A Covert Mea Culpa from Mankiw?

Greg Mankiw writes sensibly about not judging a president for “treating a single patient”. He then goes on to reference his own record as the chief economic adviser of a president:

Now some people may be tempted to read the above commentary and call it self-serving. After all, the economy looks pretty bad right now, so maybe I am trying to excuse President Bush and, indirectly, myself as one of his economic advisers.

Not so. If you want to judge presidents and their economic advisers by outcomes, that would be all to my benefit. I arrived in Washington to head the CEA in February 2003 and left in February 2005. (Harvard has a two-year rule for faculty leave). During that time, the economy grew at a healthy annualized rate of 3.6 percent, and the unemployment rate fell half a percentage point. As judged by outcomes, I look pretty good! But I will be the first to admit that this argument is deeply silly.

Hmm. Those two years happen to coincide with the hottest period of growth for the housing/credit bubble. His policy advice led the president to adopt a position of minimal regulation. And this happened in the presence of incredibly loose monetary policy (largest sustained downward deviation from the Taylor rule in near history). This is the period that gave us the infamous 2-28 ARM.

I'm all for judging Mankiw (negatively) on his (bad) policy advice, instead of the temporary growth of a bubble. At least he seems to be a person of some intellectual honesty in pointing this out himself.

Update: The subprime teaser rate ARMs have been in existence long before 2003. However, the time period was an era of rapidly growing subprime ARM utilization and increasingly predatory lending practices.