Category Nick Rowe
Tiered negative interest rates and required reserves
Tiered negative interest rates are just a mirror-image of required reserves with positive interest rates. Think back to the olden days. Interest rates were always positive, except for currency that paid 0% interest, and banks had minimum required reserves. So for a 10% required reserve ratio, for every $100 of demand deposits banks the banks […]
Under-investment in Public Clubs
I don't know if I'm re-inventing the wheel. I don't normally do this sort of micro, or any micro. Talking about "Public Club Investment goods" will sound oxymoronic to an economist. But the investment goods I'm talking about are a bit of both. They look like club goods from one angle, and look like public […]
Temporary vs permanent fiscal policy in a small open inflation targeting economy
Just a short note as a backgrounder for the current Canadian debate about fiscal policy. This is totally unoriginal boring textbook stuff (at least I hope it is, anyway). Prerequisite: intermediate macro (or special permission to skip to the results if you promise not to ask me daft questions about where they came from). The […]
Boy racers in Neo-Fisherian Equilibrium with upper and lower bounds
This is not just about monetary policy; this is about how we use the concept of "equilibrium". But it is also about Narayana Kocherlakota's recent note and working paper. There is a road from Ottawa to Toronto. There are 100 boy racers in Ottawa. The race starts at midnight. Each boy racer has a utility […]
Interest Rate Pegs with a Finite Horizon Omega Point
[I was trying to write a post on Narayana Kocherlakota's fascinating but difficult paper and post on closely-related topics, but I'm not quite ready yet, and I got distracted.] What I used to think. This is what I used to think about what would happen if the central bank tried to peg the nominal interest […]
The simple macroeconomics of monopsony power
If you loosen monetary policy in a standard macro model, you get an increase in output and employment in the short run, and an increase in the price level in the long run. That is not what happens if you assume monopsony power. The same loosening of monetary policy will cause a decrease of output […]
Don’t blame lack of cool new stuff for the slow recovery
I look in my garage and admire the lovely lines of my MX6. But it's a 21 year old car that I'm using for my daily driver, and I really should get a new car. But what sort of new car? Sometimes I look at the new MX5 and the Toyobaru twins, but……..no. Both are […]
Gross output and monetary disequilibrium
I learned a new macro fact yesterday, from Vincent Geloso. Macroeconomists should always be on the lookout for new facts that might help us discriminate between macro theories (since they won't let us do randomised experiments with hundreds of countries). Here's a (clearer) graph that Vincent tweeted this morning: It's US data. The red line […]
Tight money as binding output quota, and upward-sloping IS curves
Like all metaphors (and like all models), it works up to a point. Let's see how far it takes us. David Andolfatto has a lovely neat little model that he uses to engage my point that the IS curve may slope up — so tight monetary policy may cause the real interest rate to fall […]
Minimalism and recessions
There's a fine line between minimalism and unfurnished. I'm trying to find where that line is. [This is a heavily revised version of an old post.] Simplicity and minimalism tend to go together, but they are not the same thing. A simple model is one that is easy to understand. Which is a good enough […]
Worthwhile Canadian Initiative 
Recent Comments