Sunday, April 14, 2013

Am I being unreasonable?

See the back-and-forth here.

Generally, I try to be as civil as possible when it comes to internet debates. (Often is the time that I've rewritten a response simply to tone down the rhetoric and eliminate any implied derision.) Certainly, I think that it is a good thing to try and interpret your opponent's arguments in a generous light.

There are limits, though. Life's too short to spend it endlessly rebutting non sequiturs and side issues.

Thursday, April 11, 2013

Monetary regimes and economic outcomes

Eric Rauchway has a post over at Crooked Timber that's generating a fair bit of interest, since it compares real economic growth and inflation for the "G7" countries over various monetary regimes.

His data is taken from a 1993 paper by Michael Bordo and consequently doesn't cover information from the last two decades. ("I made you some charts. Because I love you that much. (But not enough to extend the floating exchange rate regime data down to the present; that’s actual work.)")

Well, that sounds like a challenge. And if anyone is fit to do mind-numbing compilation of data[*], that would be your typical economic graduate student...

Behold: I give you Rauchway's charts brought forward to the present day!

Fig. 1

Fig. 2

Compared to Rauchway's charts, the updated versions bring both good and bad changes from the perspective of floating (fiat) currency proponents. On the positive side, inflation has come down quite a bit. On the negative side, so has real GDP growth -- although to a lesser extent. You can better see this by looking at the next two charts, which compare the 1974-1989 (i.e. as in Bordo's paper) and 1990-2011/12 periods of the post-Bretton Woods era.

Fig. 3

Fig. 4

Of course, this is more or less as one would have guessed. We know that late '70s and early '80s were a period of high inflation -- with various shocks and loose monetary policy to blame. On the GDP side, it's interesting to note that Japan appears to be the primary driver of slower growth in the latter part of the post-Bretton Woods era (Fig. 3). Given that it's stalling economy is probably suffering from a lack of monetary accommodation to drag it out of liquidity trap conditions -- Note: recent events may provide the decisive policy experiment to prove whether this is the case or not -- it's far from obvious to me that the strictures imposed by the alternative monetary regimes would have yielded better outcomes. (I've had my say at various times on this blog as to why I think returning to a gold standard is a rotten idea, so I won't go into that now.)

And, on that note, I should say that I fully agree with the various commentators in the Crooked Timber thread, who have been pointing out that these don't charts don't nearly suffice i.t.o. counterfactuals, etc, etc. Still, these eyeball comparisons remain an intriguing bit of blogosphere fun. 
[*] It actually wasn't that much work thanks to our friendly FRED friends.

Energy Collective post - Natural gas and long-term climate goals

I should perhaps have mentioned this last Friday when it was published, but my new post for The Energy Collective is up: Bridging the Gap? Natural gas and long-term climate change goals.

As the title suggests, my aim is to explore whether the scientific evidence supports the much-touted notion of gas as a "bridge fuel" (i.e. towards a low-carbon economy). This a hotly debated topic, with a lot of excited rhetoric and dubious assertion clouding the issue. Luckily, I've read it all so that you don't have to! A snippet:
However, even this is not to say that natural gas lacks credibility as the most viable, climate-friendly alternative to coal. Unpalatable as it will be for some people, the unavoidable conclusion from my perspective is that achieving very stringent emissions targets will always depend on a hefty slice of fortune… It is certainly no accident that studies which demonstrate hypothetical pathways towards achieving such targets must inevitably make fairly heroic assumptions – whether that be in the form of changes to economic behaviour and institutional reform, or in the presumption of substantial technology breakthroughs. In that light, it is not entirely obvious to me why CCS-enabled gas plants should be regarded as more unlikely than, say, thorium nuclear. And it certainly isn’t obvious to me that climate activists are best serving their cause by demonizing the one fuel source that has provably shaken coal’s grip on the global energy system.

PS - My post on Hugo Chavez and Margaret Thatcher has also been reposted at TEC -- with an updated intro in light of recent events.