Category Macro
Monetarism: the hegemony that need not speak its name
Fish don't feel the water they swim in. (I've heard that's false, but it's too good to check). Paul Krugman does not feel the Monetarist hegemony he swims in. The only part of Monetarism that he does feel, and that he now identifies with Monetarism, is that one small part of Monetarism that failed to […]
Can the EU survive?
Just for once, this is not a question best left to the Poli Sci. Because the main forces will be money/macro. For nearly two years now, I've been worried that one or more of the Eurozone countries might do an Argentina. I've been asking whether the Eurozone could survive. I think it's time to change […]
Plastic and glass
It seems the Eurozone troubles are heating up again. Debt is like glass. If you hit it with a small shock it stays rigid. But if you hit it with a big shock it breaks. Equity is like plastic. If you hit it with a shock it bends. The bigger the shock the more it […]
Some thoughts on the Gauti Eggertsson & Paul Krugman paper
It's an interesting paper (pdf). It's a very standard New Keynesian macro model with one twist. It's a twist worth doing. There are two types of people: the impatient, who borrow from; the patient. And there's an exogenous limit to the debt the impatient are allowed to accumulate. It's a math model, of course. I'm […]
Four questions for the Bank of Canada
Three of those questions are questions the Bank of Canada is asking itself (and anyone else who cares to listen). I want to add a fourth. The Bank held a workshop yesterday. Stephen and I attended, along with a few dozen other Canadian economists. It was about the Bank's inflation targeting framework, which comes up […]
Excess supply and monopolistic competition, once again
Why do firms so often seem to produce too much, or price too high, and have to sell off the excess at a reduced price? You are a baker. You get up early and bake a batch of fresh bread. You set the price for the day. You aren't sure how much bread will be […]
Bad Irish banks and the Tragedy of the Commons
This analogy can't be original. But I don't remember hearing it before (though that doesn't mean much). I was reading Morgan Kelly (H/T Tyler Cowen) on Irish banks. And I was also thinking about my next lecture in ECON1000, on common resources. Then it struck me. They are the same. Banks are a common pool […]
Daylight Savings Time and the non-neutrality of money
I've heard stories about people who set their watches 10 minutes fast, so they won't be late for meetings. It's hard to understand how it could work. Do they forget they set their watches 10 minutes fast? Because if they remember, they should be able to figure out they've got an extra 10 minutes, so […]
Don’t forget Tobin’s q, Mr Bernanke!
It bugs me when people forget Tobin’s q. It’s not as though James Tobin was some sort of wild-eyed fringe monetarist. He was a very mainstream Keynesian economist. Ben Bernanke missed an opportunity to invoke the effect of stock prices on Tobin’s q and hence on investment as part of his explanation of why loosening […]
What (I think) Paul Krugman was saying
Paul Krugman is a very good communicator. I try to emulate him. But I think he blew it on this post. Everybody has an off-day. No big deal. And it wasn't a simple thing to talk about anyway. This is what I think he was saying. This is my attempt to say it more clearly.
Worthwhile Canadian Initiative 
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