Category Nick Rowe
Soldiers of Fortune goes to Hollywood
There are six identical men, who must choose one of them to do an unpleasant job. They could hold an auction and pay one of them to volunteer to do the job. But if they have diminishing marginal utility of consumption, they will prefer instead to roll a die to decide which one of them […]
The Devil You Know vs The Market For Lemons
I told my friend Mike I was thinking of trading my car in for one that used less gas. Nowadays I would talk about the Market for Lemons as a reason against doing what I was thinking of doing. But in 1974 I didn't know about Akerlof's famous paper, and neither did Mike, who was […]
Two Ways Central Banks can do Monetary Policy even if Bitcoin totally replaces Dollars as Medium of Exchange
Just a quickie, in response to Benjamin Vitaris' article about Warren E. Weber's Bank of Canada Working Paper (pdf) (HT Tony Yates on Twitter). [Update: and read Tony's post, on commercial banks and lender of last resort, as a complement to this post.] Suppose that Bitcoin totally replaces the Canadian Dollar (and every other currency) […]
Central Bank Communication and the Term Structure
It's a choice between being surprised by immediate small changes, and being surprised by warnings of much bigger future changes. A simple and maybe obvious point. I don't know if it's been made before; if not, it should have been. The Bank of Canada has eight Fixed Announcements Dates per year. At each FAD it […]
Migration, Wages, and Corner Solutions
I'm trying to get my head straight on something. Macro farmboy lost in Urban Economics again. Read at your own risk. If immigration always increases real wages (or well-being), do we end up in a "corner solution", where everyone bunches together in one location leaving other locations empty? If so, that's a reductio ad absurdam, […]
The exchange rate and net exports “contribution” to growth
This post is about national income accounting, and its dangers. Reading Simon Wren-Lewis' post about Brexit and real wages made me finally decide to try to get my head clear about something I've been meaning to get it clear about for some time. I think Simon might be wrong about something (I'm not sure though, […]
Thinking about Costs and Benefits of Immigration
I find this a useful way to organise my thoughts about the costs and benefits of immigration. It may work for you too. I start out with a neutral benchmark, where immigration has neither costs nor benefits for the original population. Then I think of different ways in which that neutral benchmark could be wrong. […]
Upward-sloping Demand curves for Labour and Housing
I have a simple thought-experiment ("model") that helps me think about the relationship between: migration; planning restrictions; wages; and house prices (or rents). Assume all workers are identical, all houses are identical, and it's strictly one worker lives in one house. The government of a small city/state controls both immigration and the number of houses […]
Hysteresis vs Full Recovery by creating a Boom?
Simon Wren-Lewis has an important post. Read it first. If he's right then what looks like hysteresis from the recession is due to deficient Aggregate Demand. But is he right? This post is my attempt to figure it out. I want to start with a very simple model with no hysteresis — where recessions have […]
Monetary Policy for a central bank with no balance sheet
How a central bank can do things with words. Imagine a central bank with no assets and no liabilities. It does not issue money. It does not buy or sell anything. It does not regulate the commercial banks. The only thing it controls is one word in the dictionary. Every morning it edits the dictionary, […]
Worthwhile Canadian Initiative 
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