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Robert Waldmann

Robert Waldmann

Robert J. Waldmann is a Professor of Economics at Univeristy of Rome “Tor Vergata” and received his PhD in Economics from Harvard University. Robert runs his personal blog and is an active contributor to Angrybear.

Articles by Robert Waldmann

Beutler & Yglesias on Strategy

March 5, 2021

I am going to comment on two smart guys who believe that they disagree about the optimal political strategy for Democrats.

Brian Beutler wrote an interesting essay criticizing what he calls “issue polling essentialism”. It includes the text

The topic occurred to me after I recorded last week’s Rubicon with my friend Matt Yglesias, where we took different sides on the question of how determinative issue polling should be in setting progressive priorities. We are no longer friends. (Just kidding. Unless…? Better listen to the episode!)

I trust they are still friends, but Yglesias is a bit peeved. He wrote this Thread beginning “I think this piece does not describe the position it is critiquing accurately.”

In fact, after mentioning

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Covid 19 One Dose or Two IV

February 19, 2021

Angrybearblog December 22,2020 “Eyeballing, the first shot looks 80-90% effective.” (Moderna) and “my guess is that the first shot was about 90% effective over this period.” (Pfizer).

Angrybearblog December 24,2020

New England Journal of Medicine February 17 2021

We used documents submitted to the Food and Drug Administration2 to derive the vaccine efficacy beginning from 2 weeks after the first dose to before the second dose (Table 1). Even before the second dose, BNT162b2 was highly efficacious, with a vaccine efficacy of 92.6%, a finding similar to the first-dose efficacy of 92.1% reported for the mRNA-1273 vaccine (Moderna).3With such a highly protective first dose, the benefits derived from a scarce supply of vaccine could be

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What The Democratic Senators Were thinking

February 13, 2021

As is very rare, I find myself disagreeing with Josh Marshall who asked “What Were the Democratic Senators Thinking?” when they agreed to accept Representative Jaime Herrera-Butler’s assertions (that Trump sided with the insurgents over minority leader McCarthy) in writing when Trump’s lawyers stipulated that they could be assumed to be accurate.

First I will play amateur lawyer (and link to an actual lawyer who contested Marshall and was posted by Marshall) — the managers said they asked to call witnesses specifically to present that (hearsay) testimony. After listeining to their closing arguments it is clear that they were being frank — the testimony was critical to their case against Trump. Assuming it is accurate (as agreed) it proves that

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Debt and Summers II

February 7, 2021

Larry Summers has responded to his critics. My first thought is, yes he is still really smart.

Also Olivier Blanchard also thinks the Covid Relief bill is too generous, and, in particular objects to the $1400 for most Americans. Note that Blanchard is the author of the main citation in my critique of Summers (although I should also have cited Summers on secular stagnation, Delong and Summers on the Keynesian Laffer Curve and Blanchard and Summers on hysteresis).

Summers makes 4 arguments.

Don’t blame me for the fact that the ARRA was too small. Here I think it doesn’t really matter, and that he is mostly right. Certainly he argued frequently for higher deficits.

Fearing Secular stagnation does not imply that one prefers $1.9

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Debt and Summers II

February 7, 2021

Larry Summers has responded to his critics. My first thought is, yes he is still really smart.

Also Olivier Blanchard also thinks the Covid Relief bill is too generous, and, in particular objects to the $1400 for most Americans. Note that Blanchard is the author of the main citation in my critique of Summers (although I should also have cited Summers on secular stagnation, Delong and Summers on the Keynesian Laffer Curve and Blanchard and Summers on hysteresis).

Summers makes 4 arguments.

Don’t blame me for the fact that the ARRA was too small. Here I think it doesn’t really matter, and that he is mostly right. Certainly he argued frequently for higher deficits.

Fearing Secular stagnation does not imply that one prefers $1.9

Read More »

Debt and Taxes IV:This Time It’s Personal

February 6, 2021

It seems that many people have concerns about Larry Summers’s concerns about overdoing the Covid 19 Relief bill. My first reaction to his op-ed is here, but I realize that I had more nearly relevant things to say in the Debt and Taxes series and, in particular in debt and taxes I and debt and taxes II. (the one with plain ascii algebra and only 2 comments but I promise it is relevant).

