Category Nick Rowe
The strong monetarist dark force of eventual macroeconomic self-equilibration
There must be some macroeconomic equilibrating force out there we don't know about. A dark force. It's sometimes slow to work, but it does work eventually. And whatever it is, it must make monetarism truer than it theoretically would otherwise be. A monetarist force. And whatever it is, it must be much stronger than a […]
“Is the macroeconomy self-equilibrating?” is a stupid question
"At the macroeconomic level, is the market economy self-equilibrating?" I used to think that was the most important and fundamental question in macroeconomics. Now I think it's a stupid question that doesn't make sense. So when I read Paul Krugman saying: "Think of it this way: Friedman was an avid free-market advocate, who insisted that […]
Redefining “inflation”: Austrians, NGDP targets, and my mother
Some Austrians (I can't remember which ones) define "inflation" as "a growing supply of base money". [Update: Jonathan Finegold gently corrects me.] This used to strike me, as it strikes most economists, as a bit daft. OK, I would think, you can define "inflation" that way if you want, but "rising prices" is what the […]
Is this a bank bailout by the CMHC? Quotas vs tariffs.
I learn from the CBC that the Canadian Mortgage and Housing Corporation has imposed a quota of $350 million per month per individual bank (or other lender) on the amount of mortgage-backed securities it will guarantee. Presumably the CMHC did this because the Federal government wanted to put a cap of $85 billion on the […]
The trade cycle: debt is trade
GDP is high in booms and low in recessions (relative to trend). That is (roughly) how we currently define "booms" and "recessions". GDP (roughly) measures the volume of trade in newly-produced final goods. But that is a narrow measure of trade. A lot of goods get traded that are not newly-produced. People buy and sell […]
The inflationistas are our friends; and inside and outside inflationistas
Noah Smith is doing something very wrong. The whole point of monetary policy at the ZLB is to create inflationistas. We need more inflationistas, not less, and so Noah should stop dumping on them, and saying their fears of inflation are groundless. For every inflationista destroyed by us laughing at their fears, central banks have […]
Money, bonds, and the price level
I want to try to answer Simon Wren-Lewis' good question. Let me first restate his question in my own words. (Always a good way to begin, to see if I've understood him properly.) Take a very simply model of an economy, in which a government issues a nominal stock of (high-powered) money M, and a […]
Money and the greater fool
[Update: this post wasn't as clear as I wanted it to be. Because my head wasn't as clear as I wanted it to be. Reading and responding to comments has helped me get clearer, I think. Let me try this: There are two reasons why people buy an asset: 1. Because owning the asset earns […]
Keynes’ question and the “Keynesian” answer
How did "fiscal policy" get to be the answer to a question about time and money? Sophisticated Keynesians will object if I treat "Keynesian" as synonymous with "having a predilection for fiscal policy". But I think they would recognise that the two are correlated. And that correlation is puzzling. The correlation seemed to disappear during […]
We should not teach the Keynesian Cross in Intro Macro
I have taught Intro Economics maybe 30 times in total. (I started very young). Forget about the A students, because there aren't many of them. (We don't all have massive grade inflation.) Think about the C students. And forget about the Economics majors, because other people will teach them after you. Think about the students […]
Worthwhile Canadian Initiative 
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