Category Nick Rowe
Are ideas really non-rival?
I was writing a simple teaching post, on ideas and increasing returns to scale, in micro and macro. I wrote down "Ideas are non-rival". Then I thought I had better explain what I meant by that. Then I thought about professors, who do research (thinking up new ideas), and teaching (communicating existing ideas to other […]
Mathiness and Growth theory
Paul Romer says: "No model can have a competitive equilibrium with price-taking behavior and partially excludable nonrival goods. If you are not an economist, this would be a model in which someone who has a monopoly on an idea can charge for its use, but somehow is unable to influence the price that users have […]
Another tiny money/macro model for microeconomists
With monetary exchange, and both recessions and booms. This one is based on Nick Edmond's model. You can think of it as a cross between my previous model and what Paul Krugman calls "The World's Smallest Macro Model" (pdf). This model really does work in a 3D Edgeworth Box. (I messed it up a bit […]
I need a 3D symmetric Edgeworth box to explain money/macro
The new world's simplest money/macro model? OK microeconomists, here's some money/macro for you. I want a very simple model. The model will be extremely unrealistic. It won't look anything like the real world. But it will help me explain one very important fact about the real world. It will be a model of a pure […]
Back propagation induction does not work under inflation targeting
Suppose you lived in a world where, whenever the price level fell/rose by 1%, the central bank responded by decreasing/increasing the base money stock by the same 1%. A world like that would not have a long-run Omega point, from which some present equilibrium can be pinned down by back propagation induction. That's the sort […]
Econometric estimates of fiscal policy multipliers
New Keynesian macroeconomics says that a (temporary) increase in government spending will cause an increase in the natural real interest rate. And unless the central bank increases the actual real interest rate by an equal amount, the result will be an increase in Aggregate Demand, which will cause an increase in real output and/or inflation. […]
Fiscal Policy, the Eurozone, and Ontario under Bob Rae
This post is mostly questions, not answers. I am hoping the commenters will write this post for me. Because I don't have a comparative advantage at this sort of thing. [BTW, JP Koning has an excellent post, much better than this, drawing a parallel between Greece's proposed and Alberta's 1936 parallel currency.]
What the non-lunatic right believes about macroeconomic policy
[Well, I like to think I'm a non-lunatic, when I'm having a good day. But I might be speaking only for myself.] Brad DeLong (a card-carrying member of the non-lunatic left) says: "The non-lunatic right holds that market economies are indeed macroeconomically unstable but they can be balanced by minimal interventions in aggregate variables: that […]
Fiscal shocks as relative demand shocks
Take a macro model of an economy with two different goods being produced; call them Carrots and Grapes (there can be many different varieties of carrots, and many different varieties of grapes, if you like). Suppose the demand for grapes falls, because of a change in preferences. Will there be an equal and offsetting increase […]
Why can’t central banks monetise something else?
Other than government bonds? That's a rhetorical question. They can. David Andolfatto has gone over to the Dark Side, and all the lefty keynesians are celebrating their new convert to Big Government Deficits. (Tongue in cheek warning.) Not so fast. David imagines a world where the demand for (central bank money + government debt) is […]
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