Category Nick Rowe
Are all Eurozone GDP data “fake”?
The title is more inflammatory than I want it to be, but I can't think of a simple way to ask the question properly. And it is a genuine question, because I don't know how they construct GDP data for Eurozone countries. And I know there's no chance I will be able to figure out […]
Proxies for monetary disequilibrium
Perhaps we should think about monetary policy this way. If all prices were perfectly flexible, monetary policy wouldn't matter much. Monetary policy matters because not all prices are perfectly flexible, which means that bad monetary policy causes monetary disequilibrium, which is what happens when prices want to change but don't change. Recessions and booms are […]
Individual and aggregate, marginal and total, incentives to cut prices in a recession
The purpose of this post is to lay out the intuition behind my discussion/argument with Steve Randy Waldman. (I'm not sure whether this post will help or hinder my discussion with Steve. But students of New Keynesian macro might find it useful regardless.) We need to distinguish between the individual and aggregate incentives of cutting […]
Coordination problems and discontinuities
Just a quickie. This is for Steve Randy Waldman, who says "Downward price stickiness is a coordination problem, plain and simple." It is a coordination problem (I think), but it's a bit more than just a coordination problem. There must be something else too, like a discontinuity, or something, to get that coordination problem. Let […]
WTF!? Neo Fisherianism as one social construction of reality
Macroeconomists need to pay more attention to finance sociology. Choke. Languages have multiple equilibria. If we all used the word "cat" to mean dog, then "cat" would mean dog. And if I walked into a pet store and said "I want to buy a cat", the people in the pet store would react differently to […]
Understanding Schmidt and Woodford on Neo-Fisherianism
I think this is roughly what is going on in their model (pdf). I'm not 100% sure I'm right. And I'm not even trying to be 100% right. I'm trying to get the intuition (reverse-engineer) for those bits of their results I find most interesting. Suppose you are really bad at algebra. You can't solve […]
Privately-issued preloaded Drachma cards?
Forget monetary theory for a minute, and think only about the technical/engineering stuff: is Andrew Lainton basically right about this? Can something like this be done quickly and cheaply, without too much danger of counterfeit and fraud? (I don't know, which is why I'm asking.) If you introduce a new money, you want to do […]
Alpha, Beta, ECB independence, and Omega lender of last resort
There is a tension between central bank independence and acting as lender of last resort. We need to recognise that tension. The Bank of Canada prints its dollars on paper plastic. The Bank of Montreal prints its dollars on silicon(?). But both print dollars. BoC dollars and BMO dollars have a fixed exchange rate of […]
Euro MOA+MOE plus Drachma MOE
Suppose your country (call it "Greece") is in recession, because there is an excess demand for money (call it "Euros"). And suppose that the Euro is both Medium of Account (prices are quoted in Euros) and Medium of Exchange (all other goods are bought and sold for Euros). Now suppose your government introduces a new […]
It’s the (absence of) trust, Simon
Simon Wren-Lewis ruins (for me) what would otherwise be a very good sensible keynesian post about Greece ("sensible keynesian" is a school of thought, to which Simon belongs) by leaving out trust. Or, if you want to be techie about it, the "time-consistency problem". If you give me one apple today, and I give you […]
Worthwhile Canadian Initiative 
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