Nathan Tankus: Memo to Paul Krugman on the Eurozone – Read Your Own Research!

By Nathan Tankus, a student and research assistant at the University of Ottawa. He is currently a Visiting Researcher at the Fields Institute. You can follow him on Twitter at @NathanTankus

Normally, I’m a harsh critic of neoclassical economics and neoclassical economists. However, sometimes the most frustrating things about neoclassical economists is their lack of familiarity with neoclassical models (especially older ones) and current neoclassical research. Monday provided a rather extraordinary example of this trend: Paul Krugman is apparently not familiar with Paul Krugman’s research! Before I explain why, I need to provide some context.

The major policy issue around the Eurozone has historically been seen as its existence as a currency area. As a result, neoclassical economists (especially American ones, including Krugman) have tended to analyze it in terms of Optimal Currency Area theory (I briefly discussed Optimal Currency Area theory in another piece about the Euro here). The originator of this literature, Robert Mundell, often called the “founder of the euro”, argued that the important element determining optimal currency areas was a high degree of labor mobility. Thus when Krugman started writing about the Eurozone, he inevitably pointed out that Euro didn’t live up to Mundell’s standards for labor mobility. Monday, Krugman claims to have realized that labor mobility within the Eurozone has been hurting the Eurozone:

And while I didn’t think of it until now, there’s even a case to be made that labor mobility within Europe is actually worsening the problem, making the euro less sustainable. Via FTAlphaville, Frances Coppola documents the extraordinary rates of emigration among young people in Europe’s disaster economies — not really a surprise when you consider the incredible levels of youth unemployment. But as she says, once those young people are gone, who will pay the taxes to support retirees?

The reason that this is so amazing is that Coppola’s reasoning comes straight out of his (admittedly older) research on Economic Geography. To quote Krugman himself:

Now suppose that some resources. say, workers are mobile. If one of the locations offers a larger market, they will have an incentive to move to that location. But the movement of workers itself tends to increase the size of the market wherever they go, decrease it where they come from; so one immediately arrives at the possibility that a small asymmetry between locations, perhaps arising from some small chance event, will prove self-reinforcing.

This type of locational analysis was used by Krugman to give some provisional explanations for the emergence of cities. It of course, is not limited to Krugman (indeed these ideas go back centuries) but he was the first person to formalize it mathematically among mainstream economists. It should be obvious that this logic is easily applicable to the Eurozone, where different “locations” are replaced by countries and the triggering event is large differences in each country’s level of unemployment (not to mention public services). The interesting question is why did this obvious connection go unnoticed by Krugman? The answer it seems (as is often the case) is the model he was applying.

As is often the case when something happens in the real world that contradicts a model, Krugman reached into the Optimal Currency Area literature looking for a reason that reality didn’t live up to the assumptions. Krugman discovered a reason in the writings of his colleague Peter Kenen on “fiscal integration” (see here). Since fiscal issues were obvious by that point, this was clearly an attempt by Krugman to rescue the perceived usefulness of Optimal Currency Area theory. However, Kenen’s work in this area clearly wasn’t a good guide to the Euro, especially since it convinced Kenen that the Euro was worthwhile. In 2003 he went so far as to state: “Hence, Britain should join [the Euro] soon. It should not stay outside, waiting for perfection, but should get inside, working for improvement.”

The truth is that in fact OCA theory wasn’t and isn’t a useful guide to the Eurozone crisis. While some followers of Optimal Currency Area theory were against the Euro, neither proponents or detractors had an inkling such a crisis was likely or even possible. Peter Kenen himself said as the crisis set in: “There was, I agree, excessive reliance by U.S. economists on the theory of optimum currency areas.”

