Category Nick Rowe
For David Andolfatto: why I switched from IT to NGDPLT
This post is for David, but it's mostly about me. I used to think that inflation targeting was probably roughly the best monetary policy to follow. Then, a couple of years ago, I began to think that NGDP level targeting was probably roughly the best monetary policy to follow. This post is about why I […]
How can you get an economy INTO a liquidity trap?
We spend a lot of time thinking about how to get out of a liquidity trap. Maybe we can think more clearly about that question if we instead ask the exact opposite question. But let's be a little more precise about our question: How can you get an economy into a liquidity trap in such […]
The two James Tobins
Not many people know this, but there were actually two James Tobins. The first James Tobin (pdf) said that there cannot be an excess supply of money, because if anyone did have an excess supply of money he would immediately run to the bank to get rid of it. The second James Tobin said that […]
Banks are special because the medium of exchange is special
If we used cows as media of exchange (if we bought and sold everything else in exchange for cows), would you say that dairy farming is a special industry that is macroeconomically important? I would. Because if we used cows as media of exchange, then what happened on dairy farms would affect the supply of […]
What Steve Keen is maybe trying to say
Or maybe not. But either way I'm going to say it. There's a fine line somewhere between: just fixing obvious typos in what someone actually said; and totally changing what they actually said. Or maybe there is no line, and it's just a continuous slope. Anyway, I'm going to cross that fine line here, and […]
Is money exogenous or endogenous?
Most macroeconomists will (correctly) see this as a boring post (though with maybe a small bite in the last paragraph?). But some might find it controversial. I'm just trying to state the usual view clearly. Is the weather exogenous or endogenous? Meteorologists try to explain/predict the weather, so by definition the weather will be endogenous […]
New Keynesians really need the Pigou effect
Because otherwise their models won't work. And yet the canonical versions of their models, which don't even have money, cannot have a Pigou effect. And so New Keynesians are guilty of the Old Keynesian accusation of "just assuming full employment". Here's why: In Old Keynesian models, if Aggregate Demand is too low, a cut in […]
David Laidler goes meta on “What would Milton have said?”
I tried to persuade David Laidler to join us in the econoblogosphere, especially given recent arguments about Milton Friedman. I have not yet succeeded, but David did say I could use these two paragraphs from his email: "However – re. the "what Milton would have said" debate – When I was just getting started in […]
Bob Murphy, George Orwell, me, and the meaning of inflation
I think (not 100% sure) that Bob Murphy accuses me (and Scott Sumner) of doing something sort of Orwellian. Dunno, but I don't think I am. (And BTW, I don't think Austrians are necessarily doing anything Orwellian with their way(s) of using the word "inflation", though maybe some of them are being a bit overly […]
Paul Krugman, Ricardian Equivalence, and the Pigou effect
If I produce a car, and sell it, and undertake no obligation to service that car (by changing the oil), and undertake no obligation to buy back that car, and if nobody can sue me if that car goes wrong, then that car I have produced and sold is not one of my liabilities. That's […]
Worthwhile Canadian Initiative 
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