I’m going to try to focus. First, Summers really criticizes giving an additional $1400 to most US citizens. He discussed the bill in general, but his concerns are about the wisdom of that (huge) provision and not the money for supplementary unemployment insurance, unemployment insurance for people not eligible for regular unemployment insurance, money for vaccine

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Debt and Taxes IV: This Time It’s Personal

February 6, 2021

It seems that many people have concerns about Larry Summers’s concerns about overdoing the Covid 19 Relief bill. My first reaction to his op-ed is here, but I realize that I had more nearly relevant things to say in the Debt and Taxes series and, in particular in debt and taxes I and debt and taxes II. (the one with plain ascii algebra and only 2 comments but I promise it is relevant).

I’m going to try to focus. First, Summers really criticizes giving an additional $1400 to most US citizens. He discussed the bill in general, but his concerns are about the wisdom of that (huge) provision and not the money for supplementary unemployment insurance, unemployment insurance for people not eligible for regular unemployment insurance, money for vaccine

Read More »

Debt and Taxes IV: This Time It’s Personal

February 6, 2021

It seems that many people have concerns about Larry Summers’s concerns about overdoing the Covid 19 Relief bill. My first reaction to his op-ed is here, but I realize that I had more nearly relevant things to say in the Debt and Taxes series and, in particular in debt and taxes I and debt and taxes II. (the one with plain ascii algebra and only 2 comments but I promise it is relevant).

I’m going to try to focus. First, Summers really criticizes giving an additional $1400 to most US citizens. He discussed the bill in general, but his concerns are about the wisdom of that (huge) provision and not the money for supplementary unemployment insurance, unemployment insurance for people not eligible for regular unemployment insurance, money for vaccine

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Larry Summers has Concerns

February 5, 2021

Early this morning the Senate passed a budget resolution telling committees to spend an additional $ 1.9 T on Covid relief. Yesterday, Larry Summers wrote an op-ed expressing concerns about the imminent resolution. Like many many many people, I disagree in part. Oddly, I think I disagree less strongly with Summers than most US adults do.

Summers makes two arguments. The first is that the stimulus is too large

The proposed stimulus will total in the neighborhood of $150 billion a month, even before consideration of any follow-on measures. That is at least three times the size of the output shortfall.

Which implies a risk of overheating and undesirably high inflation

there is a chance that macroeconomic stimulus on a scale closer to World

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Larry Summers has Concerns

February 5, 2021

Early this morning the Senate passed a budget resolution telling committees to spend an additional $ 1.9 T on Covid relief. Yesterday, Larry Summers wrote an op-ed expressing concerns about the imminent resolution. Like many many many people, I disagree in part. Oddly, I think I disagree less strongly with Summers than most US adults do.

Summers makes two arguments. The first is that the stimulus is too large

The proposed stimulus will total in the neighborhood of $150 billion a month, even before consideration of any follow-on measures. That is at least three times the size of the output shortfall.

Which implies a risk of overheating and undesirably high inflation

there is a chance that macroeconomic stimulus on a scale closer to World

Read More »

Covid Vaccination One Dose or Two iV

February 4, 2021

I didn’t expect this to be a series of posts, but there is news since I wrote post number III.

There is a partial change of subject, because the news concerns the Oxford/AstraZeneca adenovirus based vaccine and not the mRNA based vaccines which I discussed before.

In the UK they decided to delay the second dose for 3 months in order to get a first dose in as many people as possible as quickly as possible. This is roughly what I proposed in post I. Since then, Israeli HMOs have noted a significant rate of infection (detected by PCR screening) two to three weeks after the first dose the Pfizer/BioNTech vaccine (link to same post number III and post number II). After 3 weeks, they injected the second dose, so they can’t follow further.

Now the

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Covid Vaccination One Dose or Two iV

February 4, 2021

I didn’t expect this to be a series of posts, but there is news since I wrote post number III.