Thus, Krugman followed many other neoclasssical economists (even after the crisis) in thinking about monetary integration in terms of this one (narrow) literature rather than other neoclassical models, including even his own. However, the truth would seem to be worse then this. Not only did his penchant for thinking in terms of mathematical (neoclassical) models lead him to ignore the destabilizing possibilities of inter-regional labor mobility within the Eurozone, but his models have traditionally been built on excluding these dynamics from the analysis of international economics and trade! In 1995 he co-wrote a paper called “Trade policy and the Third World metropolis” in which he states:

Immobility of labor also changes results in important ways. Simple geography models like Krugman [1991] respond in a monotone way to declining transport costs: when these costs fall below a critical level, industry concentrates in one region. Here, because labor is immobile (and thus wage differentials between regions emerge), continuing reductions in transportation costs eventually lead to a reindustrialization of the low-wage region. We believe that this is not just an artifact of the model: it represents a real distinction between interregional and international economics because labor is in fact far less mobile between than within nations.

To translate this to English, when the real world comes to look more like traditional neoclassical models of comparative advantage and trade, poor and rich countries come closer to converging at least in terms of industrial concentration. As far as I can tell Krugman (nor the literature) never produced a formal model showing that lower international labor mobility has the same implications as no international labor mobility. As long as sustained net emigration and immigration is possible (which of course it is and does indeed happen) there is no reason why a cumulatively causal dynamic similar to his closed economy model isn’t possible (at least, I haven’t come across any mathematical defense of this proposition).

This has serious implications for how we understand the evolution of, and more importantly the formulation and application, of economic ideas. In his Development, Geography and Economic Theory. Krugman argues that, “the influence of ideas that have not been embalmed in models soon decays.” However, the discussion above shows that vague assertions that aren’t modeled but are associated with particular models (like low international mobility being analytically the same as no international mobility) have been repeated as axioms for at least two centuries.

Krugman’s explanation for why some models prosper is not historically accurate. International labor mobility was a common assumption among thinkers labeled by Adam Smith as mercantilists (such as Josiah Tucker and James Steuart) that was simply ignored and rooted out of political economy by a series of classical liberal economists starting with David Hume. The same writing by David Hume Krugman praises as “arguably the first example of modern economic reasoning.” This is arguable, of course, among people who aren’t intellectual historians. When I read the condemnation of the economic effects of emigration in Tucker’s writing and the arguments that rising wages would induce net immigration, I can’t help but think he’s a much more useful guide to the Eurozone and modern affairs then most modern economists (including Krugman). As should be obvious, the victory of the classical liberals wasn’t because the classical liberals were using mathematics or that their “model” was more clear – it was because the “Mercantilists” were attacked polemically and forgotten.

As Schumpeter noted in his great History of Economic Analysis:

Yet, as we know, facts and ideas that were familiar to the projectors of the seventeenth century and, in a purified form, to the scientific economists of the first half of the eighteenth, such as Boisguillebert, Cantillon, and Verri, might have set the writers of 1800–1850 on the track of what I believe to be a more adequate analysis. But these Facts and ideas were practically forgotten by 1800.”

Further, if in economics it is true, “that to be taken seriously an idea has to be something you can model”, should not economists be desperate to adopt new mathematical techniques for modeling as they are invented?

Yet the history of the last 60 years (at least) show this not to be case. It has been almost 60 years since systems dynamics was invented and mathematics that specifically eschews general equilibrium thinking has a large pedigree. Yet these modeling techniques have seen little use and, more importantly, the assumptions most models use are the same or similar to models developed as far back as the 19th century (specifically, Knut Wicksell’s work). To become a useful discipline mainstream economics has to either abandon its fetish with formal modeling or build better models. Preferably both.

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  1. YankeeFrank

    Mathematical modeling of complex social/political economic dynamics is a farce. I don’t care if they use systems dynamics math or not. Its too complex, and the fetish for these mathematical models that allows economists to pretend economics is a hard science is pretension and ego.

    The Reinhart/Rogoff ridiculousness was symptomatic of just that foolishness. If we can’t trust the supposed top of the profession to not make data entry mistakes… of course the model, with the erroneous data, said what they wanted it to say, so yay! Job done!

