that we
    might want to pay attention, especially given the
    theory’s simple logical appeal and its romantic
    tales of butterflies, dinosaurs, and old typewrit-
    ers that come to us, all reflecting the glowing
    halo of science.’

    That’s what set Krugman off. Pretty tame compared to what Imam Paul has to say, day after day after day…about the infidels R&R.

  23. Gravatar of Patrick R. Sullivan Patrick R. Sullivan
    29. April 2013 at 08:11

    Oops, I see I left out two earlier mentions of Krugman in the L&M paper;

    ‘Paul Krugman captures the idea in a succinct definition of path dependence: “the powerful role of historical accident in determining the shape of the economy.”‘


    ‘What is especially important is that for Arthur,Krugman, and other path dependence theorists, path dependence is no oddity….’

    I regret the error.

  24. Gravatar of Vivian Darkbloom Vivian Darkbloom
    29. April 2013 at 08:55


    It would be really useful if you were to report just where and when Krugman contradicted his own advice before he gave it to Larry Summers and his team. The earliest Krugman column I could find on this was in November 2008 wherein he stated:

    “Fiscal policy is the only game in town.”

    “When I put all this together, I conclude that the stimulus package should be at least 4% of GDP, or $600 billion.
    That’s twice what the unreliable rumor says. So if there’s any truth to the rumor, my advice to the powers that be (or more accurately will be in a couple of months) is to think hard – you really, really don’t want to lowball this.”

    Krugman did not at all think that he was low-balling his estimate (“you don’t want to lowball this”). He gave the same figure here—$600 billion in one year—that is, as a total package, that he gave Summers. Other economists cited in that memo, including Rogoff, armed with the same information at the same time, actually gave higher estimates and recommendations than Krugman. And now, Krugman calls Rogoff a patsy for the austerians!

    It was only later that Krugman began to change his tune. He started in 2009 to say that the stimulus might be too small after all (without revealing that his own advice to the administration called for a package even lower than the one passed).

    For example, Krugman wrote in early 2009 that he thought the stimulus package might be too small. At the same time, he signed on to the Romer/Bernstein memo with respect to their estimates of the fiscal stimulus multipliers:

    “The key thing if you want to do comparisons is to note that I made estimates of the average effect over 2009-2010, while they do estimates of effect in the fourth quarter of 2010, which is roughly when the plan is estimated to have its maximum effect. So they say the plan would lower unemployment by about 2 percentage points, I said 1.7, but their estimate may actually be a bit more pessimistic than mine. They have the plan raising GDP by 3.7 percent, but that’s at peak; I thought 2.5 percent or so average over 2 years, again not much difference.”

    Later, when the economy continued to slide despite the stimulus package larger than the one Krugman himself initially recommended was passed, he started an even bigger campaign to claim that the original stimulus was too small, without once mentioning his own involvement in that process. Krugman was in a very influential position at that time as a leading progressive economist in giving advice to a newly-elected and sympathetic progressive administration. When you have that sort of influence, it is exercised through direct input to Summers and others—not through a personal blog. Krugman had his chance, he gave the advice, and later he tried to undermine Summers and others.

    The campaign to distort the record began in earnest when Krugman became aware that Lizza was working on his article and that the memo would likely be made public:

    “One thing I would note, however, is that the defense people outside the administration make for the inadequate stimulus is very different from the defense the administration makes. Outside defenders argue that Obama got all he could; but administration figures like Jay Carney claim that the reason the stimulus wasn’t bigger was that nobody realized how deep the recession was going to be.
    That is, of course, not true “” I, in particular, was tearing my hair out in public over the inadequacy of the plan:
    I see the following scenario: a weak stimulus plan, perhaps even weaker than what we’re talking about now, is crafted to win those extra GOP votes. The plan limits the rise in unemployment, but things are still pretty bad, with the rate peaking at something like 9 percent and coming down only slowly. And then Mitch McConnell says “See, government spending doesn’t work.”
    Let’s hope I’ve got this wrong.

    But how could we know that the plan was inadequate? History!”

    Krugman’s new line was to be that the administration (not Krugman) erred in thinking that they could go to the well again for more stimulus after the first package. He eagerly latched on to this idea put forth by Jared Bernstein:

    “Jared is right that the really, really key misjudgment was the notion that they could come back for more “” a failure to understand the bitterly partisan nature of the situation. And this remains totally baffling and frustrating to me, because I thought it was dead obvious that they had better have tangible success on the first round, or nothing more would be possible.”

    But, again, Krugman had his chance. His advice was “$600 billion in one year”. He does not want his readers to remember that. He could have said at the time, as others did, “X amount over two years” ($1 trillion, $2 trilion, or whatever). Krugman has himself to blame for misjudging the political situation, if that is what happened. And now, after the fact, he, a person who claims considerable political intelligence through is NYT column and elsewhere, wants to blame others for this supposed political misjudgement.

