Arnold Kling starts a list.

I’ll add the early 1980s. Intellectually its one of the most fascinating because

1) Its as close to a test of modern macro theory as we have. We thought if we shrank the growth rate of the money supply we would get a recession but we also lower the rate of inflation. That’s exactly what happened.

2) It was the beginning of the Great Moderation, a period that despite our current problems, I still hold up as one our greatest victories.

In the spirit of openness and admission of our own weaknesses I will say that there is the potential I am biased by (2). I’d like to believe that I have accounted for my own bias and that I am basing my statements on the evidence.

However, it would be foolish to ignore the possibility that I want to believe that monetary policy was responsible for the Great Moderation and so I am blaming monetary policy for the poor performance today. It could be wishful thinking that if only the Fed did things right prosperity would return.

I’ve done what I can to check that bias internally. I leave it to my readers and colleagues to judge whether my evidence is compelling.

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