There is a partial change of subject, because the news concerns the Oxford/AstraZeneca adenovirus based vaccine and not the mRNA based vaccines which I discussed before.

In the UK they decided to delay the second dose for 3 months in order to get a first dose in as many people as possible as quickly as possible. This is roughly what I proposed in post I. Since then, Israeli HMOs have noted a significant rate of infection (detected by PCR screening) two to three weeks after the first dose the Pfizer/BioNTech vaccine (link to same post number III and post number II). After 3 weeks, they injected the second dose, so they can’t follow further.

Now the

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Covid Vaccination one dose or 2 III

January 29, 2021

First, I want to discuss the evidence on effectiveness of the first dose of the BioNTech Pfizer Covid 19 vaccine. The data from few person – weeks of the phase III trial suggested that one dose was highly effective after 10 days. This is based on 4 of roughly 40 cases in vaccinated participants.

Much larger samples from the not randomized controlled just by the general population experience in Israel suggest lower effectiveness. I think the most interesting data are from the Israeli HMO Maccabi who followed a cohort of 50,777 vaccinated Maccabi members. The plot shows 7 day moving averages of diagnosis by PCR. They are very close for vaccinated and not vaccinated Maccabi members for about 14 days. This suggests that all of the many biases

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Covid Vaccination one dose or 2 III

January 29, 2021

First, I want to discuss the evidence on effectiveness of the first dose of the BioNTech Pfizer Covid 19 vaccine. The data from few person – weeks of the phase III trial suggested that one dose was highly effective after 10 days. This is based on 4 of roughly 40 cases in vaccinated participants.

Much larger samples from the not randomized controlled just by the general population experience in Israel suggest lower effectiveness. I think the most interesting data are from the Israeli HMO Maccabi who followed a cohort of 50,777 vaccinated Maccabi members. The plot shows 7 day moving averages of diagnosis by PCR. They are very close for vaccinated and not vaccinated Maccabi members for about 14 days. This suggests that all of the many biases

Read More »

Debt and Taxes III

January 29, 2021

The reliably brilliant Catharine Rampell argues against giving $1400 to quite so many people. She notes

The Democratic-controlled House passed legislation in December to expand stimulus payments to $2,000. This was marketed as aid to the poor and middle class, but the bill would have given some money to 94 percent of households — including those making over $300,000. President Biden, who supports more direct payments, said this week that he is open to negotiating eligibility details to ensure the funds are targeted to the needy.

I actually agree that it would be a good idea to target the additional 1400 more. I think it very likely that this will be the condition imposed by political Manchinations. Rampell considers some arguments for

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Debt and Taxes III

January 29, 2021

The reliably brilliant Catharine Rampell argues against giving $1400 to quite so many people. She notes

The Democratic-controlled House passed legislation in December to expand stimulus payments to $2,000. This was marketed as aid to the poor and middle class, but the bill would have given some money to 94 percent of households — including those making over $300,000. President Biden, who supports more direct payments, said this week that he is open to negotiating eligibility details to ensure the funds are targeted to the needy.

I actually agree that it would be a good idea to target the additional 1400 more. I think it very likely that this will be the condition imposed by political Manchinations. Rampell considers some arguments for

Read More »

What is to be done with the Senate ?

January 26, 2021

What are we going to do about Mitch McConnell and his enabler Jim Manchin ? McConnell is blocking the establishment of committees for the 117th Senate. This means that the committees with Republican Chairs and Republican majorities will exist and operate in the Senate with a Democratic majority. He demands that Democrats promise not to eliminate the filibuster before he ends the filibuster of the resolution setting up the 117th Senate.

One simple solution is to introduce bills on the floor. This is what McConnell did with his bill to repeal and replace the ACA. McConnell objecting to contempt for regular order is, quite possibly, absurd enough to be mocked even by very serious centrists. The point is that McConnell can block the establishment of

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What is to be done with the Senate ?

