braddelong

My ballpark estimate is that I should call Sherman Robinson at the PIIE and ask him for his ballpark estimate. It will be highly informed. Mine is not so highly informed. Call mine a guess rather than an estimate...

A $50 billion fall in annual imports from and a $50 billion fall in annual exports to Mexico. Disruption of $400 billion of value chains--figure 2% of the economy. 2.8 million workers would either have to find new jobs or get lucky with their employers finding new people to sell to. A 1%-point spike in the unemployment rate while the "adjustment" takes place--a striking contrast to the implementation of NAFTA, which was planned, expected, went smoothly, and saw a smoothly falling U.S. unemployment rate...

The average auto worker in Alabama is part of a global supply chain. Keeping the cars they make competitively priced with cars made by the Japanese- and by the European-based supply chains is much easier with Mexico there to produce a number of components that require the most relatively-unskilled labor to make. Cutting off imports from Mexico will raise the price of Alabama-assembled cars--and so Toyota, BMW, and GM will increase assembly in Japan and Europe and cut back assembly in the U.S. The world will do the job...

I do think economists lost a lot of credibility because of the financial crisis. Overwhelmingly, those of us who saw that the housing market was very overvalued did not believe that the end of the housing bubble would cause big problems--after all, the crash of the dot-com bubble in 2000 hadn't caused big problems for the economy as a whole. That was, in retrospect, a major analytical error on our part.

I think the profession--at least the part of the profession that analyzed business cycles--lost its way in the 1980s and 1990s and succumbed to intellectual fashions that caused economists to forget a great deal of what earlier economists like Charlie Kindlberger in the second half of the twentieth century, Hyman Minsky somewhat earlier, and Walter Bagehot in the 19th century had known about financial crises...

Never say "strong dollar policy": say "overly strong dollar policy" instead, for one thing...

Perhaps we can go on Reddit more often, and more frequently?

I do think we need to do something to clean our own house: we know an awful lot about both microeconomic and macroeconomic market failures, about government failures, and about when to try to treat them and when to leave them alone because the cure will probably be worse than the disease.

Something like the Chicago Business School's economic panel that it polls periodically can be very useful. But this requires economists who keep up with the literatures, and are willing to say "the literature says that..." rather than "I think..." That's very hard to get...

As Larry Summers says, all Harberger triangles are small. All Okun gaps are large. Thus I would rather fight the first...