Category Teaching
Teaching comparative advantage: barter vs money (bleg)
When we teach comparative advantage in Intro Econ we assume barter exchange. We swap Canadian apples for US bananas. But the students, quite naturally, are thinking of monetary exchange. What happens if Canadian apples and bananas cost more dollars [to produce] than US apples and bananas? That's possible, isn't it? Wouldn't that mean [US prices […]
Teaching notes on banks and money
[This is aimed at intermediate-level students. It's "big picture" stuff, and doesn't go into all the institutional details. And it's already too long.] Banks are financial intermediaries that create money. Banks are special because money is special. If we used cows as money, then dairy farms would be special, because dairy farms would create money. […]
Thoughts on teaching “The Time Value of Money”
Strangely, because I've always been a macro/money guy, and have been teaching economics for 30+ years, I'm currently teaching the intermediate-level "Monetary and Financial Institutions" (aka "Money and Banking") course for the first time ever. (20 years ago I did teach a crash course in Finance to Marxist-trained Cubans, which was fun, and forced me […]
New Keynesians just assume full employment without even realising it
And anyone with even an ounce of Old Keynesian blood left in his veins, if they understood what the New Keynesians are doing, would be screaming blue murder that we are teaching this New Keynesian model to our students as the main macro model, and that central banks are using this model to set monetary […]
Old and New Keynesians and self-equilibration
As I have argued before: "Does the macroeconomy self-equilibrate?" is a stupid question, because the answer depends on the monetary policy being followed. Your answer also depends on your model of the economy. And that's what I want to look at here. "Compare and contrast Old Keynesian and New Keynesian views on whether the economy […]
Is money exogenous or endogenous?
Most macroeconomists will (correctly) see this as a boring post (though with maybe a small bite in the last paragraph?). But some might find it controversial. I'm just trying to state the usual view clearly. Is the weather exogenous or endogenous? Meteorologists try to explain/predict the weather, so by definition the weather will be endogenous […]
Is this a bank bailout by the CMHC? Quotas vs tariffs.
I learn from the CBC that the Canadian Mortgage and Housing Corporation has imposed a quota of $350 million per month per individual bank (or other lender) on the amount of mortgage-backed securities it will guarantee. Presumably the CMHC did this because the Federal government wanted to put a cap of $85 billion on the […]
Do use Wikipedia as a reference
I wish professors would stop saying to students "Do not use Wikipedia as a reference." What the professor means is "Do not read Wikipedia. Do not take ideas from Wikipedia. Instead, consult scholarly journals, books, government documents, and other serious, credible, high quality sources." What students hear is "Don't put Wikipedia down in the list of references […]
We should not teach the Keynesian Cross in Intro Macro
I have taught Intro Economics maybe 30 times in total. (I started very young). Forget about the A students, because there aren't many of them. (We don't all have massive grade inflation.) Think about the C students. And forget about the Economics majors, because other people will teach them after you. Think about the students […]
New Keynesian countercyclical fiscal policy isn’t what you probably think it is
If it weren't for the Zero Lower Bound on nominal interest rates, there would be no macroeconomic role for fiscal policy in New Keynesian models. Monetary policy alone could and therefore should be used to hit the macroeconomic target, because this leaves fiscal policy free to try to hit its many microeconomic targets as best […]
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