Quote of the day

It is an established scientific fact that monetary policy has had virtually no effect on output and employment in the U.S. since the formation of the Fed,” Professor Prescott, also on the faculty of Arizona State University, wrote in an email. Bond buying, he wrote, “is as effective in bringing prosperity as rain dancing is in bringing rain.”

Ed Prescott

1929?

1933?

1937?

1981?

2007?

2009?

Curiosity: All odd numbers!

5 thoughts on “Quote of the day

  1. “It is an established scientific fact that monetary policy has had virtually no effect on output and employment in the U.S. since the formation of the Fed.”–Professor Prescott, ASU.

    Dang! Finally!

    Proof that I caused the last recession when I stuck pins into my econo-voodoo doll.

    The Fed didn’t do it!

    That leaves me and my economy-voodoo doll.

  2. Would economics be better off if statistics was never invented?

    Maybe it’s untrue of Prescott, but many folks think the absence of a reliable statistical link between two quantities averaged across all values- short-term change in M, and NGDP for example- means the quantities are unrelated. For them, recent experience in Japan is nothing more than a bit more statistical data; if P-values don’t change when 2012-2013 Japanese data is aggregated with 100 years of prior data, then Japan meant nothing; it’s not worth explaining; that’s *science*.

    But if statistics didn’t exist, then Prescott would be forced, in English, to explain what the heck happened in Japan beginning in late 2012.

    It seems like macroeconomic history is noise-noise-noise-noise-CLEAR_EXPERIMENT-noise-noise-noise. And the effort to glean info from the noise, and the weight given to those conclusions, causes people (lets people rationalize away?) the truly illuminating events.

  3. Marcus,

    Could China’s aggressive easing-then-tightening of monetary policy explain gold’s dramatic rise (2009 to 2011) then fall (2012 to 2013)?

    Or has gold fallen because we’ve found so much new oil (increasing real interest rates and lowering the attractiveness of gold)?

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.