Category Nick Rowe
Modern LM curves are vertical
Modern teaching of modern macroeconomics and modern monetary theory should reflect modern monetary policy — what modern central banks actually do nowadays. That means the modern LM curve is vertical.
Teaching Mundell Fleming
The Mundell Fleming model is usually taught in second year macroeconomics. It's the open economy version of the ISLM model. This post is me disagreeing with Simon Wren-Lewis about teaching open economy macro (in textbooks and in the classroom). It is not a disagreement about open economy macroeconomics. Simon says that the textbook Mundell Fleming […]
Exchange controls, barter, and Cunning Plans
It was sometime in the 1960's. My uncle was teaching in Bulgaria. He wanted to buy stuff in Britain, but wasn't allowed to take much money out of Bulgaria. My father was farming in Britain. He wanted to buy stuff in Bulgaria, but wasn't allowed to take much money out of Britain. My uncle and […]
Fiscal policy with Old and New Keynesian IS curves
With the Old Keyensian IS curve, the natural rate of interest is a positive function of the level of government expenditure. High G means high r*. With the New Keynesian IS curve, the natural rate of interest is a negative function of the rate of change of government expenditure over time. High Gdot means low […]
Deposit insurance, bank runs, international currencies, and the inflation tax
Just a short post on one point about the recent Cyprus business. (It looks like Cyprus will impose a "one-time tax" on bank deposits rather than honour its deposit insurance.)
Boys, retention, and multiple regression
A followup to my previous post on university retention and males. Assume boys and girls are identical, except: there's something in the water at high schools that causes boys to do worse than girls; and there's something in the water at universities that causes boys to do worse than girls. Suppose you had a data […]
Why don’t we have disinflation (until now)?
Just a quickie, between meetings. Paul Krugman asks "Why don't we have deflation?" His answer is: downward nominal wage rigidity. And he shows that graph of frequency distribution of nominal wage changes with a big spike at zero. I don't think that's quite the right question. So I don't think that's quite the right answer. […]
What is an “excess demand for money”?
I know what it means to say there is an excess demand for apples. And I know where to look to see whether there's an excess demand for apples. I go to the apple market, where people buy and sell apples for money. If I see that it is hard for people who want to […]
Draft notes for teaching Intro Money
I always suffer self-doubt when I teach the Money part of Intro Economics. Perhaps I'm over-thinking it, and it would be better for my students if I told myself to shut up, and just give them some simple clear story. But how to get it simple and clear, yet not horribly wrong or incomplete? I'm […]
Hot potatoes and hot yams
Money (the medium of exchange) is an asset. But the demand for money is different from the demand for any other asset. Here is an (inadequate) parable that tries to explain why it is different.
Worthwhile Canadian Initiative 
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