Category Macro
New Keynesian vs Neo-Wicksellian macroeconomics
I am not going to disagree with Simon Wren-Lewis. There is a lot of merit to his perspective on what New Keynesian macroeconomics is really about. But I want to put forward a very different perspective that I think also has a lot of merit.
Why are (almost all) economists unaware of Milton Friedman’s thermostat?
I know I'm right in saying that Milton Friedman's thermostat is an important idea that all economists ought to be aware of. And I'm pretty sure I'm right in asserting that almost all economists are unaware of this important idea. Am I wrong? Are you aware of this idea? Maybe under some other name?? Google […]
Kill the Euro now?
It's an ugly thing to say, especially since the end of the Euro will be an ugly thing. But it needs to be said. Back in June, Canada came under pressure to help the Eurozone survive, and came under criticism for failing to help (or failing to help enough). Canada's position was defensible on many […]
How many monetary transmission mechanisms are there?
An economic historian builds a macroeconomic model to help her understand the gold standard. Her model says the central bank sets the dollar price of gold, and the stock of base money is demand-determined. If the central bank raises the dollar price of gold, her model says this will cause an increase in the general […]
Unit roots and pro-cyclical fiscal policy
This is something I have long wondered about. And reading Jeff Frankel's complaints (HT Mark Thoma) about pro-cyclical fiscal policy made me wonder about it again. And I do mean "wonder about". I am not at all sure that this idea is right, or even theoretically coherent. But I wonder if it might be. In […]
Growth and Development: The Very Long Run
Well, though still on the road, I’m back in Canada after a conference trip to South Africa where I was part of a session on the analysis of late nineteenth/early twentieth century wealth in Britain and its Dominions using probate records. For a summary of my trip, click here. There was a multitude of interesting […]
Trill Perpetuities, and dynamic inefficiency under uncertainty
A trill perpetuity is a bond, which promises to pay the owner a one trillionth share of nominal GDP (that's the "trill" bit), every year forever (that's the "perpetuity" bit). Trills, AFAIK, do not exist, though economists have thought about them. Perpetuities do exist (but are rare). Trill perpetuities do not exist. But they are […]
Things I think about and worry about but don’t blog about
I mean macroeconomic things, not just cars and canoeing and stuff. This is another "selection bias in blogging" post. Probably a more important selection bias than the one I talked about in my previous post. If you thought that my blog posts are about all the things in macroeconomics I think are important, you would […]
Strategy space and the theory of monetary policy Two
Industrial Organisation economists have known since 1883 that strategy space matters. To say the same thing another way, Industrial Organisation economists have believed in fairies ever since 1883, when a French mathematician proved the existence of fairies in oligopoly theory. Industrial Organisation economists, at least by stereotype, tend to be very practical down-to-earth people, quite […]
Strategy space and the theory of monetary policy One
In ECON 1000 we teach that a monopolist picks a point on his demand curve that maximises his profits. We can think of the monopolist as setting a price to hit that point, or we can think of the monopolist as setting a quantity to hit that point; and we teach that it doesn't make […]
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