Paul Krugman

Paul Krugman @paulkrugman

RT @IvanWerning: Excellent post by @paulkrugman on simplifying but not oversimplifying the mechanisms, process and policies of inflation. A… — PolitiTweet.org

Paul Krugman @paulkrugman

Final point: most war-making resources on both sides effectively immune to attack: Russia is big, UKR supplied by the West. How does this thing end? 8/ — PolitiTweet.org

Paul Krugman @paulkrugman

On the other hand, there's a benefit to avoiding destructive strikes on the energy grid etc. So the drone war is a battle of attrition, unclear who's winning 7/ — PolitiTweet.org

Paul Krugman @paulkrugman

The Ukraine war lessons go both ways. Even if UKR shoots down most drones, it's using expensive resources to do so. 6/ — PolitiTweet.org

Paul Krugman @paulkrugman

So the standard view that strategic bombing failed until late misses its crucial role in consuming German military resources 5/ — PolitiTweet.org

Paul Krugman @paulkrugman

Notably, Allied air attacks on Germany didn't take a large toll on production until 1944 — but they did force Germany to devote huge resources to air defense, at the expense of other fronts 4/ — PolitiTweet.org

Paul Krugman @paulkrugman

Even battles like Kursk or D-Day destroyed only a few days' military production for the losing side. What mattered was resources, most of which on both sides went to the air war 3/ — PolitiTweet.org

Paul Krugman @paulkrugman

Even before the war I learned a lot from Phillips O'Brien's take on WW2, which emphasized materiel rather than famous battles 2/ https://t.co/btZAQ0oQru — PolitiTweet.org

Paul Krugman @paulkrugman

Not about economics or politics, at least directly, but I thought this was interesting and ties into how I've been trying to understand the Ukraine War 1/ https://t.co/QsXTHsc9VO — PolitiTweet.org

Paul Krugman @paulkrugman

I've seen jokes about Liz Cheney as speaker, but seriously: why can't this end with 7 sane Republicans joining Democrats to elect someone who isn't totally despicable? — PolitiTweet.org

Paul Krugman @paulkrugman

Politico, 2014 https://t.co/KAyRLjmaKE — PolitiTweet.org

Paul Krugman @paulkrugman

Do American conservatives know that Hungary — Hungary! — has been trying to hold down inflation with price controls? https://t.co/rHM0SXIloW — PolitiTweet.org

Paul Krugman @paulkrugman

Ungated version 3/ https://t.co/KTbq1Ghsk5 — PolitiTweet.org

Paul Krugman @paulkrugman

Paper here 2/ https://t.co/GzgKESlFrs — PolitiTweet.org

Paul Krugman @paulkrugman

And I found the reference — not Martin Baily but a comment by Bill Nordhaus on a 1976 paper by Baily 1/ https://t.co/y4nQsO9jlq — PolitiTweet.org

Paul Krugman @paulkrugman

I'm cross-posting everything on Mastodon. So far it's a very inadequate substitute for this site, mainly because not enough people there. But getting better by the day; it will be time-consuming and awkward to replace Twitter, but we will do as needs Musk — PolitiTweet.org

Paul Krugman @paulkrugman

It's precisely because inflation isn't immaculate that we worry about things like supply shocks and wage-price spirals — and why estimating the cost of disinflation is so hard 6/ — PolitiTweet.org

Paul Krugman @paulkrugman

The late John Williamson mocked the contrary view as the "doctrine of immaculate transfer". There's a similar doctrine of immaculate inflation, which has nominal demand driving inflation without somehow affecting the incentives of workers and firms 5/ — PolitiTweet.org

Paul Krugman @paulkrugman

But exporters and importers don't care about accounting identities. They care about costs and opportunities; something that affects these, like the real exchange rate, must shift to make the identities hold 4/ — PolitiTweet.org

Paul Krugman @paulkrugman

There was a similar debate over the balance of payments back in the 1980s. The trade balance must equal the difference between savings and investment, and some argued that this made exchange rates and competitiveness irrelevant 3/ — PolitiTweet.org

Paul Krugman @paulkrugman

A business that raises its prices doesn't do so because the Fed has increased the money supply. The chain of events that leads to that price rise may have started with the Fed, but the firm is responding to its own market conditions 2/ — PolitiTweet.org

Paul Krugman @paulkrugman

Continuing this discussion. Again, Olivier is tapping into an important point often missed in monetary/macroeconomics: in the end, it all comes down to individual motives and decisions 1/ — PolitiTweet.org

Paul Krugman @paulkrugman

Tyranny in action https://t.co/6YdjxNLox2 — PolitiTweet.org

Paul Krugman @paulkrugman

And of course all of this extremely relevant if we're trying to figure out how hard disinflation will be in the near future 8/ — PolitiTweet.org

Paul Krugman @paulkrugman

Staggered wage-setting, and in a hot labor market everyone trying to get ahead of everyone else — with inflation possibly getting entrenched if everyone expected it to persist 7/ — PolitiTweet.org

Paul Krugman @paulkrugman

FWIW, the 1968 Phelps paper that simultaneously and independently introduced the natural rate hypothesis — and I think much better than Friedman's — worked pretty much that way: 6/ — PolitiTweet.org

Paul Krugman @paulkrugman

The more or less painless 1985 Bruno disinflation in Israel was pretty much exactly that: all the major parties agreed to stop trying to leapfrog each other, and inflation came down right away 5/ — PolitiTweet.org

Paul Krugman @paulkrugman

Much better if we could get collective agreement by everyone to sit down without stopping the game. That's hard to achieve, but not always impossible 4/ — PolitiTweet.org

Paul Krugman @paulkrugman

Controlling inflation by inducing a recession is like stopping the action on the field until everyone sits down again. It works, but at a cost 3/ — PolitiTweet.org

Paul Krugman @paulkrugman

I think this came from Martin Baily in the 70s. Anyway, one way to think about inflation is that it's like a sports event where everyone stands up to get a better view of the action — which is collectively self-defeating 2/ — PolitiTweet.org