Category Monetary policy
Expectational Wicksell
I'm optimistic about US recovery. If I'm reading the signs right, the market is also optimistic about US recovery. But that's not what makes me optimistic. Again, if I'm reading the signs right, the market is more optimistic about US recovery than the Fed is. And the market believes it is more optimistic about US […]
Starbucks Bucks
What do you do when you're stuck in an airport with 15 pounds or 20 euros of local currency? It's not worth paying foreign exchange fees on such a small sum. It's not enough money to buy whisky at Heathrow. So I generally take it home and put it aside for the next journey – […]
Money, Barter, and Recalculation. A response to Arnold Kling.
Arnold Kling has a good "rant against monetarism", triggered by my saying "My position is that a general glut can *only* be caused by an excess demand for the medium of exchange." Arnold's response: "Most economists believe this, or something like it. I used to believe it, or something like it. I think that it […]
Money for nothing, or how the federal government can make an easy $1b
Angelo Melino points us to this page summarising Bank of Canada note liabilities, and notes that … the Bank of Canada has a lot of archaic notes outstanding. In addition to about $12M of notes issued by other entities that it took on as its own liabilities, there are a few small commemorative issues (for […]
If cows were money (a response to Brad DeLong)
If cows were money, an increased demand for milk would cause a recession. People would stop spending their cows to buy goods and services, because if you spend your cows you don't have as much milk. Was the recession caused by an excess demand for milk, or an excess demand for money?
Forecast the target, not the instrument
Should the Bank of Canada announce what it expects the future overnight rate to be? There are two good articles in the Financial Post: Pierre Siklos argues "yes"; Andrew Spence argues "no". There's more by both authors in this C.D. Howe backgrounder (pdf). I'm against it. I'm going to try to explain why I believe […]
Sovereign insolvency and illiquidity
If a country has a debt/GDP ratio of 100%, and is paying 9% interest, and nominal GDP is not rising, then it's got a solvency problem. It needs to run a budget surplus of 9% of GDP just to stop the debt/GDP ratio rising further. And that is very hard to do. But why would […]
Eurozone Adjustment Asymmetry
Adjustment to resolve asymmetries should be symmetric. Both sides should adjust. But sometimes it isn't symmetric. One side may choose to adjust; but the other side is forced to adjust. Like under the Gold Standard. So if the Eurozone does break apart to resolve the asymmetry: I think it will not be through Germany choosing […]
New Keynesian Macroeconomics, with and without barter.
[Update 4 December: after long arguments with Adam P., which finally started to bear fruit in the comments of December 4th, I'm now clearer on what's essential in this model about the difference between "monetary exchange" and "barter exchange". It's this: In monetary exchange, there is no restriction on what the seller can do with […]
Beyond Magneto Trouble
Paul Krugman and Brad DeLong have both written very good and very depressing posts. The economy had magneto trouble. We failed to prevent it; and we failed to fix it. Their posts are about why we failed to prevent it and why we failed to fix it. Suppose either of them are right in their […]
Worthwhile Canadian Initiative 
Recent Comments