Category Nick Rowe
Re-learning the New Keynesian IS curve
I want to return to a topic I struggled with in the past. I think I understand it better now. I understand it better because I watched the video of George Evans that Mark Thoma made and posted. What I understand better now is not so much the answer; it's the question I was trying […]
Arrow, Schelling, and the Fed
Does the Fed want to loosen monetary policy? If so, why doesn't it do it? There are two answers (or at least, two simple answers) to this question: 1. The Fed doesn't want to loosen monetary policy. 2. The Fed wants to loosen monetary policy, but thinks it can't. I'm trying to come up with […]
The Fed should buy pro-cyclical assets, not bonds
Suppose you believe that the US economy needs increased Aggregate Demand, and needs looser monetary policy to accomplish that, and needs asset purchases by the Fed to accomplish that. (I believe those things, but am not going to argue them here). What sort of assets should the Fed buy? I want to divide all assets […]
Taylor = Wicksell + Fisher + Friedman
Note to all genuine historians of economic thought: yes, I know. There's real history, then there's Whig history, and then there's this blog post.
The bond “bubble”, and why we should be worried about it
In one important sense, there is a "bubble" in US government bonds, and we should be worried about it.
What standard monetary theory says about the relation between nominal interest rates and inflation
This is what I understand "standard" monetary theory to say about the relation between inflation and nominal interest rates.
Why “everyone” should be forced to take Intro Economics
The reason is not what you are expecting. It's because maybe if he had been forced to take Intro Economics, the 12th President of the Federal Reserve Bank of Minneapolis, who holds a PhD in Economics from the University of Chicago, who is a specialist in money and macro, who has a CV that creams […]
Monetary policy as asset prices
As every economist knows, interest rates don't really exist. They are a mathematical construct derived from observed bond prices. Take a really simple example: suppose a bond (OK, a bill, if you want to be picky) promises to pay $100 one year from today. We observe that bond to be trading at a price of […]
Liquidity and the housing market Phillips Curve
I think it is a stylised fact of the housing market that, on average, houses sell quickly when house prices are rising, and sell slowly when house prices are falling. (I am talking about house prices rising or falling relative to trend). There is a negative correlation between the rate of change of house prices […]
Liquidity and used cars; liquidity as the slope of the round-trip curve
Conclusion: liquidity should not be measured by the cost of a round-trip from money into the asset and back to money. Instead, liquidity should be measured by the slope of the curve relating the cost of a round-trip against the time taken to make that round-trip. Liquidity has puzzled me for a long time. It's […]
Worthwhile Canadian Initiative 
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