Fable responds

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In a recent post, I responded to a Fable output comparing market monetarism with the HANK [Heterogeneous Agent New Keynesian] model, especially in reference to 2008-09. Vaidas Urba also asked Fable the same question from a HANK perspective. Because LLMs are somewhat obsequious, that response appeared slightly more HANK-friendly, although the substance was not much different. And then Vaidas asked Fable to compare the two responses and offer a judgement as to which one was more persuasive.

In this post, I had intended to respond to Vaidas’s latter two Fable outputs, but on second thought I’d like to respond to a different Fable output, which seems much more interesting, and even more impressive. This output was produced after Vaidas asked Fable to respond to my blog post, which was itself a response to the first Fable output.

This post will have three parts. In the first two, I’ll provide the Fable HANK-friendly reply and the overall summation that Vaidas sent me earlier, without any comment on my part. Feel free to skim over the first two sections. I don’t wish to get bogged down in an overly long tit-for-tat on every single point. Instead, I’ll reserve all my comments for the superior part 3, where I respond point by point to Fable’s reply to my earlier post. In this way, I hope to keep the conversation going in a productive fashion.

Note that in this final section, Fable’s response is written at a fairly high level. The response is not technically demanding in a mathematical sense, but it requires a deep understanding of macro theory. Sorry, this post isn’t for everyone. But I’ll occasionally try to clarify in my replies to make it easier for the reader. I will not indent Fable’s output, only my replies.

Part 1:

Prompt:

You are a discussant preparing for macroeconomics seminar. The topic of the seminar is the thesis…