Category Monetary policy
Stag Hunt and macroeconomics
A coordination failure is when rational individual behaviour leads to a bad outcome. Some other outcome would be preferred by all. Keynesians especially emphasise coordination failures, though nearly all macroeconomists say that coordination failures sometimes happen, and say the US economy is in one right now. That makes us optimists. Maybe this isn't the best […]
The Bank of Canada and the Fed: rules vs. discretion
I just can't get interested in the Bank of Canada right now. I can only think about the Fed. The Bank of Canada is just too boring. Which it should be.
Breakfast at Richard’s
This post was written by Simon van Norden of HEC-Montréal. A few weeks ago I blogged about the views of Richard Fisher, President of the Federal Reserve Bank of Dallas and self-described "inflation hawk." Mr. Fisher is an important man; among other things he was a voting member of the FOMC in 2008 and will […]
Time-shifting planned demand vs. permanently increasing actual demand
Most policies aimed at increasing demand merely time-shift planned demand. Does that mean they don't really work? Does it mean we get recovery now at the expense of an even bigger recession later? Do we just have to cross our fingers and hope that something else eventually comes along to increase demand in future? A […]
Re-learning the New Keynesian IS curve
I want to return to a topic I struggled with in the past. I think I understand it better now. I understand it better because I watched the video of George Evans that Mark Thoma made and posted. What I understand better now is not so much the answer; it's the question I was trying […]
Arrow, Schelling, and the Fed
Does the Fed want to loosen monetary policy? If so, why doesn't it do it? There are two answers (or at least, two simple answers) to this question: 1. The Fed doesn't want to loosen monetary policy. 2. The Fed wants to loosen monetary policy, but thinks it can't. I'm trying to come up with […]
The Fed should buy pro-cyclical assets, not bonds
Suppose you believe that the US economy needs increased Aggregate Demand, and needs looser monetary policy to accomplish that, and needs asset purchases by the Fed to accomplish that. (I believe those things, but am not going to argue them here). What sort of assets should the Fed buy? I want to divide all assets […]
Taylor = Wicksell + Fisher + Friedman
Note to all genuine historians of economic thought: yes, I know. There's real history, then there's Whig history, and then there's this blog post.
The bond “bubble”, and why we should be worried about it
In one important sense, there is a "bubble" in US government bonds, and we should be worried about it.
What standard monetary theory says about the relation between nominal interest rates and inflation
This is what I understand "standard" monetary theory to say about the relation between inflation and nominal interest rates.
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