Category Nick Rowe
Wicksell and the hot potato
There is no monetary hot potato in standard Keynesian and New Keynesian models. That is because those models make wildly implausible assumptions about people's knowledge. They assume people have perfect knowledge about how much money everybody else is borrowing from the banking system, and how much they are planning to spend from what they borrow.
Bike banks
Bear with me on this one. I'm trying to get my head straight on money and banking, by thinking weird thoughts. Suppose, just suppose, that (for some unknown reason) the only asset that banks liked owning was bicycles. They refused to own any other sort of asset, except, of course, central bank currency and reserves […]
My answers to Steven Landsburg’s two questions
Steven Landsburg asks two questions, in two related blog posts. I'm going to give my answers, taking the two questions in reverse order.
Research Project for Economics Student(s)
I don't have a comparative advantage in doing this, so why not see if I can find someone who does? If you are interested in Canadian monetary policy, and have basic econometric skills, you should be able to do this. And the answer you come up with might be interesting.
The Lucasian map is not the Hayekian territory
In defence of Lucas '72. Take any macroeconomic model of a market economy with inefficient aggregate fluctuations. In fact, take any economic model where something bad might happen. Assume that model is literally true. The people in that model are idiots.
How to take apart the Eurozone, without sovereign “default”
1. Canada prints up 17 batches of banknotes. The first batch is called "New Drachmas"; the second batch is called "New Liras"; etc.; and holds them till D-day. 2. Canada prints up one batch of very good counterfeits of Euro banknotes, and holds them till D-day+365.
Is and ought for the Eurozone
In a correctly specified economic model, the number of equations equals the number of unknowns, and the model tells you what will happen. If you think that the model is telling you something bad will happen, and you want something better to happen, you have to remove (at least) one of the equations, and replace […]
All money is helicopter money. Against the Law of Reflux.
Milton Friedman said (somewhere) that money is like a refrigerator. Both are consumer durables that yield a flow of services to their possessor. But in one important way that is a very bad analogy. Money is a medium of exchange, and refrigerators aren't. The stock of money, and the stock of refrigerators, are determined in […]
Where’s the put?
People used to talk about a Greenspan put. It was a put on stocks. Now there's a Bernanke put, but it's a put on bonds. More precisely, it's a put on US government bonds, not on all bonds. Greece doesn't have its own central bank, and there isn't much of a Trichet put on Greek […]
What’s wrong with New Keynesian macroeconomics — an MM perspective
There are many things right with New Keynesian macroeconomics. It is a very good synthesis of many strands in Monetarist, Keynesian, and New Classical macroeconomics. But this post is not about what's right with New Keynesian macroeconomics. There are also many things wrong with current New Keynesian macroeconomics. New Keynesian macroeconomists are aware of many […]
Worthwhile Canadian Initiative 
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