Thursday, March 12, 2009

Washington Times on Long-term Growth Rates

The Washington Times tries to ridicule Paul Krugman:

Harvard economics Professor Greg Mankiw thinks that Mr. Obama's growth forecasts are overly optimistic and that the federal deficit will be a lot larger than Mr. Obama thinks. He was chastised by Princeton's Paul Krugman, a Nobel Prize winner in economics, who on his New York Times blog claims that Mankiw can only make the predictions that he does because of "more than a bit of deliberate obtuseness." He titled his post on Mankiw, "Roots of Evil." Last Wednesday, Mankiw responded to Krugman's attacks by suggesting: "Well, Paul, if you are so confident in this forecast, would you like to place a wager on it and take advantage of my wickedness?" Krugman has still not responded. It seems even a Nobel Prize winner isn't willing to lay money on Mr. Obama's rosy projections.

I’m not sure why one would be waging a bet against the US economy in the first place but I don’t blame Professor Krugman for ignoring this silliness. Speaking of silliness, the Washington Times lead this pathetic op-ed with:

The Obama administration is basing its budget forecasts on the economy growing an eyebrow-raising 15.6 percent above inflation between 2008 and 2013 - a drop of 1.2 percent this year followed by an average of 4 percent growth over the following four years. That's very impressive growth for any period of time.

So for the first five years, the Obama administration is forecasting a growth rate less than 3 percent – which would mean that its forecast for a 9-year interval would have average annual growth that is less than 3.5 percent. Did the author of this op-ed not realize that the average annual growth rate for the last half of the 20th century was about 3.5 percent?


Shag from Brookline said...

Check out Mankiw's archives at:

March 31, 2006, "Is the U.S. Trade Deficit a Problem?" where Mankiw bets against Krugman for his personal portfolio. Now, I don't know the end result of this, but Mankiw is obviously trying to make his bones on the back of Krugman by challenging him with bets. Mankiw no longer has comments on his blog so one cannot ask him directly whether his betting against Krugman in 2006 turned out to be profitable.

By the way, how can one find out how well well-known economists have done with their personal investment portfolios in the past 6 or 7 months? As a non-economist, I got hit pretty hard with the ebbing tide, but not at the hands of Madoff. Is there an economists' bragging club?

Anonymous said...

Considering each of them have committed their opinions to (electronic) print, I would say they have already have a wager.

Mankiw is just saying he values money over his reputation.

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According to me Obama administration is much more good than any other for Americans.

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