Category Nick Rowe
Dumb questions about econometrics and GAI/NIT
I've been meaning to write this post for some time. Scott Sumner's post spurs me to write it now. First let me ask my dumb econometrics question. It's a very simple question, and I really ought to know the answer. But I don't. Q1. If you estimate a linear regression, using Least Squares or whatever, […]
Retirement, saving, and the rate of interest
I want to sketch out a very simple model of the effect of retirement on saving and on the rate of interest. Because I think that saving for retirement is the biggest motive for saving, and that the increase in the length of time people are retired is having a big effect on the rate […]
The Bank of Canada vs the bond market
Carolyn Wilkins, Senior Deputy Governor at the Bank of Canada, gave a speech yesterday at noon. She said that the Bank of Canada had lowered its estimate of the (cyclically-adjusted) neutral rate of interest. "All told, we think that the neutral rate of interest is lower than it was in the years leading up to […]
Inventories of goods and money (I=S again)
Think waaaay back, to the Keynesian Cross model of the traditional first-year textbook: 1. Desired expenditure Yd is an increasing function of income (aka production) Y. So Yd = a + bY where a > 0 and 0 < b < 1 2. In equilibrium, Yd = Y What is the process that brings the […]
How scared of deflation were you, in 2008?
In normal times, like today, or 2004, my subjective probability distribution for the average annual inflation rate over the next 5 years looks something like this: The Bank of Canada tries to keep inflation between 1% and 3%, and targets the 2% midpoint of that range. In any one year, inflation will rarely fall below […]
The orthodox New Keynesian position on liquidity preference and loanable funds
I am not an orthodox New Keynesian macroeconomist (ONKM), but I can pretend to be one. Q: What determines the rate of interest? ONKM: "The central bank sets the rate of interest." Discussion: the above answer is a pure liquidity preference theory of the rate of interest. By having a perfectly elastic money supply curve, […]
Open borders for land too?
[I am trying to explain what I think is a conceptual confusion by the "Open Borders" people. Unfortunately, my brain isn't very clear either.] Land can't move, of course. But borders can. We can't move land across the borders, but we can move borders across the land. So if half the people in country B […]
What’s special about monetary coordination failures?
This is a response to Brad DeLong's and David Glasner's good posts. They are good posts because they forced me to think. This is what I think. [I really ought to spend more time on this post, but I am a little snowed under with committee work at present. Sorry.]
Fractional reserves, capital, communism, and the optimum quantity of money
Just trying to get my head clearer on some related stuff. I have a weird thought-experiment, that I think helps us understand fractional reserve banking better. Even though, paradoxically, there are no commercial banks in my thought-experiment. There is just One Big Bank, owned and controlled by the government, that issues the only form of […]
Suppose that printing money were irreversible
Suppose, just suppose, that you believed that printing money was irreversible, or just very hard to reverse. So central banks could increase the supply of base money by printing money, but could not (or could not easily) reduce the supply of base money again by burning money. And suppose you knew that central banks had […]
Worthwhile Canadian Initiative 
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