Comments on: The extent of our knowledge

By: The Ambrosini Critique » Blog Archive » Sam, Fred and the deer in the road

Thu, 03 Sep 2009 00:12:03 +0000

[...] the guard rail? Yes, but jerks on wheels can, by luck, right out-of-control cars. Luckily for Sam, Eggertsson has found this was the case in the historical example. In that case, a jerk on wheel in the right [...]

By: Tona

Tona — Sat, 21 Mar 2009 19:39:42 +0000

Do you guys have a recommendation section, i’d like to suggest some stuff

By: Macroeconomics as Mind Control

Macroeconomics as Mind Control — Wed, 04 Feb 2009 20:50:32 +0000

[...] Ambrosini is annoyed by all the macro bashing, and says that one can see that modern macro is successful, if one knows about the best new stuff. But when asked in comments what advice he’d give the [...]

By: swong

swong — Tue, 03 Feb 2009 21:31:40 +0000

Isn’t that exactly the tone he took with his inaugural speech? Something like “We’ve faced adversity before, we will defeat it again,” etc.

I agree though – any government agency put in the path of an asset bubble will be fired from a cannon at the nearest bus the moment it looks like it’s impeding growth.

By: pushmedia1

pushmedia1 — Tue, 03 Feb 2009 20:16:34 +0000

I’d have him give speeches about positive prospects for growth (”your company will turn the corner! your wages will go up!”); I’d have him talk about how this recession is a short term bump in the road. No more talk about how shitty things are (without, of course, denying the statistics… I assume Obama’s a better rhetorician than I am). Pessimism feeds on itself so to the extent the president controls expectations, he should try to improve them. Even though I don’t think the President has that much control over expectations, I think Obama’s rhetoric of transformation is more useful than his rhetoric of crisis.

I’d advise him that any actions he takes should reinforce his positive message. That this is the force of those actions. So if the stimulus has to happen for whatever political reasons, then it should be to improve long term prospects for growth. People have to feel like their wages will get higher.

Secretly, I’d wish we didn’t live in a world that had political institutions that acted as if “something needs to be done; this is something” was good policy.

That’s to address the crisis, which I assume is what you were talking about. As for “real” reform, I’m not an expert on regulation or finance. Clearly, though, something will need to be done there.

Also, I’d want to think about ways to anticipate asset bubbles and to have institutions in place to deal with them before they become a problem. As we’ve seen, significantly sized bubbles can really distort allocations. Maybe this is a new role for the Fed because of its independence. No political institution would be able to stare down voters when it tried to deflate asset prices. “Sir, please vote for me. Yes, I reduced the price of your home, but it was for the greater good!” Maybe the Fed could get away with this though.

By: Kevin Dick

Kevin Dick — Tue, 03 Feb 2009 18:20:18 +0000

I’ve really enjoyed reading your macro posts, so I’m going to ask you to go out on a limb. If President Obama called you up and said, “Will, what should I do?” what would you tell him?

I’ve got my own answer to this question and want to check it against yours.