Category Nick Rowe
The preponed government spending multiplier may exceed one
From very casual observation, I get the sense that a lot of extra government spending in the last couple of years was to build stuff that would have been built anyway. They just built it a bit earlier. It was preponed government spending. Am I right? Anyway, I'm going to assume I'm right, because it […]
Do Keynesians understand their own models?
If we lived in a world of barter exchange, or in a world where people could use barter exchange at minimal cost, Keynesian macroeconomics would make no sense whatsoever. That is not, of course, a criticism of Keynesian macroeconomics. We do live in a world where people use monetary exchange, not barter. And people (usually) […]
Are there any straight lines in economics? Roman and Anglo Saxon roads.
This post is meandering philosophical whimsy that goes nowhere. If you don't get off on that sort of thing, best stop reading now.
Ricardian Equivalence does not assume full employment
The Ricardian Equivalence Proposition asumes many, many things. But full employment equilibrium (however you define "full employment") is not one of those things it assumes. I disagree with Antonio Fatas (and others who believe the same).
Ricardian confusions squared
Hang on now, Paul, Mark, Progrowthliberal, and Antonio Fatas. Justin Yifu Lin (pdf) is basically right. He's making an important point. It's similar to one I made a couple of years back. Sure, a temporary increase in useless government expenditure, even under Ricardian Equivalence, will give a bang for the buck. But it's a totally […]
Cars, control, and cost-benefit analysis
I was watching a TV documentary on the history of engineering car safety. It talked about the really good inventions like better brakes, steering, suspension, and tires, that help the driver avoid an accident. And things like safety glass, crumple zones, seat belts and air-bags that help you survive an accident you don't avoid. Then […]
The conflicting claims theory of inflation, and unemployment
The conflicting claims theory of inflation goes like this. Suppose we start in equilibrium with 10 people in an economy each earning 10% of total income. Then all of a sudden each decides he deserves 11% of total income, and raises his price accordingly. The total claims add up to 110% of total income. In […]
Why New Keynesian macroeconomists are against labour unions
Like all New Keynesians, I believe two things that are apparently contradictory: 1. We each get paid too much; 2. Because of 1, we all get paid too little. It only makes sense if you understand fallacies of composition. What is true of each part isn't necessarily true of the whole.
Divine Coincidence Failure. UK lessons for the Bank of Canada
According to "divine coincidence", the monetary policy that is best for stabilising inflation is also best for stabilising real output. Divine coincidence seems to be holding up fairly well in Canada. But the recent UK experience is a case where divine coincidence has failed. The Bank of Canada's inflation target is up for renewal this […]
Tatonnement: in Walras, PSST, and monetary disequilibrium
Walrasian general equilibrium theory models the economy as a system of demand and supply equations. The quantities of goods traded, and the prices at which they are traded, are the solution to that system of equations. Who solves those equations? A fictional Walrasian auctioneer, who calls out prices at random, asks people their demands and […]
Worthwhile Canadian Initiative 
Recent Comments