Here is a video of this presentation on Tariffs and the best monetary policy response: www.youtube.com/live/DoFrOjJ...

Workshop in International Macro 📣 Call for Papers 📣 Montevideo, Uruguay, Dec 10-11 Keynote: Ricardo Caballero Submit your paper: digitatics.typeform.com/to/rUqHU5hOh...

🚨New paper with Veronica Guerrieri and Guido Lorenzoni Was the recent inflation surge due to a lack of coordination? Can lack of coordination lead to too much inflation? Yes, we show. Especially in response to global supply shocks. link to paper: economics.mit.edu/sites/defaul... 1/n🧵

MIT Economics obituary for the legendary Stan Fischer: t.co/8fgZbnaRCB

What should the Fed do with Trump Tariffs? New paper on 'Monetary Policy in Times of Tariffs' with Guido Lorenzoni & Veronica Guerrieri (link at end) We show simplest most intuitive way to approach tariffs is actually correct: Tariffs = textbook cost-push shock www.nber.org/papers/w33772 🧵1/N

How Tariffs Affect Trade Deficits... ... a new paper with amazing trade economist Arnaud Costinot. Many politicians and the general public expect tariffs to reduce imports lower imports and thus work to close a trade deficit. Economists typically say "not so fast"... 🧵1/n

Analyzing theoretical formula used to determine tariffs… What’s wrong with it? Used in isolation on a single small trading partner the formula makes some sense. But if applied widely to many non trivial ones it does not. ustr.gov/issue-areas/...

This was clearly for the better. I have enjoyed his Substack since then.

Economics is hard. Even the basics. Exhibit #52783

Trump at it again talking about the virtues of tariffs. Two key papers: Diamond-Mirrlees Atkinson-Stiglitz, establish conditions under which tariffs should not be employed and show the income tax is a great tax. Or read @pkrugman.bsky.social Pop internationalism!

2025 a year of mass deportations and trade wars? I’m not that excited for that.

Has anyone guesstimated Musk’s effect on the election? Sure he went all in. My own guess is near zero. If so we can stop with the “Musk helped Trump get elected but now…”

Argentina, one year into its libertarian presidency Milei is starting to post some good numbers. Fiscal cut of ~5% of GDP. Inflation continues to fall. Structural reforms and deregulations Recession ending. Latest: poverty falls after spike earlier this year.

Ambition.

New Keynesian economics for you.

Tom Sargent honoris causa at di Tella University in Buenos Aires.

Fake Barbara… check the handle

Krugman nails it. I'll add, what does Bessent mean by "money" being fixed, we don't hold money supply fixed as a policy. Maybe he means wages? But why would some home produced goods fall in price if wages do not fall? It's possibly not even consistent.

Just back from giving a talk to 2nd year students on how to approach research, how to write a paper. Abhijit was coming after me (good thing he didn't go first, tough act to follow!) Here are my slides... www.dropbox.com/scl/fi/0pm2m...

Simon Johnson said his daughter asked why he was getting up at 4am and he'd explain he was writing another paper with Daron. Simon was very gracious and told the story of how Daron invited him to join him and Jim on "a paper"...

A great party at MIT to not forget… Celebrating Daron Acemoglu and his Nobel award! Happy new in the room was brimming.

Starter pack creators as the new journal editors... 🤣

Men are more competitive and overconfident but this can be to their long term detriment, says great MBA data. Fits my experience! onlinelibrary.wiley.com/doi/10.1111/...

#EconSky 📉📈

On Fiscal Dominance, a classic is Sargent-Wallace "Unpleasant Monetarist Arithmetic" in the QR. 💵 In this QR note I celebrate and revisit it. I show their spectacular example relies on being on the wrong side of a Laffer curve. I offer a variant that strengthens their conclusions. t.co/gGRDafQ01V

Even if you really hate Trump you have to be ready to like some of the things he might do. You may still hate other things and this doesn't have to change your bottom line, but it can help reduce cognitive dissonance. Controversial?

This finally might produce enough outrage from macroeconomists to try out bsky... www.cnbc.com/2024/11/09/e...

Micro to Macro. Argentina has been a macro mess. Fixing it is a big challenge for any government: stop inflation, deficits, etc. But one of the most impressive things about the new administration in Argentina are the microeconomic reforms: www.ft.com/content/2e65...

Whether you're pro- or anti-trump you'd expect a bump up in activity on bsky from those network effects. #EconSky 📉📈

Everything is Awesome!

Maestro movie, huge excitement the first 20m, love the cinematography and actors. But then rest of the time disappointed by the absence of a plot other than "genius gets to trample and use loved ones because, well, he's a genius".

Re-upping this great trick for Mac users by @ivanwerning.bsky.social

New piece, on the 3 arguments against recent inflation being a cost-push supply shock: - why wasn't there deflation? - why was inflation broad? - what about job openings? and giving a sense of what we know. Using @ivanwerning.bsky.social's work throughout. mikekonczal.substack.com/p/the-three-...

On Markus TV, talking about dollarization in argentina, historical and recent argentina background + 2 papers www.youtube.com/live/Cc2t2NJ...

In relation to yesterday's Argentine elections... Best of luck to the next president Javier Milei. Argentina needs a break. I hope he moderates his message and policies. Some of them are in the right direction (lowering spending), others are not (dollarization, taxation is theft, etc.).

Ran this on the other site (we still can't do it here):

Just back from teaching Public Finance, always love it. Simple, yet general (General Equilibrium is quite hackable/adaptable). Intuitive results once you get them, but easy to trip people up ex-ante that answers are the reverse.

Halloween lecturing.

Argentine elections, Econ summary... - runoff for president between libertarian who says "redistribution is theft" and sitting peronist minister who redistributes away from poor via inflation and makes up for it with favors via discretionary transfers, printing money... 1/3

This paper provides a simple formula that automates going from... Empirical estimates of wage distribution impacts ---> Desired tax on new technology Sorry, but now that that has been automated, we no longer need economists for this anymore! :) economics.mit.edu/sites/defaul...

Inflation dares not enter here at the ECB Frankfurt's café. Great prices!

Announcing dollarization—hoping to lower inflation—may lead to more inflation! Yep, title+abstract upside down! Context: Argentina is actually seriously debating adopting the dollar, giving up the peso and monetary policy. But it has very few dollars now so... nber.org/papers/w31763

Hack: add #EconSky 📉📈 very quickly Easy! Use automatic text replacement/substitution! On a Mac, go to Settings > Keyboard > Text Replacement > add your substitution (see screenshot)

#EconSky 📉📈

Nobel tree... (is this longest chain?) Kuznets ├── Friedman (→ Becker*) └── Fogel │ └── Goldin Goldin: 3rd or 4th (*) generation Nobel (*Friedman mentor and influence on Becker, but not formally advisor)

A good day to celebrate Guillermo Calvo who was honored as a Distinguished Fellow by AEA. I'd promised to write something explaining why he is one of my econ idols.... ... here is something I wrote (translated by AI) dev-focoeconomico-org.translate.goog/2023/05/03/g...

The idea of wage-price spirals resonates with regular people that experience high inflation. I have always felt uneasy that I don't know how to think about this idea formally. Guido and Ivan reinterpret a relatively standard model to help us think about what a wage-price spiral is. Very insightful:

I talked about perils of Dollarization to Peter Coy of the NYT. He has a good line about a dog named Milton in there, and views by Milton about money and inflation. In Argentina, the U.S. Dollar Could Soon Become King www.nytimes.com/2023/10/06/o...

Works like a charm #EconSky 📉📈

Just adding #EconSky 📉📈 ...