Category Macro
General Gluts, Secular Stagnation and the World Economy
The head of the International Monetary Fund warned today on her visit to Beijing that the global economy faces the risk of a "lost decade" with little or no growth and that without action, the world faces worsening financial instability and a possible collapse of demand. This news item also coincided with my morning lecture […]
What’s the best shape for the AD curve?
Economists usually talk as if the slope of the Aggregate Demand curve were a positive question: what is the slope of the AD curve? I think it's best to treat it as a normative question: what slope of the AD curve ought the central bank choose? That leads us to a simple way to think […]
Existentialism and the non-neutrality of money language
OK, this post is a little on the whimsical side. The argument is a lot less strong and clear than I would like it to be. But sometimes you just have to say what's in your head, and hope that will help it get clearer. Read at your own risk (as if that needed saying). […]
IT vs PLPT vs NGDPLPT for the Bank of Canada
The Bank of Canada's 2% inflation target comes up for renewal every five years, and it's up for renewal now. To my mind, there are only three serious candidates: IT. Inflation Target. Keep the existing 2% Inflation Target (with maybe minor amendments). PLPT. Price Level Path Target. Like inflation targeting, and with the same 2% […]
Greg Ip on NGDP targeting
Greg Ip (once one of our Carleton students, I'm proud to say) is not opposed to NGDP level path targeting. But he is not very enthusiastic about how well it would work. Greg starts with a US anecdote, about a businessman who told Paul Volcker that he didn't think Volcker would succeed in driving inflation […]
Paul Krugman and inflation pessimism
Paul Krugman believes (I'm pretty sure) that the IS curve slopes down. Getting the US economy to a higher equilibrium level of output and employment through monetary policy alone means a real interest rate that is lower than it is now. And since the nominal interest rate can't fall any lower, the only way to […]
Negative natural rates of interest and NGDP targets
My colleague and co-blogger Frances Woolley doesn't do macroeconomics and monetary theory. It's not her cup of tea at all. But when I started to write a response to Steve Waldman's very good post on NGDP targeting, I found myself writing about Frances' also very good post on demographics and saving for retirement. Steve: meet […]
The Fed’s Dark Age communications strategy
One sentence in Fed vice-chair Janet Yellen's speech caught my eye: "Indeed, I believe that the Federal Reserve qualifies as one of the most transparent central banks in the world." That is total bullshit. The Fed is one of the least transparent central banks in the world. Ironically, in the excellent paragraph immediately following her […]
All Chuck Norris really needs is stamina
This is my fourth and last Chuck Norris post. I'm getting bored with the metaphor too. But there is something many people missed in my last posts. It's important. Andy Harless explains it in his post. I'm going to explain it my way. Suppose Chuck Norris keeps on fighting for an NGDP level path target […]
Isn’t Chuck Norris American?
He doesn't need to apply for a Green Card to do the same work in the US that he's been doing outside the US. Why can't he work in the US too? The US and Japan do not have inflation targeting central banks. Nobody knows what they are targeting, because they don't say. Canada, Sweden, […]
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