Paul Krugman

Paul Krugman @paulkrugman

Maybe useful to talk about the "New Trade Theory" I and others developed in the early 80s. There had long been a sort of counterculture in the analysis of international trade, a sense that Ricardo and Heckscher-Ohlin weren't the whole story 8/ — PolitiTweet.org

Paul Krugman @paulkrugman

Then Rudi Dornbusch, with his crystal-clear models, arrived at MIT, and a funny thing happened: not only was Rudi's approach an inspiration, but once you learned how to do clear models, Kindleberger's insights began to make sense too 7/ — PolitiTweet.org

Paul Krugman @paulkrugman

Charles Kindleberger, by contrast, was an elegant and witty writer. But it could be hard to figure out what was really crucial. I actually took his international finance course in grad school; all of us came out feeling very confused 6/ — PolitiTweet.org

Paul Krugman @paulkrugman

To take one big example, Minsky in the raw is almost unreadable: the valuable morsels of insight are smothered in a thick stew of indigestible prose. It only makes sense if you have some clear, simple stories — not necessarily formal models — to help you pick out key themes 5/ — PolitiTweet.org

Paul Krugman @paulkrugman

But my last principle was "Simply, simplify". Richly layered discussions of economics and finance can contain valuable insights, but are much more useful when you have clear, stylized models to help figure out what's important 4/ — PolitiTweet.org

Paul Krugman @paulkrugman

Now, I'm all in favor of economists paying attention to what smart, observant people who don't do formal models have to say. When I wrote about doing economics way back in 1991, my first principle was "Listen to the Gentiles" 3/ https://t.co/g5bEyWLY1R — PolitiTweet.org

Paul Krugman @paulkrugman

In large part Tooze is saying that it was all in Bagehot, Minsky and Kindleberger, and that belatedly acknowledging what everyone should have known doesn't deserve celebration. This shows a surprising lack of understanding of the role models play in economic thinking 2/ — PolitiTweet.org

Paul Krugman @paulkrugman

A somewhat belated response to Adam Tooze's uncharacteristically ill-tempered response to the latest economics Nobel 1/ https://t.co/pwIe7RNHc3 — PolitiTweet.org

Paul Krugman @paulkrugman

Trump's outburst actually illustrates why American Jews are relatively liberal. Anyone with a sense of history knows that whatever group is currently in illiberal crosshairs, the Jews are always next in line — PolitiTweet.org

Paul Krugman @paulkrugman

RT @Number10cat: People try to tell you what to think every day. Here are what some individuals and organisations told you about Liz Truss… — PolitiTweet.org

Paul Krugman @paulkrugman

Forgot to say that if we used new rentals rather than average rents to measure shelter prices, the inflation surge of 2021-2 would look sort of ... transitory. And demands for large rate hikes are calling on the Fed to fix the past (which it can't), not the future 10/ — PolitiTweet.org

Paul Krugman @paulkrugman

Just to say, this recipe changed my life for the better. The Times does important reporting on many subjects; but the cooking advice is the best — PolitiTweet.org

Paul Krugman @paulkrugman

I'd add that elevated wage changes suggest that there is in fact some real overheating. But maybe not nearly as much as many people believe 9/ — PolitiTweet.org

Paul Krugman @paulkrugman

There's at least a case that the inflation numbers everyone is freaking out about are a delayed response to a structural shift in demand, reflected with a long lag in official data, not a symptom of currently high demand. In which case the policy response could b very wrong 8/ — PolitiTweet.org

Paul Krugman @paulkrugman

So why were rents surging? Probably a structural shift in demand, largely due to work from home. Lots of stuff to unpack; what were people *not* buying as they demanded more housing, and how did that affect inflation? But narrative still needs rethinking 7/ — PolitiTweet.org

Paul Krugman @paulkrugman

Compare this with the currently fashionable measure of labor market tightness, V/U, which had barely begun to rise in 1st half of 2021 6/ https://t.co/C1cG5xMgbQ — PolitiTweet.org

Paul Krugman @paulkrugman

The picture again 5/ https://t.co/dHOgsr0kJz — PolitiTweet.org

Paul Krugman @paulkrugman

But let's go with Jason's chart, which suggests that new-rent core — arguably a better measure of overheating than the standard measure — surged in the first half of 2021, and has been declining ever since 4/ — PolitiTweet.org

Paul Krugman @paulkrugman

And pent-up measured shelter inflation may be less than the private measures suggest (good news) 3/ https://t.co/agrESPtQNG — PolitiTweet.org

Paul Krugman @paulkrugman

First, need to acknowledge that Zillow may have some biases 2/ https://t.co/COhhoUy67R — PolitiTweet.org

Paul Krugman @paulkrugman

Excellent, and thanks. Pretty sure new-rent core will fall further — lots of evidence that rents are stalling nationally. But let's talk about the inflation narrative 1/ — PolitiTweet.org

Paul Krugman @paulkrugman

RT @jasonfurman: Based on a suggestion from @paulkrugman I thought it would be interesting to look at what core CPI looked like swapping in… — PolitiTweet.org

Paul Krugman @paulkrugman

RT @BerezinPeter: Life is very different when you are on the steep side of the Phillips curve. Rather than causing unemployment to rise, de… — PolitiTweet.org

Paul Krugman @paulkrugman

But it won't show up in the CPI for a year — PolitiTweet.org

Paul Krugman @paulkrugman

All about the rents https://t.co/UU7bV1FNbG — PolitiTweet.org

Paul Krugman @paulkrugman

With the right link — PolitiTweet.org

Paul Krugman @paulkrugman

RT @henryfarrell: The piece that @paulkrugman very kindly cites in his NYT column today has been ungated- it’s freely available at https://… — PolitiTweet.org

Paul Krugman @paulkrugman

PS: three-month average of core is only 6 percent, so you could make the case that underlying inflation is really as low as 3.5 6/ — PolitiTweet.org

Paul Krugman @paulkrugman

Here's a closeup of their relevant chart. Official measures are still catching up to that hump late last year 5/ https://t.co/XoEIvW0amN — PolitiTweet.org

Paul Krugman @paulkrugman

And as I've been saying, median is basically shelter even when shelter isn't the median, so alternative measures would be even lower 4/ https://t.co/E4mJtgxVfh — PolitiTweet.org