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Overcoming Bias Commenter's avatar

You are missing a key ingredient. The money supply. If people were rational there would be no boom bust cycles. The existance of some irrationality is part of the system. What the macroeconomists are saying is that our irrationality is somewhat predictable when it is aggregated and can be manipulated to increase prosperity. This isn't just an argument for stimulus its an argument for having a Fed which adjucsts interest rates. Why shouldn't we try to understand aggregate irrationality and use it to our benefit?

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Overcoming Bias Commenter's avatar

@TGGP

"why Robert Barro thinks you should discount Krugman"

But having read some Barro lately, and having seen Krugman's response, I have to say I am more persuaded by Krugman! I do think Krugman is winning the question honestly with his arguments. Overall my impression is that Paul Kedrosky actually has the most interesting and useful understanding of the situation.

"Is he the only one?"

Of course not. The person with the most amusing ideological view, hands down, is of course Wilkinson. That's because he's one of the most hilarious people I know.

But seriously, this question is too important to leave to ideology, which is why we're all here at OB. Whatever happens now could probably shape the planet for the next 7-10 years, as this is an international problem. The irony in this case is that truth-seeking will require most OB folks - the ones who could be the most helpful in forming views - to refrain from having an opinion. Sigh.

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