Category Nick Rowe
Retirement and the non-smoothing of consumption of leisure
Most of us take a short break for coffee, a longer break for lunch, a longer break from late afternoon to the following morning, a longer break at weekends, a longer break for holidays, and then a very long break indeed when we get old. There are two questions: 1. Why do we bunch our […]
Fiscal Policy, and the macroeconomics of doing nothing, redux
I don't think Simon Wren-Lewis will find this an annoying argument against fiscal policy. I hope not anyway. Let's assume that New Keynesian macroeconomics is 100% correct. What role is there for fiscal policy?
The politics of NGDPLP targeting, redux
Back in November 2011, there was a part of the world that I didn't understand. The politics of monetary policy didn't make sense to me. Now the world is starting to make more sense. It's not that my understanding has changed. It's the world that has begun to change. Specifically, John Quiggin has come out […]
Robert Waldmann (and others) on Dean Baker (and hence Paul Krugman) and the burden of the debt on future generations
Robert Waldmann here. Bob Murphy here. Richard Williamson here. I've done my bit, and have failed. Robert Waldmann may succeed. If Robert Waldmann fails too, that would be very bad for the credibility of economics blogging.
Asking the right question about fiscal policy
If you can't get a good answer to a question, it might be because you are asking the wrong question. Good answers need good questions. Before 1975 (roughly), we used to ask questions like: "What is the effect of increasing the money supply today, when unemployment is bigger than normal?" After 1975, economists learned to […]
A very simple derivation of the balanced budget multiplier in a very monetarist model
This is mainly a brain-teaser. But I hope you find it useful, as well as fun. 1. Assume initially there is no government. So G=T=0, and Y=C+I. (You can add in net exports too if you want, or delete I if you want to make the model simpler still.) 2. Assume MV=P(C+I), where V is […]
Where (I think) Mike Woodford’s model of the multiplier is wrong
Paul Krugman asks a fair question. If anyone disagrees with what Mike Woodford says about the New Keynesian government expenditure multiplier, can they point to where exactly they disagree with Mike Woodford's model (pdf). I am going to do just that. I'm not 100% sure I'm right (we never should be). But I think Mike […]
Consumption smoothing and the Keynesian multiplier
This is the simple short version, but it covers quite a lot of ground. Nothing much new here. Maybe the bit towards the end is newish.
If S weren’t I
There is something very strange about a counterfactual conditional in which the counterfactual is logically impossible. There are no possible worlds in which something logically impossible happens, so we can't ask which of the possible worlds in that subset is most plausible. The subset is empty. "If saving were bigger than investment, what would happen […]
Macroeconomics and the Celestial Emporium of Benevolent Knowledge
This is what we teach, right at the very beginning of macro: 1. Macroeconomics is about GDP. 2. On the expenditure side, GDP is divided into Y=C+I+G+NX 3. On the income side, GDP is divided into Y=C+S+T Now read what Borges said on a closely related subject. We don't have to think of macroeconomics that […]
Worthwhile Canadian Initiative 
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