    And lets not forget corruption. As compared to other academic disciplines, it is, for obvious reasons, more susceptible to outside influence. As long as economists can easily find well-paying, high status positions working as stooges for banksters and the wealthy by trumpeting the preferred “theories”, it will remain utterly corrupt. Why don’t they stick that economic causality into their fancy models and smoke it.

    Not to mention that the very premises of neoclassical econ are a joke. Perhaps if they could drop the laughable premisses they rely on, gain a more accurate picture of how the financial system actually works along with criminal fraud theories (e.g., William Black, etc.) they can regain relevance and not be such a pathetic and worse-than-useless joke. Until then they can all go jump off a bridge, preferably onto jagged rocks.

    And Krugman, who apparently can’t even keep track of his own “math”, can lead the pack as he lends credit from “the left” for these frauds.

    1. Chris Engel

      It’s not a farce it’s just a method that needs to be taken at its face and understood for the caveats that come along with any econometric work.

      There’s no reason why we shouldn’t develop models and combine them with observed concrete data and try to find ways to understand how things come together. Writing mathematical models off entirely is just as silly as praising them as hard-science laws.

      1. jake chase

        YF is not writing off mathematics; he is writing off the shysters who are milking it for careerist purposes. But, here’s the problem: mathematics cannot solve problems with more variables than legitimate equations. Economists cannot even correctly identify the variables, and it is not clear that even one equation they have come up adds anything to common sense. It probably doesn’t help that economics only attracts very mediocre mathematicians.

        The situation is analogous to yesterday’s post by Kervick on bank creation of money. The statements in that long post may have been all true, but they are irrelevant to the problem. Whether or not your uncle Fred’s community bank out in the boondocks creates money out of thin air, megabanks clearly do, because their activities are constrained only by “reserves”, and limitless reserves may be borrowed over night whenever they are needed. Meanwhile, the megabanks work full time shifting liabilities into SPVs, running speculative derivative games, dodging taxes off shore, producing phony profits and shifting losses to the Fed, and engorging their executives and creating a web of usury that impoverishes everyone else, so who really gives a flying f**k whether they create money out of thin air or not?

      2. YankeeFrank

        Yes, mathematical models that attempt to model human behavior, culture and society are a farce. There is no way to model such complexity, at least not with current theories. I daresay its possible we will never reach such a point. I think people have read too much Isaac Asimov frankly.

        Not only that, but economics, devoid of ethical and moral considerations, create the types of societies we are now suffering from in the west. Supposed “technocratic” solutions, utilizing all the latest models and theories, created Greece. Created Spain. Created the grand ole US of A. Great job economics!

        If economists want to toy with mathematical models and observe their predictive value over time, tweaking and adjusting to as they go, and avoiding the corrupting influences on the profession, then maybe in 50 years they might reach a point where they are actually a little bit useful. The current, unbelievably simplistic models that are trotted out to tell us everything about our economy and what we should do to make it work better, are horribly destructive and have done nothing but ruin entire nations. If math-modeling economists want to toil in obscurity for the next several decades, like theoretical physicists, in order to produce something useful then by all means they should go ahead and do so. That is NOT what is happening and so I reject their models as worse than useless.

        1. Crazy Horse

          No, no Yankee, you’ve got it all wrong.
          The problem isn’t with the models— its with the Modeled. We’ve made tremendous strides in this area, starting with the invention of Television and its creation of virtual reality that people confuse with real life. In a few short decades we’ve reached the point where most target audiences can be convinced that consumption is the only measure of human worth, lies evaporate after 24 hours, war is peace, and assassination is liberation.

          Now with new tools like Facebook combined with nearly unlimited data processing ability we are able to refine our profiling algorithms to a much higher level of sophistication.

          The next step is to implement direct control. Our current concept is to require a subcutaneous implant (which we will describe as a medical history and diagnosis device) for all citizens who wish to receive health insurance coverage. Once it is widely in place we can use it to fine tune consumer mood levels each time a cellular phone device is activated nearby. Now our econometric models will have direct and mathematically measurable results that will verify that they have been right all along.

