I have heard of Geanakoplos, but mostly because he won the U.S. Junior (under 21) Chess Championship in 1970 at the age of only 15! It has always seemed to me that players who were that good at an early age are often very imaginative thinkers. And it certainly appears that Geanakoplos has done an impressive body of work.
Another well known economist who is an even better chess player is Harvard's Ken Rogoff. In fact, Rogoff interrupted his early educational and professional career to become a FIDE-titled International Grandmaster while he was in his 20s.
Recently he and Cuban-born Carmen Reinhart have teamed up to do some excellent work on the history of financial crises going back hundreds of years. One of their key points is that countries tend to have great difficulty digging out when they allow their debt/GDP ratios to approach 100%, and that such a level of debt lessens prospects for robust, sustained growth. They note that Japan, while in deep trouble, may have an easier time getting away with this sort of thing than we would, since most of their debt is domestically held -- just as ours was when we financed World War II.
Rogoff certainly does not support the Krugman prescription and warns against what he calls a "panicked fiscal surge."
Maybe his chess experience serves him here. It is not uncommon for a player to sacrifice a pawn (or two) in return for a strong initiative or attacking chances. But if you fail to win in the middlegame, you face the bleak prospect of going into the endgame material down. Against a good player, that's virtually hopeless.
In Japan, we've clearly seen the metaphorical equivalent of failing to win in the middlegame; that is, a failure to punch the economy into sustained growth with a huge fiscal jolt. Rogoff is apparently concerned that we are at risk of doing that.
I might suggest that if we took Krugman's advice, instead of inexorably heading for the endgame a pawn down, we might be a
rook down!
As to Kartik Athreya's idea that only PhD economatricians should be allowed to have opinions, that's the kind of stupid shit that got us into this problem to begin with. We have far too many economatricians who are all too wrapped up in their economometric models, and not enough people with a good background in theory who can sit back and say, "But that doesn't make any sense! Just think about it for a second and ignore the pretty math."
Originally Posted by TexTushHog
Ain't that the truth!
Did anyone hear about the Blinder-Zandi paper that just came out a couple of days ago? These guys actually argue that the fiscal portion of the policy response was working because
their models said it would work! Seriously, you can't make this stuff up. But I suppose it's hard to find anything else that buttresses their claims. Of course, Zandi is the guy who said last year that giving away food stamps, according to his model, gives you a fiscal multiplier of 1.73! Since they were two of the leading cheeleaders for the whole idea, I guess it's understandable that they would try to paint some sort of happy face on it.
And one of my economics professors favorite quotes, attributed to various people, most notably George Bernard Shaw, was "If all the economists in the world were laid end to end, it would be a good thing."
Originally Posted by TexTushHog
LOL!