Producer prices — basically wholesale prices — were rising at a double-digit clip 3/ https://t.co/1bwYYR8RQt
Paul Krugman Sun 21 Mar 2021 13:41

My sense is that this episode has been widely forgotten, but it's very relevant. Here's what happened: as the economy began to recover from the 2007-9 recession, headline inflation picked up to almost 4% 2/ https://t.co/gldWlbQ8TN
Paul Krugman Sun 21 Mar 2021 13:41

Now that the big Biden package has been enacted, we're hearing warnings from some economists — well, one economist — about stagflation. As always, history is extremely useful in thinking about such things; and I've been reviewing the great inflation panic of 2010-11 1/
Paul Krugman Sun 21 Mar 2021 13:36

Apocalypse is always possible, but probably not now. The markets don't expect it; private forecasters don't expect it; of course, they could all be wrong, and so could I. But now we just wait and see 2/
Paul Krugman Sat 20 Mar 2021 21:00

The important point is that none of this will indicate a return to 70s-type stagflation. It will all be a blip reflecting an economic surge plus some lingering Covid-related disruptions. I'm sure the Fed understands that. But be prepared for another inflation panic 8/
Paul Krugman Sat 20 Mar 2021 14:00

RT @nytopinion: . @PaulKrugman responded to readers commenting on his column "Vaccines: A Very European Disaster." Read their exchanges her…
Paul Krugman Fri 19 Mar 2021 16:54

Now Democrats seem to have found a way to pursue progressive goals in a non-threatening way. And Republicans don't seem to have any answers beyond filibustering and voter suppression 2/
Paul Krugman Fri 19 Mar 2021 12:04

RT @johnauthers: Worth Reading. Paul Krugman is completely right about this, sad to say: Vaccines: A Very European Disaster https://t.co/GK…
Paul Krugman Fri 19 Mar 2021 11:24

RT @nytopinion: European bureaucrats, @PaulKrugman writes, seem "haunted by the fear that someone, somewhere — whether it be pharmaceutical…
Paul Krugman Fri 19 Mar 2021 01:09

Everyone in Fedworld eagerly awaiting this afternoon's dot plot. Here's a preview https://t.co/fR9Y1FBMt0
Paul Krugman Wed 17 Mar 2021 13:47

So there have been important changes in how economists talk about policy, some of which include rethinking of our models. But a lot of what has happened is simply that economists are following their existing models, instead of tweaking them to justify political prejudices 15/
Paul Krugman Wed 17 Mar 2021 13:27

That is a pretty big deal, and feeds directly into policy: Biden and co's relaxed attitude toward debt is matched by a relaxed attitude toward inflation 14/
Paul Krugman Wed 17 Mar 2021 13:22

This doesn't mean that inflation is never a concern. But it does mean that the stability of inflation over time does NOT mean that the economy was on average at full employment. Instead, there's now a good case that we've been persistently underemployed 13/
Paul Krugman Wed 17 Mar 2021 13:22

Low unemployment and a hot economy do seem to yield somewhat higher inflation; but there has been no sign that this quickly or easily translates into an ever-rising inflation rate. Maybe it's anchored expectations, maybe it's downward wage rigidity, but it's just not there 12/
Paul Krugman Wed 17 Mar 2021 13:22

The other big change — and this does mark a change in theory — is that the NAIRU has largely dropped out of discussion — basically because nothing that's happened since 1985 supports an "accelerationist" view of inflation 11/
Paul Krugman Wed 17 Mar 2021 13:17

Anyway, the whole debate over ARPA was in effect conducted in terms of functional finance — not whether it cost too much, but whether it was inflationary. But that's not so much new theory as taking our own models seriously 10/
Paul Krugman Wed 17 Mar 2021 13:17

Concerns about debt did loom larger in economic analysis than they should have — partly, I think, because people didn't grasp the implications of r Paul Krugman Wed 17 Mar 2021 13:12

So part of what's happening is simply that the Biden team is actually listening to the economic consensus, rather than grabbing dubious doctrines that fit right-wing preconceptions. But it's also true that there have been some changes in theory 6/
Paul Krugman Wed 17 Mar 2021 13:07

No, austerity isn't expansionary; no, there isn't a growth cliff at a debt ratio of 90 percent. Nothing in standard macro suggested either of these things should be true. All that supported them was bad statistical analysis and the political will to believe 5/
Paul Krugman Wed 17 Mar 2021 13:07

It was actually quite weird: there was a lot of innovative, creative economic analysis — all of which turned out to be dead wrong — being deployed FOR austerity, which conventional macro rightly said was a really bad idea 4/
Paul Krugman Wed 17 Mar 2021 13:02

One thing people should realize, however, is that policy orthodoxy in, say, 2011 did NOT reflect macroeconomic orthodoxy in the sense of what the standard models said. In crucial areas it was in flat defiance of what Macroeconomics 101 would have recommended 3/
Paul Krugman Wed 17 Mar 2021 13:02

The ARPA definitely marks a big break with the austerity/debt obsession that crippled recovery after the 2008 crisis. That's a very big deal. And even the debate over the bill was very different from what went before 2/
Paul Krugman Wed 17 Mar 2021 13:02

Nice reminder by Bruce Bartlett of all the Republicans who warned about runaway inflation under Obama.
Paul Krugman Mon 15 Mar 2021 20:55

Of course all this could be wrong — in either direction. But private forecasters are basically saying that Bidenomics year 1 will look very good. Whether that can be used to build a constituency for longer-term investment remains to be seen 4/
Paul Krugman Sun 14 Mar 2021 13:29

And with most of the stimulus behind us, slower growth in 2022 and after. Other forecasts have smaller output gap but also slower growth, so again no major overheating. The overall picture looks like this Brookings chart 3/ https://t.co/tZdY4wBEKS
Paul Krugman Sun 14 Mar 2021 13:24