    2. Luis Augusto Fretes

      The problem isn’t the math, please, just because you don’t know math that doesn’t make it the problem.

      You’re arguing some stupidity akin to arguing because some idiot used English to state some bullshit, therefore, trying to state the truth in English is impossible.

      The reason we need to use math is precisely because math allows us to model and build complex systems, math is a necessary condition of an advanced scientific theory, but it’s not a sufficient one, you can build an axiomatic theory of ghosts, mathematically refined an false, just like in English.

  2. Ramanan

    Nice points.

    I was trying to find more about Peter Kenen. Great you found out that he was advocating Britain join the EA in 2003! How wrong he was.

    In fact he said that the Euro won’t collapse because the cost of exit will be high. Which is debatable obviously and misleading because it can happen with high unemployment and suffering such as the case now. Perhaps he assumed full employment in his models.

    Kenen also dismissed the Neochartalists’ opposition of the Euro Area the way it was formed:

    Volume 25, Issue 1, 1999 here:

    1. Schofield

      Just love the Economic Archaelogy job you do! Via Smithin you get to Wray’s Levy Institute Working Paper 213 ( 1997 ) where Wray says:-

      “If a government can create at will the money that the public willingly offers goods and services (especially labor services, for our purposes here) to obtain, then the government’s spending is never constrained by narrow “financing” decisions.”

      Add to that the fact at a macro level this “almost” perpetual motion engine creates the net money for the non-government sector to pay the interest on private bank loans, the reserves for the payment settlement system and desired savings to meet future eventualities and it becomes readily apparent the bankers ( mainly constituting the Delors Committee ) ignorance of the role played by fiscal powers whilst creating the Euro is at the root of its current problems not to mention the the ignorant Libertarian Austerians wreaking havoc in other Western economies.

  3. Calgacus

    OCA’s can be traced a bit further back, to Lerner’s Economics of Employment.As Mundell writes somewhere, Lerner encouraged him, saying something like his great mind appreciated what I said immediately (but ignoring that like most amazing feats of greatTM minds, it was because the great mind had thought of it himself before. :-) ) Of course the truly great Abba would not have committed the crimes/mistakes of the Euromadmen, and did not share the narrow purpose of a Mundell. Read right, there is a lot in E of E on the defects of the Euro.

    And there is a great deal more math than system demonics that the generally laughable & ignorant “mathematical economists” ignore the existence of. Though this is not to say that there are not a (very) few true flowers growing from the neoclassical, marginalist mire.

    To become a useful discipline mainstream economics has to either abandon its fetish with formal modeling or build better models. Preferably both. It also might be a good idea to understand what mathematicians understand mathematics to be, which is not at all what economists understand mathematics to be. Nearly disjoint sets. E.g. to a mathematician, the MMT academics are really / largely fellow mathematicians, perhaps even unknown to themselves, while many neoclassicals are just frauds. Cf Clifford Truesdell on Michael Faraday (and elsewhere, also on a lot of once famous, now forgotten fraudsters.)

  4. jake chase

    I have believed since its beginning that the purpose of the Euro was to eliminate Germany as an oasis of hard money which kept interest rates from plummeting to the levels they have now achieved. The idea was to bleed savers and reward speculators and looters operating from inside positions and controlling other people’s money in retirement funds, other investment vehicles, etc. The scheme has worked beautiful. Other consequences are merely collateral damage evocative of hand wringing and pathetic gestures.

    1. Generalfeldmarschall Von Hindenburg

      The purpose of the Euro was to centralize the EU political and financial mechanisms into a nexus that could more easily be dominated by the Americans. It has way more to do with an ongoing effort to keep the EU firmly under Washingtons domination. Is it any surprise that Rome, Berlin, Paris and London vie with one another to ingratiate themselves in such an obsequious manner to the Americans?

  5. craazyman

    doesn’t anybody realize by now?

    the models don’t describe the reality, they create the reality.

    1. David Lentini

      the models don’t describe the reality, they create the reality.

