Big econ fight underway, and it is nerdy but spicy.

It all started with this @ojblanchard1, @asdomash and @LHSummers analysis. Their gist: The Fed's hope that it can lower job openings w/o a higher jobless rate "flies in the face" of evidence.

www.piie.com/publications/policy-briefs/bad-news-fed-beveridge-space

@ojblanchard1 @asdomash @LHSummers The Fed replied. Governor Chris Waller and Andrew Figura said that a soft landing actually *is* possible. Why? Theoretically, when the job market is super tight, the jobless rate climbs by less as vacancies fall.
www.federalreserve.gov/econres/notes/feds-notes/what-does-the-beveridge-curve-tell-us-about-the-likel...

@ojblanchard1 @asdomash @LHSummers But BDS, as Figura and Waller dubbed them, are having none of it. "The Fed is Wrong," they title their response, arguing that the Fed analysis includes "misleading conclusions, errors, and factual mistakes."
www.piie.com/blogs/realtime-economic-issues-watch/fed-wrong-lower-inflation-unlikely-without-raising-...

@ojblanchard1 @asdomash @LHSummers Obviously, those are wonk fighting words. Summers take issue with:

*The Fed using a model vs. real life evidence
*A coefficient
*The paper's assertion about separations '07-09 (does seem off based on JOLTS data, but I'm waiting to hear back on what data the Fed used)

@ojblanchard1 @asdomash @LHSummers "Given that the current vacancy rate is outside of historical experience, anything is obviously possible. But based on the evidence, we see no reason to change our conclusions," the new BDS paper argues.