Monday, January 28, 2013

Economist Robert Murphy Gives Hope to...

...anyone who finds Paul Krugman (and his followers on your Facebook friend feed) ridiculous, partisan, and hypocritical.  I'm sure he's a nice guy and such; he has a cat that appears well-fed.

Murphy lays out recent statements from Paul Krugman and Christina Romer where they state that there is no evidence that lower or higher marginal tax rates and corporate tax rates have a positive/negative impact on GDP growth.  Murphy then cites a great deal of evidence, including from Krugman and Romer, in which it is concluded that taxes matter.  That is, lower marginal tax rates and lower corporate tax rates will raise GDP growth while higher marginal tax rates and higher corporate tax rates will lower it.

So, when you and your friends are discussing fiscal stimulus and its merits, be sure to have read the following article.

Robert P. Murphy, What Economic Research Says About Fiscal Austerity and Higher Tax Rates | Library of Economics and Liberty

Is the Invisible Hand Hard to Grasp?

Russ Roberts points out (see link below) that mainline economics seems to be losing out to Keynesian economics in the marketplace for ideas.  He  argues that mainline economics (what Peter Boettke calls the tradition of ideas from Adam Smith, F.A. Hayek, Milton Friedman, and Boettke and Roberts themselves) may be hard to understand if one doesn't observe it in practice and infer its existence that way. 

Further, he points out that economists may have an incentive to provide the economic analysis that the public demands.  After the crisis, people demanded that government do something (according to the government) and so a wave of regulation was unleashed.  Economists (many, but not all) then produced research that showed government intervention works.  We now know just how limited the government's success can be at promoting growth and lowering unemployment.  Perhaps a new flood of research will seek to explain the limited efficacy of government deficit spending and regulation to put GDP growth back on track and the ideas of Friedman, Hayek, Smith, and others will gain traction.

Cafe Hayek — where orders emerge

Tuesday, January 22, 2013

Who Truly Has a "Faith-Based" Approach to the World?

From Don Boudreaux at George Mason University.  "It is high time that those of us who have a more-realistic and less-romantic understanding of the logic of politics start more forcefully to insist that if anyone in this battle over appropriate fiscal policy is unscientific or faith-based, it is the Keynesians – whose theory of the determinants and role of aggregate demand might or might not be valid, but whose theory of government behavior most certainly amounts to nothing more than praying to the state to behave only nonpolitically and only in accord with the scientific dictates of Keynesian theory.  Such a ‘theory’ of state behavior, of course, is no theory at all; it is merely a naive hope or a faith immune to reason and facts."

Cafe Hayek — where orders emerge

Wednesday, January 09, 2013

Are Stimulus Multipliers Higher During Times of High Unemployment? Not in the United States.

Key Finding: "No matter how they test, the conclusion is the same. The authors say they "find no evidence that multipliers are higher during periods of slack in quarterly U.S. data from 1890 to 2010."

An argument against government spending over other stimuli in times of recession?

Are Stimulus Multipliers Higher During Times of High Unemployment? Not in the United States.

Women, Liberty, Marketing, and Social Science, Bryan Caplan | EconLog | Library of Economics and Liberty

I've found this to be true.  You?

"To make a long story short: Thinking people tend to have "hard heads" and "hard hearts," while Feeling people have "soft heads" and "soft hearts."  Unsurprisingly, then, Feeling people tend to hold more anti-market views.  I've similarly found strong evidence that males "think more like economists."  This gender belief gap increases with education, consistent with a simple model where male and female students gradually learn more about whatever their personalities incline them to study. "



Women, Liberty, Marketing, and Social Science, Bryan Caplan | EconLog | Library of Economics and Liberty

Cafe Hayek — where orders emerge

Good quote from Adam Smith.,

Cafe Hayek — where orders emerge