      I’d put it a bit differently: Mathematical models are the commandments of the utopian religion that is presided over by the econmists and which lauds the rich, who in turn use the government and police to enforce the commandments on everyone else.

      1. Susan the other

        We have a bipolar economy. Somewhere back in the late 1800s the industrialists discovered that they could only get filthy rich if they had customers, now known as consumers. But the consumers needed discretionary cash to buy all those products. And that cash could never come out of the profits of the rich because they would not have enough money to remain sufficiently elite. So they invented productivity to control a steady flow of profits. They were the “job creators” like God, creating consumers. Controlling everything jealously. But gradually eliminating labor. Debt no longer matters because productivity has become counterproductivity. Why don’t we change our concept of what is productive? Instead of nitpicking away at the edges of the dreaded “inflation.” After all, stealing is the most productive model out there.

      2. Paul P

        Yes, the neoclassicals do create reality.
        Facts don’t falsify theories.
        Greenspan is the living caricature of this in thinking that markets are self-policing. He, apparently, never read a newspaper or history. That the oracle was not met with laughter is sad… sad …sad ….

    2. H. Alexander Ivey

      The reality that is created is the reality of the modelers, not the rest of the population.

      Most economic theory and practice is not measured against an objective reality, nor against the theory and practice’s ability to accurately predict future events. Most is measured against what the status quo want to hear, and will pay for.

    3. Calgacus

      Quite right, craazyman. Quite right. Minsky & Keynes understood this well. Though perhaps you don’t go far enough. What makes economics interesting & fun is that the map often is the territory.

  6. rapazinho

    Perfections eludes us all. Yet, rigorous data treatment cuts through vapid insights and force all to look at reality–or its imperfect depiction. With better analytics Marx would have found out the capitalistic model he was criticizing with such erudition and cogent logic was being swept away by crashing waves of technology and massive migration flows.

    Now, we urgently need to use emerging large data bases to analyze the institutional validity or not of our trends–massive income polarization, corruption of democracy prior to primaries through economic power concentration, realignment of wages caused by international competition, “winner takes all” vs.the former “competitive Model,” and the reemergence of feudal capitalism (primarily in financialization, informatics and energy).

    2 x 2 is a model…but we can do better.

  7. Watt4Bob

    Some economists are actually attempting to mathematics to build models that accurately describe reality in order more fully understand our collective possibilities.

    Some economists are building ‘models’ that use mathematics to justify and obfuscate the kleptocracy’s ‘faith’ in their phony and self-serving ideology.

    One is searching for the truth and the other is serving the interests of our pirate class.

    Simple as that and so obvious.

    Krugman who it seems, wants to tell the truth, but also hold on to his job and his status, is a perfect illustration of the problem of deciding who to trust.

  8. Deloss

    It is early and this, heaven knows, is not my field of expertise (which is turnips). But Mr. Tankus seems to be picking on Paul Krugman not because his theories have failed to predict the circumstances or, if put into practice, would fail to alleviate the circumstances, but because his theories are incomplete, in the writer’s view, or are unaesthetic. I’m a fan of Krugman because he persistently picks on the people whose theories, published, do terrible damage to public opinion (“Americans blame public welfare for persistent poverty,” parroting the Cato Institute) and to the extent they can get them put into practice, do terrible damage to the sociey (“Democrats accept more cuts in food stamp program”). Furthermore Krugman seems capable of modifying his theories when circumstances seem to change; Simpson, Bowles, Ryan and ilka ilk have one tune and one drum to play it on.

    1. Nathan Tankus

      Prediction is a high standard that I’m not holding Krugman to in this post. I’m talking about his consideration of a POSSIBLITY of the issues Coppola considered. There is a way of reconstructing his older Economic Geography models for this purpose but even as he created this literature he attempted to block it’s application to international trade. If I were holding him to the standard of prediction, I would be much harsher.

