Brad DeLong’s Grasping Reality…
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… ]
Originally published at www.bradford-delong.com on April 16, 2015.