Category Nick Rowe
Keynes just left Canada
Paul Kugman's post title is "Keynes comes to Canada". Paul is wrong. Keynes was in Canada, but he just left. Look at this graph from Matthew Klein (a very good article, by the way): The other bit of information you need to know is that the Bank of Canada hit the Zero Lower Bound in […]
Negative interest vacuum-cleaner Gesellian money for broke central banks
[I can't decide whether this thought-experiment has any policy relevance. I hope not, but who knows what the future will bring? It came to my mind after reading a (more policy-relevant) post by Simon Wren-Lewis.] 1. Helicopter money is when the central bank prints money and puts it in people's pockets. Vacuum-cleaner money is the […]
Two types of liquidity “shortage”
If I said that the recent recession was caused by a shortage of liquidity, most people would say I was mad. "Look how easy it is to get a loan, at such low interest rates!" In hyperinflations, the price of liquidity is extremely high. If the price level is doubling daily, then currency pays a […]
Fiscal offset of silly QE
This is (primarily) for Brits. 1. Suppose I normally buy 10 apples at $1 each. Then the government taxes me $3, buys 3 apples, and gives me those 3 apples. I will now buy 7 apples instead of 10. The net result on my consumption of apples, and everything else, is zero. The only difference […]
The equivalence between national debt and transferable monopoly rights
I got this idea from reading a Matt Rognlie comment on a previous post. (But Matt may or may not agree with what I say here). A. Suppose the government sells bonds, and finances those bonds by imposing a 10% sales tax on (say) milk. B. Suppose the government sells transferable milk quotas, and sells […]
Inflation in Lake Wobegone
In Lake Wobegone there are 1+n firms. The first firm raises or lowers its price by a mean-zero random amount, e. The remaining n identical firms wait to see what the first firm has done, then raise their prices by B times the average expected inflation rate, or lower their prices by B times the […]
Could increasing monopoly power explain declining interest rates?
Suppose that monopoly power (as measured by the markup of price over marginal cost) has been increasing over time. What effect would that increase in monopoly power have on the equilibrium (real) rate of interest? TL:DR the sign is right, but the magnitude looks far too small.
Dumb questions about predictability of stock market returns
Something I always wondered about, but was too scared to ask. Noah Smith's (quite reasonable) post nudges me into asking it. Even if everyone is perfectly rational, where is it written that stock market returns cannot be predictable? The stock market rate of return is a rate of interest. Where is it written that changes in […]
Spare Parts, and The Use of Knowledge in Society
Random musings from a small sample on a subject about which I know little. Where did I read that military amateurs talk strategy, but military professionals talk logistics? Or that if they did a re-make of The Graduate, the one word career advice would be changed from "plastics" to "logistics"?
The (near) inevitability, and who and when, of Helicopter Money
Helicopter Money is (almost) inevitable. The only questions are: who does it; and when do they do it. And we can't (easily) tell when it gets spent, and what it gets spent on, because money is fungible and we don't observe counterfactual conditionals. Let's make some ballpark-correct assumptions. Assume currency pays 0% interest, and the […]
Worthwhile Canadian Initiative 
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