Category Macro
Is NGDPLT a perfect guard dog? A challenge.
Can anyone think of a single historical example, in any country, at any time, where NGDPLT would have failed as a guard dog? Is targeting the level-path of Nominal GDP a perfect monetary policy? Almost certainly not. I would be really surprised if something as crude as NGDP turned out to be the very best […]
For David Andolfatto: why I switched from IT to NGDPLT
This post is for David, but it's mostly about me. I used to think that inflation targeting was probably roughly the best monetary policy to follow. Then, a couple of years ago, I began to think that NGDP level targeting was probably roughly the best monetary policy to follow. This post is about why I […]
How can you get an economy INTO a liquidity trap?
We spend a lot of time thinking about how to get out of a liquidity trap. Maybe we can think more clearly about that question if we instead ask the exact opposite question. But let's be a little more precise about our question: How can you get an economy into a liquidity trap in such […]
Banks are special because the medium of exchange is special
If we used cows as media of exchange (if we bought and sold everything else in exchange for cows), would you say that dairy farming is a special industry that is macroeconomically important? I would. Because if we used cows as media of exchange, then what happened on dairy farms would affect the supply of […]
What Steve Keen is maybe trying to say
Or maybe not. But either way I'm going to say it. There's a fine line somewhere between: just fixing obvious typos in what someone actually said; and totally changing what they actually said. Or maybe there is no line, and it's just a continuous slope. Anyway, I'm going to cross that fine line here, and […]
New Keynesians really need the Pigou effect
Because otherwise their models won't work. And yet the canonical versions of their models, which don't even have money, cannot have a Pigou effect. And so New Keynesians are guilty of the Old Keynesian accusation of "just assuming full employment". Here's why: In Old Keynesian models, if Aggregate Demand is too low, a cut in […]
David Laidler goes meta on “What would Milton have said?”
I tried to persuade David Laidler to join us in the econoblogosphere, especially given recent arguments about Milton Friedman. I have not yet succeeded, but David did say I could use these two paragraphs from his email: "However – re. the "what Milton would have said" debate – When I was just getting started in […]
Paul Krugman, Ricardian Equivalence, and the Pigou effect
If I produce a car, and sell it, and undertake no obligation to service that car (by changing the oil), and undertake no obligation to buy back that car, and if nobody can sue me if that car goes wrong, then that car I have produced and sold is not one of my liabilities. That's […]
The strong monetarist dark force of eventual macroeconomic self-equilibration
There must be some macroeconomic equilibrating force out there we don't know about. A dark force. It's sometimes slow to work, but it does work eventually. And whatever it is, it must make monetarism truer than it theoretically would otherwise be. A monetarist force. And whatever it is, it must be much stronger than a […]
“Is the macroeconomy self-equilibrating?” is a stupid question
"At the macroeconomic level, is the market economy self-equilibrating?" I used to think that was the most important and fundamental question in macroeconomics. Now I think it's a stupid question that doesn't make sense. So when I read Paul Krugman saying: "Think of it this way: Friedman was an avid free-market advocate, who insisted that […]
Worthwhile Canadian Initiative 
Recent Comments