Knowing and Making

I have posted a couple of detailed comments in response to Scott Sumner's recent items, and as most of my readers probably don't read his blog, I'm cross-posting them here. For background, read this comparison of the performance of the UK and Sweden , and the comment thread; then the following response by Scott . First, I tackle UK monetary policy: As illustrated by the currency discussion, the figures in this debate is strongly influenced by the choice of starting point. For example, nominal GDP in the UK has been growing at an annual rate of 6% for the last nine months. http://www.telegraph.co.uk/finance/economics/7764916/Boost-for-UK-as-GDP-growth-revised-up.html All of the problems in Scott's figures come from a single quarter, Q1 2009. In Q1 of 2009 we were still in recession, with a 3% fall in NGDP in that quarter alone. I believe the CPI was also negative in that quarter (though I can't find quarterly index figures for that, only annual changes). It was ...

Mervyn King said today that the UK economy might go back into recession and that the recovery is weaker than hoped. So, Mervyn, what possessed you to stop quantitative easing  less than a week ago? Scott must be so disappointed. Unless you can come up with a solid rationale for why QE can't work , this is bizarre and inexplicable. p.s. to be fair, he has also said today it's ' far too soon ' to assume there will be no more QE. David Wighton in The Times points out that this behaviour looks ' downright peculiar '.