Category fun
Teaching, OLG models, and the phenomenology of perception
When we teach students economics, we sometimes use numerical examples to help them understand general principles. Sometimes we make them work through those numerical examples by themselves, as an assignment. It's the only way they will really get it, and see what's really going on. But once they get it, they don't need the numbers […]
How markets convert meat into vegetables
It is Winter. It is impossible to produce food, and the people can only eat the food they have already stored. The king wants to take food away from the carnivores and give it to the vegetarians. He orders a tax on the carnivores, so they will eat less food, and a transfer payment to […]
The New Keynesian case for anti-inflation price controls
Take a very standard New Keynesian macroeconomic model. The two key ingredients (the only ones that matter for this post) are: monopolistically competitive firms; the Calvo Phillips Curve. In that model, if there are no macroeconomic shocks, the equilibrium level of output and employment is below the efficient level of output and employment. Because it […]
Negatively-valued (red) money in an OLG model
Samuelson 1958 (pdf) built an overlapping generations model in which intrinsically worthless green bits of paper have positive value. It is possible to build a mirror-image of Samuelson's model in which intrinsically worthless red bits of paper have negative value. My model actually makes more sense. Because any infinitely-lived productive asset, like land [or Frances' […]
Helicopter money is normal, or else we’re doomed!
With one exception, Tony Yates strikes me as being a very sensible and very good money/macro economist. But at the mention of "helicopter money", he seems to turn into an Old Testament prophet, or maybe Private Frazer from Dad's Army, saying "We're doomed, I tell ye!" (or maybe this longer video makes my point better). […]
The over-investment and under-saving theory of the ZLB
This post is ironic. I have a really neat new theory of what causes countries to hit the Zero Lower Bound. It's got a beautifully counter-intuitive policy implication. The government needs to tax investment, or subsidise saving, to help the country escape the ZLB. What I need is a co-author to help me do some […]
The collective speed limit game
Neo-Fisherite fun. Plus concrete steppes fun. 1. Suppose you don't care what speed you drive. Anything between 0 and 200 is all the same to you. But the cops do care what speed you drive. They want you to drive at exactly the speed limit S*, neither faster nor slower. (They have a symmetric target.) […]
Why are lawyers against higher inflation?
An extremely quick Google search convinces me that lawyers are massively over-represented in the Canadian Parliament. I am quite sure that something similar is true in other countries too. Lawyers are far more powerful in setting government policy than are ordinary middle-class people like me. So if we want to understand why monetary policy is […]
Why the Roman Empire Really Fell
Research Memorandum From: Office of Historical Research Studies, Time Travel Division, Open University of the Inner Solar System, September 3, 2476 To: Board of Solar Regents, Open University of the Inner Solar System On the bi-millennium of the official fall of the Roman Empire as dated by the overthrow of Romulus, the last of the […]
Tim Hortons
A lot of US econobloggers are talking about the Tim Hortons-Burger King merger. But all they seem to talk about is corporate tax rates. I think they are missing the big picture. The big picture is here: [I can't figure out how to embed that picture in Typepad. That's okay, I did – SG] To […]
Worthwhile Canadian Initiative 
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