Category Macro
How time travel is possible
Suppose you wanted to take milk away from people on the east coast, and give it to people on the west coast. But you don't have any way of transporting the milk quickly enough to stop it spoiling before it gets from one coast to the other. Here's how you do it: You take milk […]
What part of “counter-example” don’t you get?
Suppose you claim that it is impossible for a debt to create a burden on future generations unless: it causes a reduction in investment that reduces future output; the higher future taxes cause disincentive effects that reduce future output; it is owed to foreigners so we have to pay part of our future output to […]
The burden of the (bad monetary policy) on future generations
You can try to kill zombie ideas. Or you can try to reframe them. I'm fed up with killing the "The national debt is not a burden on future generations because they will inherit (sic) the bonds as well as the debt so they will owe it to themselves" zombie. I already killed it a […]
Is “Y=C+I” a PPF?
I'm thinking about the best way to teach the investment demand curve in the "classical" (flexible price and wage) macroeconomic model. I don't like the way it's normally done. This post is an experiment, where I'm trying to come up with a better way. I'm not sure if I have succeeded yet, so if you […]
Simple thoughts on NGDP = RGDP x P
There have been several recent posts in the blogospere arguing about the interpretation of graphs (for several countries, but you can see Canada's here) which show a big fall in NGDP (relative to trend) at the beginning of the 2008 recession. (The latest from Ryan Avent here; Tyler Cowen's collection of links here.) Here are […]
Two (probably) unstable macroeconomic equilibria
Some people argue about whether the macroeconomy is inherently stable or unstable. I don't think that's a very useful question. Because…..it depends. And one of the things it depends on is monetary policy. And that is a useful discussion to have, because we can actually do something about monetary policy. Don't adopt a monetary policy […]
Fedspeak NGDP portfolio
I want to pick a very small fight with Paul Krugman. And I want to get my head clearer on something. (It's still not clear, so read at your own risk.) So I'm writing this post. Here's Paul: "The problem, at least in part, is that the indirectness of Bernanke’s language, the way an inflation […]
Three different ways expectations can matter. And the ZLB.
Nothing new here. Think of this as a teaching post. Partly for the people of the concrete steppes, but for others too. I'm just going to talk about different ways that expectations can affect what happens. The main distinction is between multiple equilibria and unique equilibrium.
A case for ZLB denial
This post is in response to two posts by Simon Wren-Lewis on "Zero Lower Bound Denial". First post here and second post here. I'm just collecting my thoughts from my comments on Simon's posts and from my previous posts. This is what I think: 1. The ZLB is a real wall. Bad stuff happens if […]
The orthodox recovery of faith?
In May 2010 I wrote a post with the title "the orthodox loss of faith". Please read it (or re-read it). It's a short post, and it would take me as long to repeat what I said there. And I can't recapture today how pessimistic I felt just over two years ago. If "orthodox" means […]
Worthwhile Canadian Initiative 
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