    That’s chutzpah and I’d say that’s wanting to have it both ways. When his reputation is at stake he not only undercuts his ideological opponents, but also those supposedly on his own team.

    Given the above history, his tirade against Rogoff’s alleged austerianism is just par for the Krugman course.

  25. Gravatar of Vivian Darkbloom Vivian Darkbloom
    29. April 2013 at 08:59


    I’ve responded to your comment; however, it is “awaiting moderation”, likely because it contains too many hyper-links to Krugman’s posts in the NYT (none of which call for higher stimulus than $600 billion preceding his advice to Summers).

  26. Gravatar of ssumner ssumner
    29. April 2013 at 09:20

    Vivian, That’s a pretty impressive analysis. I’d be interested in what others think of your facts.

  27. Gravatar of bjssp bjssp
    29. April 2013 at 09:45


    I don’t really get why you think this is some huge gotcha! moment. He was clearly thinking in terms of a year. That may or may not have been the right way to do it, but it’s not at all clear, to be charitable, that he was trying to play fast and lose with his audience.

  28. Gravatar of Becky Hargrove Becky Hargrove
    29. April 2013 at 09:54

    Vivian doesn’t go for ‘gotcha’ moments. She’s interested in who has the best facts and logic. And believe me, she would not spare Scott Sumner for one minute.

  29. Gravatar of Vivian Darkbloom Vivian Darkbloom
    29. April 2013 at 09:55


    How does “he was clearly thinking in terms of a year” jive with the later criticism of *the administration* (but not himself) that they erred in thinking they would be able to go back for more after one year? If that was the case, why would not Krugman have argued for even more or argued that a larger amount should be applied over two years as part of the package as others did? Or, alternatively, why would Krugman not take the blame for the same mis-judgement? It strikes me that these two positions are not compatible.

    Also, Krugman is on record (see above) that “fiscal policy is the only game in town”. Given that, would his estimate not have been much larger than the other economists surveyed? I’m assuming here that the others, or at least some of them, did not think that “fiscal policy was the only game in town”.

    No, I’m not claiming this is a “huge gotcha moment”. Krugman’s game is more subtle than to allow that. I’m claiming the record shows that Krugman is revising history and that he is totally hypocritical in claiming Rogoff is an “austerian mascot” when Rogoff was on record as having recommended more fiscal stimulus than Krugman did when asked by the administration for advice.

    Others may be more informed on this than I am, but I also suspect Rogoff did not believe that “fiscal policy was the only game in town”.

  30. Gravatar of bjssp bjssp
    29. April 2013 at 10:38

    Separate questions/calculations. One was an economic calculation, about which someone could infer (or ask about if it wasn’t clear) each year would be roughly the same. Hence $600 billion over one year being $1.2 trillion over two years. The other was a political calculation about how easy it might have been to go back and do more stimulus. It’s not at all clear, to say the least, that Krugman was thinking in terms of politics back when he was making his original stimulus calculations. I don’t know if he ever made a statement about the political ends of getting more stimulus back when President Obama was first elected.

    I don’t Krugman is revising anything. For him to do that, he’d have had to explicitly argue that stimulus would be within a strict range and/or a temporary thing. I don’t think he’s done that.

    I also don’t think he’s wrong to disagree with Rogoff, Reinhart, and people like them, regardless of how much stimulus they supported. But even if you think he’s being unfair in his criticisms, and especially with his words, I don’t think it’s right to say he went smaller than the Obama administration. Take this piece, which was published a few weeks before Obama was sworn in and before the stimulus package was enacted:

    Why the switch from November to January? Perhaps there wasn’t anything underhanded going on, and perhaps you are being way too literal.

  31. Gravatar of Vivian Darkbloom Vivian Darkbloom
    29. April 2013 at 11:17

    “Separate questions/calculations.”

    Do you seriously think Krugman was asked different questions than the other economists surveyed?

    As for the rest, I’m really not sure why I bother to respond to someone who avoids the specific issues presented, but rather tries to change the subject. The rest you wrote is pathetic gibberish. For example, Krugman really meant that $600 billion over one year meant $1.2 trillion over two years? Your attempted obfuscation is worse than his. You are not doing him any favor.

    As for the Jan 2009, opinion piece you link to, I wrote this:

    ” He started in 2009 to say that the stimulus might be too small after all (without revealing that his own advice to the administration called for a package even lower than the one passed).” Etc.

    Tell me something I don’t already know. That’s why I come here. Make my visit worthwhile. Make my day.

  32. Gravatar of bjssp bjssp
    29. April 2013 at 12:32


    No, I don’t think he was asked different questions. When I said “questions/calculations,” I meant different areas and topics, not different questions from the same topic.

    Above, you stated he criticized the administration for thinking they could go back for more, but there’s no indication that this notion was crossing his mind. In other words, politics weren’t factoring in to his thinking, even if they should have.

