Who Knows Macro?
Tyler Cowen does not like the tone of the stimulus debate.
A highly respected anti-stimulus economist puts up some anti-stimulus evidence in a highly imperfect test (in Barro’s defense, he did cover more than just WWII). The anti-stimulus economist is attacked by pro-stimulus economists. But the pro-stimulus proponents are focused on attack. They are not putting up comparable empirical evidence of their own for the efficacy of fiscal policy and there is a reason for that, namely that the evidence isn’t really there.
I don’t think that the proponents of a stimulus can claim superior intellectual firepower. It’s not as if Paul Krugman’s Nobel Prize was awarded for his work on macroeconomics. If John Huizinga does not qualify as a nonpartisan expert on macroeconomics, then nobody does.
Huizinga, Krugman, Bernanke and I took the same macro courses from the same professors. I spent a year as “forecast co-ordinator” for the staff of the Federal Reserve, which gives me the most experience of anyone in this debate with what Greg Mankiw calls the engineering approach to macro. The engineering approach is what is being implicitly adopted by stimulus advocates.
I think it would be educational to have a face-to-face debate between proponents and opponents of the stimulus. Unfortunately, I do not believe that the debate will be settled by empirical evidence. We have historical data, but we do not have controlled experiments in macro. In the end, we will be left with economists who believe different things for various reasons. A debate could serve to clarify the reasons.