Category Teaching
Project Link: Piecing together recent Canadian economic history
I've already ranted a couple of times – here and here – about Statistics Canada's 'Attention Deficit Disorder': its habit of starting new time series using new methodologies without updating the historical data. As I put it in my first rant, Statistics Canada must be the only statistical agency in the world where the average […]
The Brexit-News Boom?
Start with a bog-standard second-year textbook Mundell-Fleming ISLMBP model. Start in equilibrium at Y*, then hit it with a negative shock to Net eXports. The IS curve shifts left initially, at the previous equilibrium exchange rate. But the central bank is sensible, and allows the exchange rate to depreciate sufficiently to shift the IS curve […]
Cheshire Cats and New Keynesian Central Banks
How can the Cheshire Cat disappear, but its smile remain? How can money disappear from a New Keynesian model, but the Central Bank still set a nominal rate of interest and create a recession by setting it too high? Ignore what New Keynesians say about their own New Keynesian models and listen to me instead. […]
Some Simple Basic Money, for Finance People
Finance people are good people. Economics needs finance people. Some of my best friends are finance people. But (you heard that "but" coming), finance people (though there are of course honourable exceptions) just don't seem to get money. I can hear the reply now: "Yeah, and money people don't get finance either!". And I think […]
On Olivier Blanchard on ISLM and Teaching Intermediate Macro. And my despair.
I read Olivier Blanchard on how to change the ISLM model in response to the recent recession to teach Intermediate Macro better. And I despaired. Not because he says anything daft, but precisely because what he says seems so sensible a set of minor modifications. But it's a set of minor modifications that takes us […]
Accounting for central bank profits
Just a simple "teaching" post. There are two different ways of thinking about central bank profits (of doing the accounting). A simple numerical example will illustrate the difference. Assume 2% inflation, and 1% real GDP growth, so Nominal GDP grows at 3%. Assume the stock of currency is 5% of annual NGDP. Assume the nominal […]
New Keynesian macro when all output is consumer durables [DRAFT]
Warning: math-challenged economist at play. I want to see if I can sucker any readers into checking my math and doing the rest of the math for me. Do not read this post unless you think that might be fun. Update: Keshav has solved the math. Now we are trying to understand what it means. […]
Does saving count towards GDP?
Here's a fun one. (OK, I think it's fun, anyway.) Especially for those who teach macro. A first year student emails me. Paraphrasing, he asks "For a closed economy, we know that national saving equals national investment, and investing in newly-produced goods counts towards GDP. And "saving" means anything we do with our income other […]
ISLM pictures with interest on money
By popular request (well, David Andolfatto asked, but I think he's right to ask) I'm drawing a picture to illustrate my previous post on the distinction between the interest rate Rb you get paid for lending money and the interest rate Rm you get paid for holding money. But first I need to take a […]
Interest on holding money vs interest on lending/borrowing money
Prerequisite: intermediate macro. I reckon some people might be getting those two things muddled. The difference matters. Actually, the difference is the only thing that matters. It's the spread between those two interest rates, not the levels of those two interest rates, that matters for Aggregate Demand. Simplify massively. There are two rates of interest. […]
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