Wednesday 1 July 2009

Those Who Think the "Left of Center" is Too Tough on N. Gregory Mankiw

should read Sensible Centrist J. Bradford DeLong on the difference in forecasting between the current Administration and the CEA under N. Gregory Mankiw.Romer/Bernstein/Kreuger et al., 2008-9 edition:As I understand matters, last December the average private-sector forecast had the unemployment rate topping out at 9% in the second half of 2009. The incoming Obama administration simply adopted that forecast. At the time I thought that was a mistake: (I thought that was a mistake: I thought they have to have made a bifurcated forecast with a "good case" 80th-percentile scenario and a "bad case" 20th-percentile scenario; they have to then have stressed that in the bad case we would need a large incentive indeed to prevent high unemployment, and that in the good case we could restrain price rises via monetary policy.)Mankiw et al., 2003 edition:it would make it extremely difficult for belongings to occur like what happened to the Mankiw CEA over the chill of 2003-2004, when high politics appears to have reached down into the forecast, changed the table for payroll service (and only payroll employment: the rest of the forecast is not out of line with contemporary professional forecasts), and produced an estimate for December 2004 (a) inconsistent with the rest of the forecast, and (b) high by 2.3 million in its estimate of payroll employment--all because Karl Rove and company thought it important to avoid headlines like "Bush administration forecasts 2004 payroll service to be less than when Bush took office." (link from original)The positive-spin version is that Mankiw plays politics better than the Obama Team.
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