      Clearly, the Optimal Currency Area did when “published, do terrible damage to public opinion (“Americans blame public welfare for persistent poverty,” parroting the Cato Institute) and to the extent they can get them put into practice, do terrible damage to the society”. His attempt to reconstruct an Optimal Currency Area as a useful body of literature is a defense of failed theories that is not disimilar to the people and institutions you dislike. Further, there were some detractors of the Euro that came to that position using the OCA, but even they didn’t consider the possibility let alone the likelihood of this crisis

      Krugman spent decades attempting to resist the application of this analysis to international economics. He may be able to incorporate this issue into his models because the European Union explicitly attempts to promote the free movement of people, but I suspect even in this situation he would deny the general relevance of international labor mobility. In general, he’s willing to modify neoclassical models to a certain point, but no farther. He’s willing to introduce increasing returns, but only if it’s a tractable model under conditions of general equilibrium.

      1. Deloss

        Thank you for taking the time to supply a courteous explanation (and for correcting my misspelling “sociey”). I will study your paragraph, and try to learn from it (and I’m being serious, not sarcastic). I don’t mind admitting that I’m in over my head here (we turnip specialists spend a lot of time underground).

  9. TheCatSaid

    Within any one European country, “mobility” will vary depending on the age group (young, unencumbered) and on whether or not they are tied down by a mortgage (underwater, or depressed housing market meaning they can’t sell and move elsewhere–even if they want to).

    Does Krugman’s analysis consisder potential contradictions like this?

  10. Rodger Malcolm Mitchell

    Given a simple, straightforward answer vs. a complex, convoluted answer, the mainstream economists will go for complex, convoluted every time.

    Why? They think it makes them sound smart, and anyway, how does one argue with complex, convoluted?

    The simple answer: The euro forced every nation to surrender the single most valuable asset the had: Their Monetary Sovereignty.

    Having lost control of their money, their money supply and their money value, they have begun to drown in debt. The EU solution: Lend more and demand austerity, the double whammy of increased debt and increased poverty.

    Ten years ago, in writing and in speeches, I predicted the euro would destroy the economies of Europe. Not a hard prediction. It’s what always happens to monetarily non-sovereign governments with no outside source of money.

    Think: Any of the U.S. states with no help from the federal government.

    There are two, and only two, solutions for the euro nations:

    1. Dump the euro, re-adopt your sovereign currency and return to Monetary Sovereignty or
    2. Create a United States of Europe, in which the EU supplies (gives, not lends) euros as needed.

    Those who do not understand Monetary Sovereignty do not understand economics and are doomed to assist their own economic suicide.

    1. Nathan Tankus

      Yes, I’m aware. If you see the link to the first piece I wrote last September, I wrote about this (although I hope my writing style has gotten much better since then).

  11. Warren Celli

    Yves said; “Normally, I’m a harsh critic of neoclassical economics and neoclassical economists. However, sometimes the most frustrating things about neoclassical economists is their lack of familiarity with neoclassical models (especially older ones) and current neoclassical research.”

    Normally, I’m a harsh critic of neobaloney economics and neobaloney economists. However, sometimes the most frustrating things about neobaloney economists is their lack of familiarity with neobaloney models (especially older ones) and current neobaloney research. This article provides a rather extraordinary example of this trend: Xtrevilist Paul Krugman, who publicly states that “Economics is not a morality play.” is the quintessential neobaloneyist as he delivers this neobaloneyish murderous drivel wrapped in mathematical models that are supposed to rationalize and legitimize it.

    The neobaloneyists take the bait and mathematical models are put on the alter of legitimacy rather than the morality of how they are used and the morality of the people that hijack them for attaining their Xtrevilist goals. This is a deflection several steps beyond Xtrevilist Paul’s occasional use of the ‘crony capitalism’ deflection which he off handedly and occasionally uses to describe the murderous Xtrevilist thugs he shills for.

    Not surprisingly some in the audience beat up on the mathematical modeling process as being next to useless, little realizing that it is what has them by the balls in the present situation as they are being measured, power quantified, and lined up for subsumption into the Onotron.

    doesn’t anybody realize by now?

    deception is driving the train, deception creates the reality, mathematical models are DETODs.

