Scott Sumner offers some comments here FWIW, copying and pasting:
I certainly believe the BOJ policy had the effect of boosting Japan’s real GDP, but the figure cited by Yudkowsky (“trillions of dollars”) seems excessive.
A few points:
1. In the long run, money is neutral. Hence monetary stimulus won’t impact the long run level of Japan’s RGDP or employment.
2. There’s a lot of evidence that Kuroda’s policies boosted Japan’s NGDP.
So here’s the issue. How much evidence is there that faster NGDP growth boosted Japan’s real economy (and employment) for a period of time? (Alternatively, how flexible are Japanese wages and prices?)
I’d say there is substantial evidence. Japanese stocks responded as if the policy was boosting growth. Unemployment fell to levels well below the 2006 boomlet. Also, keep in mind that growth in Japan’s working age population slowed sharply in the past decade, so trend RGDP growth is slowing substantially. Growth held up better after the 2014 tax increase than after the previous (1997?) version. Thus if Yudkowsky’s evidence was too cursory, so is this critique.
To summarize, the article makes some good points, but only shows that Yudkowsky might be wrong, not that he is wrong. I still think there’s lots of evidence that he was right and the pessimists at the BOJ were wrong, even if he exaggerates the benefits.
As an aside, he mentions my name. But people with very different views on monetary policy effectiveness—such as Paul Krugman (2018)—also see the evidence as clearly suggesting that Kuroda’s policy worked to some extent.
(There’s lots more I could say, but I’m on vacation.)
I’m happy that Scott Sumner commented. I think his analysis is reasonable, and I roughly agree with what he said. My only major complaint is that I think he might have misread the extent to which my article was intended as a criticism of his policy recommendations as opposed to Eliezer’s specific commentary. I think it’s plausible that the new monetary policy had a modest but positive counterfactual impact on RGDP over several years. I just don’t think that’s the impression Eliezer gave in the book when he provided the example.
Scott Sumner offers some comments here FWIW, copying and pasting:
I’m happy that Scott Sumner commented. I think his analysis is reasonable, and I roughly agree with what he said. My only major complaint is that I think he might have misread the extent to which my article was intended as a criticism of his policy recommendations as opposed to Eliezer’s specific commentary. I think it’s plausible that the new monetary policy had a modest but positive counterfactual impact on RGDP over several years. I just don’t think that’s the impression Eliezer gave in the book when he provided the example.