    Now, what specific issues am I avoiding? The issue at hand is whether Krugman deliberately left himself an out so that he could avoid being wrong, isn’t it? I said I didn’t think he was doing anything like that and I said why. If you feel like there’s something I am not addressing, please let me know.

    More specifically, in no particular order:

    1. You’re parsing his words heavily and assuming that everyone was asked something quite strict, along the lines of “How much stimulus specifically and for how long?” Based on the type of responses given, it seems like the question was broad, not different, along the lines of “What is your recommendation for stimulus?”

    2. The memo cited in Lizza’s post doesn’t seem to ask anything specific. Indeed, as we can see on page 10, it doesn’t do anything more than list what people recommended over various lengths of time. Hell, Stiglitz is mentioned twice, once on page 10 and then on page 11, the first time mentioning $1 trillion over two years and the second time, along with other similar guys, mentioning at least $300-400 per year.

    3. There’s also the issue of composition. Something like 40 percent of the stimulus was composed of tax cuts, and Krugman was an early advocate of making more of it direct spending. He didn’t describe this in the post from November 10, 2008, but it’s worth mentioning.

    4. We don’t even need to be specific with numbers, however, to see that he thought it was too small. I didn’t notice this before, but the November 10, 2008 post had a link to his column for the day. Reading it, we see this:

    “My advice to the Obama people is to figure out how much help they think the economy needs, then add 50 percent. It’s much better, in a depressed economy, to err on the side of too much stimulus than on the side of too little.”

    Nothing specific is mentioned, but he clearly wasn’t advocating something small.

    5. You can also browse a bunch of these links from late 2008 and early 2009 to see he thought it was too small: (Note: this one has lots of links itself.)

    I could go on, but it should be clear that at the beginning, he felt it was too small.

    6. As for Rogoff, he proposed what many others were proposing, but then he shifted to worrying about debt levels. That’s where the austerity criticism comes from.

  33. Gravatar of marcus nunes marcus nunes
    29. April 2013 at 12:56

    I agree with you all the way. Over the years Krugman has developed a style of argument and ‘predictions’ that are fully ‘hedged’. He would make a great trader! I note that in a recent post:

  34. Gravatar of J J
    29. April 2013 at 15:22


    You are right that he confirmed his $600 billion for one year suggestion on his blog. Thus, I don’t think he was trying to hide that; it was public information well before the memo came out.

    I believe others have already linked to this from January 2009:

    Perhaps I have some new thoughts. First, he emphasizes the composition of the stimulus. He complains that 40% of the stimulus involved tax cuts which he believes to not have a significant multiplier. He concludes that the stimulus plan contained only $600 billion of real stimulus. Yes, this is the amount that he proposed. However, he also emphasizes that the $600 billion was over two years.

    A piece of information is missing: what was Krugman’s longer-term stimulus plan. Let’s make a conservative estimate that he thought $600 billion in year one would be enough to end the demand shortfall and no more would be needed (this is also assuming that he didn’t rethink his ideal stimulus package after more bad news came out between November 2008 and January 2009). It does not follow, however, that $600 billion over two years would be enough. Maybe he thought the stimulus wasn’t spent quickly enough.

    Either way, it doesn’t seem like he was trying to be dishonest, particularly since he publicly stated his $600 billion in one year proposal in November 2008.

  35. Gravatar of ssumner ssumner
    29. April 2013 at 17:45

    J, I don’t think he’s trying to be dishonest, I think he’s got a blind spot, and holds others to a higher standard than himself. For instance he complains that R&R should have known how their ideas would be misinterpreted, when he’s a master in doing posts that get misinterpreted by his own fans, and he knows they are being misinterpreted. He knows his fans thought he believed monetary policy was ineffective at the zero bound, for instance. I have posts showing the clever techniques he uses to both please his (left-leaning) fans and yet maintain credibility with serious economists by sending out subtle signals showing his hasn’t completely lost his mind.

  36. Gravatar of PP PP
    30. April 2013 at 02:26

    How about this Krugman pearl, from his Japan 1998 paper?
    “My point is that the end of the Depression, which is the usual, indeed perhaps the sole, motivating example for the view that a one-time fiscal stimulus can produce sustained recovery, does not actually appear to fit the story line too well. Much, though by no means all, of the recovery from that particular liquidity trap seems to have depended on inflation expectations that made real interest rates substantially negative.”

  37. Gravatar of ssumner ssumner
    30. April 2013 at 11:07

    PP, That’s a good one.

  38. Gravatar of Krugman Calls Out Sumner: Hornets Nest! | Last Men and OverMen Krugman Calls Out Sumner: Hornets Nest! | Last Men and OverMen
    18. April 2017 at 02:27

    […] criticizng Reinhart and Rogoff is the pot calling the kettle black.      For all this, it’s true that it’s early to say definitively say […]

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