Category Monetary policy
Second best monetary and fiscal policy and the strategy space
[This post covers too much ground and stretches my brain too far. I'm trying to put Lipsey-Lancaster and game theory together, and apply it to monetary-fiscal. I blame Brad DeLong for making me think about this.] Brad DeLong says: "But as long as Nick Rowe recognizes that fixing situations of depressed activity by simply printing […]
Land vs Helicopters
[This post is not as clear as I want it to be. Sorry.] Most discussions of long run secular stagnation, and short run liquidity traps, ignore land. They shouldn't. If a central bank runs out of other options to increase aggregate demand, it could always use helicopter money. Or it could buy land. Is it […]
Money, prices, and coordination failures
[This is very long, and covers a lot of old ground for me, as well as some new. It was supposed to be a belated reply to Brad DeLong's post. But my thoughts wandered. (By the way, for some reason I never remember being annoyed at Simon Wren-Lewis, even when I disagree with him; but […]
Why has the Bank of Canada “done nothing” for 4 years?
On the face of it, the Bank of Canada has done absolutely nothing for nearly 4 years now, and most people think it won't do anything until sometime next year. The target of the overnight rate has stayed at 1% for a very long time. This is very puzzling. I do not understand it. But […]
If new money is always paid as interest on old money
…will an increase in the rate of interest paid for holding money be deflationary (because it increases the demand for money), or inflationary (because it increases the growth rate in the supply of money)? This question crops up from time to time, in comments here and on other blogs, so I thought I would lay […]
The Quantity Theory and Neutrality of Money when money is endogenous
"If the central bank permanently doubles the stock of (base) money: all nominal variables will double [that's the Quantity Theory of Money]; all real variables will stay the same [that's the Neutrality of Money]." The Quantity Theory of Money and the Neutrality of Money go together. It is very hard to have one without the […]
When is helicopter money optimal?
Money is fungible. And things get lost in translation, especially between micro and macro. "Helicopter money" is when the central bank prints money, gives it to the government, and the government gives it to everyone, as a freebie. When is helicopter money optimal?
On not quite getting Lloyd Metzler
30 years ago, IIRC, my colleague Steve Ferris said I should read Lloyd Metzler's Wealth, Saving, and the Rate of Interest, because he thought it was a great paper. Yesterday Brad DeLong said the same thing. David Glasner also thinks it's a classic paper. When three very good but very different economists recommend a paper […]
The continuum from monetary to fiscal
Simon Wren-Lewis says (in response to right-deviationist David Beckworth): "Now this does not mean that Market Monetarists and New Keynesians suddenly agree about everything. A key difference is that for David this [fiscal policy at the ZLB] is an insurance against incompetence by the central bank, whereas Keynesians are as likely to view hitting the […]
Three growth stages of the New Keynesian model
This is very very crude. It's something off the top of my head scribbled on a scrap of paper as an outline for a first draft. But I will never go beyond that outline, because I wouldn't be any good at doing it. The history of the Old Keynesian model is very quick. You have […]
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