January 26, 2021

What are we going to do about Mitch McConnell and his enabler Jim Manchin ? McConnell is blocking the establishment of committees for the 117th Senate. This means that the committees with Republican Chairs and Republican majorities will exist and operate in the Senate with a Democratic majority. He demands that Democrats promise not to eliminate the filibuster before he ends the filibuster of the resolution setting up the 117th Senate.

One simple solution is to introduce bills on the floor. This is what McConnell did with his bill to repeal and replace the ACA. McConnell objecting to contempt for regular order is, quite possibly, absurd enough to be mocked even by very serious centrists. The point is that McConnell can block the establishment of

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Desirable incentive effects of income taxation V

January 26, 2021

Fifth and last. Not relevant to the USA. Back in the day when US unions weren’t totally feeble, MacDonald and Solow wrote a brilliant paper on collective bargaining and tax based incomes policy.

Imagine a world in which firms must negotiation with unions (for example imagine Europe). The unions have two aims — they want high wages and they want high employment in the sector they represent. This means that a GM&UAW right to manage contract which specifies wages and working conditions and allows management to choose output, investment, and employment is Pareto inefficient. It makes sense to specify wages and the level of production (firms must produce more than the amount that maximizes profits given wages).

If unions have power (hah!) and

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Desirable incentive effects of income taxation V

January 26, 2021

Fifth and last. Not relevant to the USA. Back in the day when US unions weren’t totally feeble, MacDonald and Solow wrote a brilliant paper on collective bargaining and tax based incomes policy.

Imagine a world in which firms must negotiation with unions (for example imagine Europe). The unions have two aims — they want high wages and they want high employment in the sector they represent. This means that a GM&UAW right to manage contract which specifies wages and working conditions and allows management to choose output, investment, and employment is Pareto inefficient. It makes sense to specify wages and the level of production (firms must produce more than the amount that maximizes profits given wages).

If unions have power (hah!) and

Read More »

Desirable Effects of Income Taxation IV Dissipative Signaling

January 24, 2021

From now on, these posts will be reviews of the established literature. I will assume, as is standard, that people are completely selfish. The point is to show that, even if people are selfish, there are desirable incentive effects of income taxation.

As is often the case, the results of 50 year old theory turn out to depend on the assumption of symmetric information. If some agents know things that other agents don’t know, then free market outcomes can easily be Pareto inefficient.

One very old example is due to A Michael Spence who considered a model in which people don’t learn anything useful in college, but get degrees just to prove they can. Spence was dean of Harvard’s faculty of Arts and Sciences, so he should know. Basically the

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Debt and Taxes III

January 22, 2021

I don’t know if I should try to make my contributions to AngryBear a noahpinion sub substack or if I should put this over at my personal blog, but I am always stimulated by Noah’s posts . His most recent “No one knows how much the government can borrow” is on a topic I’ve mentioned here (and here also Brad all following Blanchard): How much should we worry about the huge and rapidly growing US national debt ?

Noah wrote that he doesn’t know and he doesn’t think anyone else does either. My comment is that Noah assumes things we don’t know. In particular, he assumes that we know something about how much the US Federal Government can borrow while paying record low interest rates. Noah write well, so it is hard to excerpt

“If the U.S. federal

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Covid Vaccination one dose or 2 II

January 20, 2021

There is evidence from Israel that one dose of the Pfizer vaccine is less effective than was suggested by the few person-days of evidence in the phase III trials. In Israel  “over 12,400 have people tested positive for coronavirus after receiving vaccine shots” Israeli health officials estimate that one shot is about 50% effective after 14 days . The control group is not matched, it’s not a randomized trial, but it is evidence that the second dose provides benefits on the order of the benefits of the first and is evidence against my proposal to delay the second dose.

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Debt and Taxes II

January 19, 2021

This is an extended post on the caveat to debt and taxes 1. It is joint work with Brad DeLong and Barbara Annicchiarico. The point is that, in his Presidential Address, Olivier Blanchard notes that the argument that higher debt causes increased welfare is weaker than the argument that it is feasible.

