Category Monetary policy
Three goods means two markets, if one good is money.
Paul Krugman says: "I guess my question is, why can’t we walk and chew gum at the same time? I like to introduce the subject with IS-LM as a representation of three-market economics, then say look, in practice short-run policy involves setting an interest rate target and adjusting M to get there, so that’s how […]
It’s still ISLM to me
There are some policy-relevant substantive questions that are being ignored in the current futile blogosphere debate over ISLM. I'm coming back to that below. Brad De Long says it's tribalism. People want to show their tribal allegiance by using or not using ISLM. Or at least appearing to use or not use it. That may […]
Wicksell and the hot potato
There is no monetary hot potato in standard Keynesian and New Keynesian models. That is because those models make wildly implausible assumptions about people's knowledge. They assume people have perfect knowledge about how much money everybody else is borrowing from the banking system, and how much they are planning to spend from what they borrow.
Medieval Monetary Thought
In my final class lecture this week on ancient and medieval economic thought, I discussed the work of Nicholas Oresme (1320 to 1382), a French Roman Catholic bishop who was also a philosopher, mathematician and an economic thinker. I found it interesting to see a career link between mathematics and economics so early on. More […]
Bike banks
Bear with me on this one. I'm trying to get my head straight on money and banking, by thinking weird thoughts. Suppose, just suppose, that (for some unknown reason) the only asset that banks liked owning was bicycles. They refused to own any other sort of asset, except, of course, central bank currency and reserves […]
My answers to Steven Landsburg’s two questions
Steven Landsburg asks two questions, in two related blog posts. I'm going to give my answers, taking the two questions in reverse order.
Research Project for Economics Student(s)
I don't have a comparative advantage in doing this, so why not see if I can find someone who does? If you are interested in Canadian monetary policy, and have basic econometric skills, you should be able to do this. And the answer you come up with might be interesting.
The Lucasian map is not the Hayekian territory
In defence of Lucas '72. Take any macroeconomic model of a market economy with inefficient aggregate fluctuations. In fact, take any economic model where something bad might happen. Assume that model is literally true. The people in that model are idiots.
How to take apart the Eurozone, without sovereign “default”
1. Canada prints up 17 batches of banknotes. The first batch is called "New Drachmas"; the second batch is called "New Liras"; etc.; and holds them till D-day. 2. Canada prints up one batch of very good counterfeits of Euro banknotes, and holds them till D-day+365.
All money is helicopter money. Against the Law of Reflux.
Milton Friedman said (somewhere) that money is like a refrigerator. Both are consumer durables that yield a flow of services to their possessor. But in one important way that is a very bad analogy. Money is a medium of exchange, and refrigerators aren't. The stock of money, and the stock of refrigerators, are determined in […]
Worthwhile Canadian Initiative 
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