Edmund S. Phelps (2007) "Foreword," in Roman Frydman and Michael D. Goldberg, Imperfect Knowledge Economics: Exchange Rates and Risk.
“Monetary policy decisions tend to regress toward the mean and to be inertial—and hence biased in just the same way that adaptive expectations are biased relative to rational expectations. But errors like that, while systematic, will generally be small and will tend to shrink over time. And, in return, the system builds in natural safeguards against truly horrendous mistakes.”
Source: Central Banking in Theory and Practice. 1998, p. 31
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Alan Blinder 9
economist 1945Related quotes
Gunnar Myrdal (1982, 265); as cited in: Carlson, Benny, and Lars Jonung. "Knut Wicksell, Gustav Cassel, Eli Heckscher, Bertil Ohlin and Gunnar Myrdal on the role of the economist in public debate." Econ Journal Watch 3.3 (2006): p. 534-5
Source: Macroeconomics (7th Edition, 2017), Ch. 16 : Expectations, Output, and Policy
Source: Father and Child Reunion (2001), p. 241.
"Rational expectations and the dynamics of hyperinflation." 1973
Source: Anti-Tech Revolution: Why and How (2015), p. 47
Source: Macroeconomics (7th Edition, 2017), Ch. 24 : Epilogue: The Story of Macroeconomics
As quoted in Science at the Edge: Conversations with the Leading Scientific Thinkers of Today (2008), p. 170
Context: People are often unconscious of some of the mechanisms that naturally occur in them in a biased way. For example, if I do something that is beneficial to you or to others, I will use the active voice: I did this, I did that, then benefits rained down on you. But if I did something that harmed others, I unconsciously switch to a passive voice: this happened, then that happened, then unfortunately you suffered these costs. One example I always loved was a man in San Francisco who ran into a telephone pole with his car, and he described it to the police as, "the pole was approaching my car, I attempted to swerve out-of-the-way, when it struck me."
Let me give you another, the way in which group membership can entrain language-usages that are self-deceptive. You can divide people into in-groups or out-groups, or use naturally occurring in-groups and out-groups, and if someone's a member of your in-group and they do something nice, you give a general description of it – "he's a generous person". If they do something negative, you state a particular fact: "in this case he misled me", or something like that. But it's exactly the other way around for an out-group member. If an out-group member does something nice, you give a specific description of it: "she gave me directions to where I wanted to go". But if she does something negative, you say, "she's a selfish person". So these kinds of manipulations of reality are occurring largely unconsciously.