Monthly Archives: October 2012
Medium of Account vs Medium of Exchange
Money has two defining functions: it is the medium of account (all prices are quoted in terms of money); it is the medium of exchange (all other goods are only bought or sold for money). ("Store of value" is not a defining function of money, because my canoe is a store of value too.) Scott […]
Liquidity-Velocity Multipliers, Menger, Money, and Financial Crises.
This is a Sunday morning [evening – I hesitated] post, about some ideas I'm playing around with, trying to get my head straight. I'm just throwing it out there, and wondering if it has enough empirical "oomph" to fly. I don't think there's anything original here. "It's all in Menger". But Menger didn't draw a […]
The dubious value of doctors’ notes
Students get sick around exam time. Cold, damp weather, combined with lack of sleep, poor diet, and stress, is a recipe for illness. I’m sure that the students who woke up last week and thought, “I don’t feel well enough to write a midterm exam today” truly didn’t feel very well. But what degree of […]
Trashing balance sheets and observational equivalence of fundamental and bubble money
Four years ago (and again two years ago) I argued it might be good policy for central banks to (conditionally) trash their own balance sheets. Now this idea is in the news. See Ralph Musgrave for links. The recent blogosphere debate over whether money is or is not a bubble must have sounded like angels […]
Another debt burden counterexample
One last kick at this can. "OK Nick. Your previous counterexamples have shown that debt can be a burden on future cohorts even if future national income is not affected. But that's not what we meant by 'future burden of the debt'. Those counterexamples don't show the country as a whole being worse off in […]
How to manipulate student grades
There are times when a professor wishes to raise or lower his or her students' grades. Perhaps a directive has come down from on high: "Instructors need to focus on increasing student success rates." "The average grade in this class is above the departmental norm – grades must come down." Or a professor might wish to maximize teaching […]
Liquidity, bubbles/ponzis/chain letters, and money
I might as well join in the fun. Along with Steve Williamson, Noah Smith, Karl Smith, Paul Krugman, David Glasner, and Steve again. [Update: and Brad DeLong and JP Koning. And David Andolfatto.] Some assets are more liquid than others (they have lower transactions costs of buying and selling). More liquid assets will have a […]
An Economic Salute to US Presidents!
Well tonight is the next US Presidential debate and what better way to help set the stage than an economic retrospective on American Presidents and their relative performance when it comes to economic growth. I went onto Eh.Net and have obtained real per capita US GDP in 2005 constant dollars for the period 1790 to […]
You can’t estimate Optimal Currency Areas that way
The better the Bank of Canada is doing its job, the more it will appear that the Bank of Canada should be broken in two. The worse the ECB does its job, the more it will appear that the Eurozone is an Optimal Currency Area. If central banks were even slightly more competent than random […]
Six (maybe) good arguments for deficits (and one bad).
Are deficits good or bad? That depends. Sometimes they are good, and sometimes they are bad. But even when deficits are good, don't use bad arguments to defend them. It really annoys me. First as an economist, because it's bad economics. Second, as a (Canadian, but whatever) citizen. Because we want governments to run deficits […]
Worthwhile Canadian Initiative 
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