    Have you checked your alliances lately?

    Deception is the strongest political force on the planet.

    1. skippy

      Yep… and the mathematical models are no different than the steam powered doors, too the temple, too wow, the entering, soon to be…. mentally sheared sheep… in antiquity.

      Gawd moves stuff in mysterious ways….

      Heros Temple Doors Technical After Effects Animation

      skippy.. its just info arb… like natives watching men ride upon horse, ships with clouds pulling them, lightning sticks, beads and blankets for land… sigh.

      1. Chris Engel

        oh my skippy you’re so melodramatic.

        mathematical models are as good as the assumptions and theories that back them. it’s your own fault if you’re viewing the models as law and then getting upset when they don’t perfectly match reality.

        just because a bunch of neoliberal free market extremists hijacked models to inject silly assumptions to produce their desired results doesn’t make all mathematical modelling of social phenomena evil! really, focus the energy on more specific culprits, lest you want to have von misesian dialectic circlejerks into perpetuity

        1. skippy

          The models you folks use are toys, filled with objective values [Plato’s cave comes to mind].

          The day you come even close to the methodology used to construct and apply, say, cyclone modeling (up to 5 different models used to predict out comes [short term days – weekish]) I’ll give you less than a 50% margin of error.

          skippy… put it this way, until a long term study on the P&L of your customers, using your product can be done… its just opinion. If it works out in the short term, you can claim success, and when it does not you can claim external factors are at fault.

          BTW… you commenting first on a post or multiple comments with in a thread is indicative of trying to shape the narrative… cough… sales job.

          PS. Don’t you have much work on, to commit so much effort, to blogging?

          1. Chris Engel

            Yes yes of course. The guy who disagrees with you and gives a shit about a subtopic is a paid shill…

            You’re just THAT important, skip.

          2. skippy

            Hay I’m not making this a personal issue ie your a bad person [hell you night be a great sort on a P2P level, IDK], what I do take exception too… is your assertions wrt modeling social interactions.

            Mad science dressed up [marketing – fashion] because it extracts a short term profit ie mathematical financial products that depend on future events that are not exposed to chaos events or formulated with out much historical scope. How have the resent events challenged such notions… eh.

            This is complicated by some of your education (known neoliberal temple), which I’ve pointed out, and confirmed by more than one observer.

            Did you question any of it or just – consume it – as an article of faith? These are the challenges – we all face – in this topsy turvy world, been there done that.. sigh.

            Skippy… although… you have yet to address any of my concerns save personal opinion… articles of faith… thingy… with a paycheck at the end of the day. I only seek rigor in seeking, that is all. Be well Chris.

            PS. “You’re just THAT important, skip.” – Chris…

            This is a projection… I have always maintained I’m horribly defective and if humanity was to find a way to live in this world peacefully (with all the stuff on it)… I cold not be a part of it… save some quite spot to fish… as I might inadvertently infect some poor sob with my past.

    2. H. Alexander Ivey

      Ah-hum. Actually, it is Nathan Tankus who says that, he is posting on Yves’ site.

      1. Nathan Tankus

        I never correct them because I always find it so flattering to be mistaken for yves

  12. Frank Dean

    You are not being particularly fair to Krugman. His consistent criticism of the Eurozone as an optimal currency area is that there is a lack of fiscal integration, unlike the United States. The problem of young people relocating would be a non-issue if there were adequate fiscal integration in Europe. His model seems to have led him to the correct policy prescription; isn’t that the point?

    1. Nathan Tankus

      It is clear from your comments that you did not actually read the post.

      First, as I said, Krugman only really adopted the point about “Fiscal integration” AFTER the euro crisis happened. Second, the person he cites for this point is Peter Kenen, who’s actual model led him to REJECT, not accept criticisms of the Eurozone. his fiscal integration point had nothing to do with the inability to finance budget deficits and do countercyclical fiscal policy.

      see his paper rejecting criticisms of the Eurozone that Ramanan cites above

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