Category Macro
Short vs long-run natural rates of interest
Just a quickie, because I'm (supposed to be) grading exams. I want to suggest a small change in Paul Krugman's two recent posts (here and here). One that would narrow the gap between his way of thinking and (say) Scott Sumner's. Desired saving and desired investment depend on a lot of things. One of the […]
Living in a demand-side world
I know what it's like to live in a demand-side world, because I used to live in one. Let me tell you about it. Maybe it's like the world you live in.
Two more random arguments for microfoundations
1. Because it helps us understand micro better too. For example, suppose we found that macroeconomic models worked a lot better if we assumed that firms were monopolistically competitive rather than perfectly competitive. Even if you were a microeconomist with no interest in macroeconomics, that tells you something useful. It's one more bit of evidence […]
Teaching inflation targeting with ISLM
In intermediate macroeconomics the ISLM model (and the Mundell-Fleming ISLMBP open economy version) is the main workhorse. But we also want to teach how the Bank of Canada (or whatever) targets inflation. This post is about how I use the ISLM to teach inflation targeting. It's a bit clunky, and I haven't got all the […]
Asymmetric Redeemability question: if the Fed pegged to the loonie?
One of the things I was a little disappointed about in the recent money and banking controversy was that nobody (IIRC) picked up on my (it's not original to me) point about asymmetric redeemability. The Bank of Montreal promises to redeem its (demand deposit) dollars for Bank of Canada dollars, while the Bank of Canada […]
Blue sky money three: boomerang money
This post meanders and doesn't really come to any clear conclusion. Read at your own risk. Imagine, just imagine, that every dollar I spent was attached to a very long rubber band; and sooner or later it would return to my wallet to buy something I wanted to sell. Or that every dollar I spent […]
Greece, barter, and the gap-cubed law of new exchange systems
In the past, I have argued for the theory that recessions are always and everywhere a monetary (medium of exchange) phenomenon. How to test that theory? Non-monetary exchange (barter) is usually very costly, so people use money instead. But in a recession, if my view of recessions is correct, the benefits of resorting to barter […]
Teaching Purchasing Power Parity
This is a simple post about how I have been teaching Purchasing Power Parity in ECON1000 for the last couple of years.
International finance with no international trade
Sometimes I like to make assumptions I know are totally false. Not (or not always) for simplicity, but just to see what happens. It helps me understand the world better. For example, sometimes I like to assume a barter economy; it helps me understand monetary exchange better to see what would happen if we didn't […]
Teaching SRAS shocks
I hate teaching Short Run Aggregate Supply shocks. 1. It's easy to teach them wrong. 2. I don't understand them very well. 3. I don't think anyone understands them very well.
Worthwhile Canadian Initiative 
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