Wednesday, March 04, 2009

Greg Mankiw challenges Paul Krugman to a bet

Greg has come out against gambling in the past. But I think he's seen the light of prediction markets.

This bet challenge may evidence a full turnaround:
Paul Krugman suggests that my skepticism about the administration's growth forecast over the next few years is somehow "evil." Well, Paul, if you are so confident in this forecast, would you like to place a wager on it and take advantage of my wickedness?

Team Obama says that real GDP in 2013 will be 15.6 percent above real GDP in 2008. (That number comes from compounding their predicted growth rates for these five years.) So, Paul, are you willing to wager that the economy will meet or exceed this benchmark? I am not much of a gambler, but that is a bet I would be happy to take the other side of (even as I hope to lose, for the sake of the economy).
This might be the biggest bet in economist history since that one in 1980.

I'd be surprised if Krugman has the stones for it. Why taint the ivory tower with the prospect of having real risk adjusted returns next to your name?

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