Category Nick Rowe
Collateral and the money supply
I sketch a simple model where a shortage of collateral reduces the money supply, and makes the Cash-In-Advance constraint binding in an otherwise New Keynesian model. This post is a followup on my previous post on "negative money".
Tiff Macklem, retail competition, flexible IT vs NGDPLT
Tiff Macklem is senior deputy governor at the Bank of Canada. On Friday, Tiff gave a speech on "Flexible Inflation Targeting and 'Good' and 'Bad' Disinflation". The Bank of Canada is not like the Fed; Tiff's speech reflects the Bank of Canada view. The picture below reflects what I think Tiff might be saying:
Negative money
There are two parallel worlds. Both worlds use bits of coloured paper as money, because barter is very difficult. The green world uses green paper as money, and the red world uses red paper as money. The green paper money has a positive value. The red paper money has a negative value.
Two interest rates, and one simple question.
Most simple macro models have just one (nominal) interest rate. I want to complicate it, just a little, by talking about two (nominal) interest rates: 1. There is the rate of interest you get paid if you hold money. Call it Rm. 2. There is the rate of interest you get paid if you lend […]
Separating real from nominal shocks
Nobody wants a monetary policy that creates nominal shocks. "Don't do random stuff with monetary policy for no reason at all!" is clearly sensible and uncontroversial advice. But finding a monetary policy that separates real shocks from nominal shocks, so that real shocks don't also create nominal shocks, is harder. But that is exactly the […]
Coloured sunspots and shells
This post is a sketch of a model of secular stagnation; and of bubbles that burst and get replaced by different bubbles. I don't formalise the model mathematically, because I don't have a comparative (or absolute) advantage at that sort of thing. But I think it could be formalised fairly easily. Start with a model […]
“Is the falling exchange rate good news or bad news?”
I was on CBC radio yesterday morning for about 5 minutes, talking about the exchange rate. From this experience, and from previous similar experiences, this is what reporters want to ask: "Who gains, and who loses, from the fall in the exchange rate? For Canada as a whole, is the fall in the exchange rate […]
One good thing about Bitcoin
Is that it is (sometimes) used as a medium of exchange but is not (yet) used as a medium of account. (Is that right?) Quite probably, someone else has already said this, but just in case they haven't:
Another weird monetary world
Imagine you lived in a world where the central bank issued two types of money: paper money; and electronic money. If you want to pay for something with the paper money, you have to physically transfer it. If you want to pay for something with the electronic money, you just need to tell the central […]
Is the macroeconomic importance of finance an artefact of current monetary policy?
Suppose the Bank of Canada pegged the price of gold. If an increased demand for gold caused a recession, would macroeconomists be told they needed to pay more attention to the theory of the demand for gold? Or would the Bank of Canada be told to change its policy? Suppose the Bank of Canada pegged […]
Worthwhile Canadian Initiative 
Recent Comments