A self test (a follow up to this post):
- If the dollar appreciates exogenously, do export and import prices (in US currency terms) tend to fall, holding all else constant?
- If tariffs on imports are raised, do import prices tend to rise, ceteris paribus?
- If US government debt issuance increases, and private domestic and foreign actors do not correspondingly increase demand for US government debt, do real interest rates tend to rise (holding constant expected inflation)?
- If US inflation rates increase ceteris paribus, will a Federal Reserve following a Taylor Rule tend to raise the policy rate (Fed funds rate)?
- If the Federal Reserve’s independence is reduced so that the Executive branch is empowered to have a say in monetary policy, will the Fed then tend toward greater monetary accommodation of fiscal policy?
- If mass deportations reduce the labor supply, do upward wage pressures and hence price pressures increase?
If your answers are “yes” to all, then you are likely a Mainstreamer.
On the other hand, if you answer yes to the following:
- it’s possible to raise enough revenue by raising tariffs to replace the income tax.
- It’s possible to cut spending enough by reducing the Federal workforce to balance the budget.
- If you cut corporate tax rates by another 3 percentage points, corporate tax revenues will increase sufficiently to balance the budget.
- If you raise tariffs on imports from a foreign country, that country will promptly capitulate, and not raise tariffs on goods it imports from the US.
- If you raise tariffs on intermediate goods (goods that are used to produce goods in America), this will not raise the cost of producing exported goods.
- If you deport millions of unauthorized immigrants, it will not cost anything in budget dollar terms to do so.
- If you deport all unauthorized immigrants in the United States, this will not have any negative impact on output, or elevate production costs, in construction, agriculture, and food processing.
Well, then, I’d say you’re not a mainstream macroeconomist.
In fairness to legitimate heterodox thinkers, one can be non-mainstream and still think like an economist. Some commenters here (at least one of whom has been banned, and deservedly so) have abused the notions of “main stream” and “orthodox” and “heterodox”, in service of trotting out idiocies and falsehoods. In fact, there are perfectly serious people who have doubts about neo-liberal economic thinking, who would not touch anything on Menzie’s non-mainstream list with a ten-foot poll.
There are orthodox economists, there are heterodox economists and there are liars and loonies. Lance Roberts? Clearly neither orthodox nor heterodox, so…
Macroduck: I don’t have a problem with heterodox economists if they have a consistent framework. I find the value in RBC theory. After all, RBC is the core of the New Keynesian approach. I’m a little leery of the labor theory of value — I think we’ve gone past that. However, at least formal Marxian economics is internally consistent. It’s just folks making it up that bug me.
Exactly.
With due respect, I have to take issue with the answer (or perhaps the wording) of Q #2. Strictly speaking in the national accounts, import prices (Pm) are measured as CIF; they do not include tariffs. In 30+ years of modeling trade, I always computed the effects of tariffs on prices as Pm (1+t). Indeed, it is much more likely that Pm falls (because foreign will want to preserve market share) than rise.
Bessent is Trump’s choice for Treasury.
The good news:
– Not Kevin Warsh
– Not a felon
– Not a politician
– Not a fan of tariffs
– Experience as a leveraged investor (that’s not praise for leverage, but rather an indication of Bessent’s limits as a finance guy)
The bad news:
– Limits as a finance guy
– Chosen for his ability to get guys like me to recognize that he’s not wretchedly bad, rather than because he is highly qualified – he’ a “don’t spook the equity market” choice
– He’s Trump’s creature, so he can end up being bad because he’s told to be bad
*test
Welcome back.
I finally got through. WOW……. Was I being “punished” by Prof Hamilton or any of his distant relatives?? Honest to God I’ll accept that. “Hoover Institute is next to God”. Was that my line??
Did you guys notice David Letterman played “American Idiot” by Green Day on his YT channel ONE day after the presidential election??
Letterman’s still “got it”/
Call an economist mainstream, call them heterodox, but whatever you do, don’t call them neoliberal. They really seem to get worked up about that.
*test
With due respect, I have to take issue with the answer (or perhaps the wording) of Q #2. Strictly speaking in the national accounts, import prices (Pm) are measured as CIF; they do not include tariffs. In 30+ years of modeling trade, I always computed the effects of tariffs on prices as Pm (1+t). Indeed, it is much more likely that Pm falls (because foreign will want to preserve market share) than rise.
jeff werling: yes, I should’ve written “price inclusive of tax” or “cost to end user of the import”.
Apparently I am a mainstream (macro) pretend economist. My cloudy plastic crystal ball is also completely mainstream.
I would only slightly quibble with number 3, in that I would add “assuming no additional central bank intervention” (consideration being that any nominal rates the central bank targets along the yield curve would stay the same)