Category Nick Rowe
Bicycle Disequilibrium Theory
Suppose you need a bicycle to get to work. Suppose bicycles are a common property resource, because bike locks don't work. Every night the workers deposit their bicycles in the bike bank, and in the morning it's first come first served. And suppose that sometimes there aren't enough bicycles to go around. So sometimes the […]
The Meaning of Life, Labour Supply, and all that
Here are the results of my Twitter poll: This post is my interpretation of those results. I recognise all the usual caveats. I am more concerned about bias in the sampling method than in the small size of the sample (because it's not that small). The people who follow me on Twitter (or who follow […]
The 1 vs 3 Model of Quick Recessions vs Slow Recoveries
Business cycles are not symmetric; if you flipped the time-series data upside-down the fluctuations would look different. Recessions are usually quick; recoveries are usually slow. And Milton Friedman's "Plucking Model" seems to fit the data: big falls in economic activity are usually followed by big increases; but big increases are not usually followed by big […]
The Blind Target Shooter
This is an attempt by someone who is not very good at math to understand the alleged "indeterminacy problem" of central banks using market signals of expected inflation to help them target inflation (or whatever). [I used to do rifle shooting at school. "If you can't group you can't shoot". But if you could group, […]
A well-deserved tribute to Nick Rowe
As you may know, Nick has retired from teaching. His career as a teacher and blogger has earned him this very nice tribute in the pages of The Economist: Learning macro is a source of anxiety for many students. Teaching it can give their professors the jitters, too. The subject is notoriously difficult to explain […]
Micro Profs teaching Intro Macro
My crappy little Twitter poll isn't conclusive of course, but it mostly agrees with my priors based on anecdotal evidence, so I think it's probably mostly right. I think this points to a problem, in two senses: Finding profs willing and able to teach Intro well is not easy. It's low status (and economists dumping […]
Hydraulic Monetarism
There are two ways to increase your stock of money: 1. increase the flow in; 2. reduce the flow out. There is only one way to increase your stock of any other asset: 1. increase the flow in. (Unless you are a producer of that other asset. Or unless you are a dealer in that […]
The Parable of the Fruit Trees
The apple producer produces apples. The banana producer produces bananas. The cherry producer produces cherries. Every year they always work exactly the same number of hours and produce exactly the same quantity of fruit. If you define "recessions" as a decline in output and employment, there cannot be a recession in this economy. By assumption. […]
A very simple model of too much city
100 identical individuals choose to live in one of two identical locations. The only thing they care about is how many people live in the same location. Let W individuals choose to live in the West, so 100-W choose to live in the East. The Utility of living in the West is U(W), and the […]
“Trickle Down”, “Magic Dirt”, memes and deep parameters
"Trickle Down Theory" is a meme used (mostly by non-economists) to ridicule certain economic policies and the theories on which those policies are supposedly based. My first year students sometimes ask me to explain it to them, not understanding that it's a meme and not a theory. "Magic Dirt Theory" is a similar meme, of […]
Worthwhile Canadian Initiative 
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