The Treasury can afford to increase debt D_t just by just giving bonds away and can pay interest and principal without ever raising taxes so long as the safe rate of interest which it has to pay is lower than the trend rate of growth of GDP. In that case it is possible to just roll over the debt forever and the debt (including the additional debt) shrinks to insignificance as a share of GDP.

Following Blanchard we assume zero trend growth and an

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Debt and Taxes I

January 19, 2021

There might be such a thing as a free lunch.

There will soon be a Democrat in the White House and Republicans will soon rediscover their hatred of deficits (which were no problem when they were cutting taxes on firms and rich individuals). We are going to read a lot of arguments about irresponsibly burdening our children with debt (which ignore the fact that they will also inherit most of the bonds). We will be reminded that sooner or later we will have to pay.

I am not sure if Milton Friedman will be quoted saying “to spend is to tax”. There will be arguments about how deficit spending creates the illusion of wealth (as consumer/investors we forget that we owe the money as well as owning the bonds just as citizens we forget that we are (most

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Desirable Incentive Effects of Income Taxation III

January 18, 2021

This is the third post in a series. I will discuss advantages of income taxation different from the obvious advantage that taking from people with high income hurts them less than taking from people with low income. Here again, I will assume that, in equilibrium, income tax is returned to the people who pay it as a lump sum. I do this to focus on the incentive effects of income taxation.

The first two posts are here and here.

In standard models, these effects are undesirable and amount to a deadweight loss which is second order in the tax rate. However, the standard models rely on standard assumptions which are completely implausible. They are used, because it is guessed that the policy implications don’t depend on the absurd assumptions.

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Desirable Incentive Effects of Income Taxation II

January 17, 2021

This is the second post in a series. I will discuss advantages of income taxation different from the obvious advantage that taking from people with high income hurts them less than taking from people with low income. Here again, I will assume that, in equilibrium, income tax is returned to the people who pay it as a lump sum. I do this to focus on the incentive effects of income taxation.

In standard models, these effects are undesirable and amount to a deadweight loss which is second order in the tax rate. However, the standard models rely on standard assumptions which are completely implausible. They are used, because it is guessed that the policy implications don’t depend on the absurd assumptions. The policy implications always, in fact,

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Covid Vaccine Dosing Trials ?

January 17, 2021

I asked if, given the data collected in Phase III trials, it might be wise to delay second doses of the Pfizer and Moderna Covid 19 vaccines until supplies are ample.

Since then the UK government has decided to give second doses three months after the first dose. The reason is explicitly to get first doses in more people quickly. This is highly controversial. I’m just going to name drop (actually link drop) to show I am not the only person outside of the UK who supports this.

Another approach to vaccinating more people with limited supplies of vaccine is to reduce the dose. This was proposed by the now former head of the US program formerly known as Warp Speed. Here the logic is based on a clinical trial — with a sample size of 42 — the

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Desirable incentive effects of income taxation I

January 16, 2021

Cases in which income taxation is preferable to lump sum taxation with the same ex post net transfers.

The main reason for progressive taxation is that the welfare cost of taking money from wealthy people is lower, because they have a lower marginal utility of consumption. I would like to discuss other advantages of income taxation, that is cases in which it can cause an increase in money metric welfare, or, in other words cases in which a distortionary tax and transfer policy is desirable even if, in the end (in the Nash equilibrium) everyone gets a transfer equal to taxes paid.

The incentive effects of taxation can be desirable for many reasons. I will try to list them in a series of posts. One very simple reason is that lower income is

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Is an Increased Federal Deficit good or bad ?

December 29, 2020

As the Senate decides whether to send an additional $1400 to US residents, there are two macroeconomic policy issues. One is whether aggregate demand stimulus would be useful. The other is whether we should be concerned about the budget deficit.

I think that the case for fiscal stimulus is medium strong and the case for higher Federal Debt is very strong. Thus I agree with Donald Trump and Bernie Sanders and disagree with Larry Summers.

The case for stimulus is only medium strong. Unemployment is fairly high, but part of this is an efficient response to the risk of Covid Transmission. There are two ways to argue that demand is undesirably slack. One is below peak employment in sectors which are not especially directly affected by Covid 19

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