Category Macro
Matt Yglesias, spilt milk, and the debt burden
I visit Matt Yglesias' house (HT JeffreyY). I drink one litre of milk from his fridge. I write Matt an IOU for one litre of milk. 1. If Matt subsequently tears up that IOU, then I am richer and he is poorer. Taking the two of us together, in aggregate we are neither richer nor […]
The 30 years non-war over the debt burden. Plus Samuelsonian NGDP bonds.
I thought we all had this debt burden stuff sorted out 30 years ago. Obviously we didn't. We should have had a bigger argument about it 30 years ago, which would have sorted it all out. But we didn't. Maybe because we spent all our time arguing about other stuff 30 years ago, and didn't […]
Debt is too a burden on our children (unless you believe in Ricardian Equivalence)
So, I was out there shovelling snow, thinking about writing a post on the burden of the debt on future generations. And about how macroeconomists' beliefs on this question had silently shifted about 30 years ago, and about how we as a profession have engaged in a sort of "memory falsification" (like Timur Kuran's concept […]
The Trade Cycle; why I=S is a bad place to start doing macro.
In the olden days, economists used to talk about the trade cycle. (They meant a cycle in the amount of all trade, not just international trade). They meant a cycle in the amount of exchange. There are fluctuations over time in the amount of buying and selling that people do. In a boom, trade speeds […]
Why Y? A disproof of Keynesian macroeconomics?
There's something really wrong with the way we do short run macroeconomics. We focus all our attention on the output of newly-produced goods and services. That's what we call "Y". We talk about Aggregate Demand and Aggregate Supply, and what we mean by AD and AS is the demand and supply of those same newly-produced […]
Bryan Caplan and Joseph Stiglitz
OK, I've said that Joseph Stiglitz gets Aggregate Demand wrong. It's only fair that I say that Bryan Caplan gets AD wrong too, for much the same reason. Where are you Mark, Paul, and Brad? Seriously, you're not allowed to do any posts criticising Bryan Caplan for this, until after you have said that Joe […]
The gizmo theory of the recession
I've just come up with a new theory of what caused the recent recession. There was a technological improvement in making gizmos. The productivity of gizmo producers increased, so the price of gizmos fell. The demand for gizmos is price-inelastic. So total revenue from gizmo production fell. So incomes from producing gizmos fell.
SRAS/SRPC; levels vs rates of change
Something's been puzzling me about the data for the last couple of years. (This post isn't very clear, sorry. I can't even get my head clear enough to explain clearly what's unclear to me.) There are two curves in short run macroeconomics: the AD curve, and the "other" curve. This post is not about the […]
What is a (Eurozone) “structural deficit”, again?
I don't have much to say about the latest EU "agreement" that hasn't already been said. To me, it looks just like the old "stability and growth pact" warmed over, and with a bunch of judges having to approve budgets. (Does this mean we are going to leave fiscal policy to the lawyers? Do they […]
Blue sky money two – money and not banking
Banking is a subset of finance. Money and finance go together. Money and banking go even more together. But they don't have to go together. Maybe they didn't ought to go together. Finance is unstable. Banking is even more unstable than the rest of finance. A bank makes promises it knows it might not be […]
Worthwhile Canadian Initiative 
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