The central bank is on the Gold Standard. The discovery of new gold increases the supply of gold, which causes an inflationary boom. People blame the inflationary boom on the gold discoveries. It can't have been a monetary shock, because the central bank wasn't doing anything different from what it always does. The central bank […]
Suppose I want to borrow money. So I issue a financial asset I call "NRUnits". You can buy NRUnits from me at $1 each. I consider two different policies to give people sufficient incentive to want to hold NRUnits: I promise to peg the exchange rate between NRUnits and the dollar, so they are always […]
Because "stock-flow consistency" makes me think of money. [Here's Simon Wren-Lewis' and Jo Michell's good posts, but I've got a one-track mind.] 1. If you want to increase the stock of land in your portfolio, there's only one way to do it. You must increase the flow of land into your portfolio, by buying more […]
At the Green Door restaurant, customers line up, take a plate, then fill it with their choice of items from the restaurant's vegetarian buffet. At the cash each plate is weighed, and the customer's bill is calculated: price per gram*grams of food taken=cost of dinner. This pricing scheme creates an interesting choice problem. It might […]
Unless it has a massive endowment fund, a university's biggest asset is its reputation. If it loses its reputation and students stop coming and paying, a university has only got a bunch of buildings that often aren't well-suited for any alternative use. That asset is not on the books. Unless it has a massive debt, […]
A New Keynesian central bank considers two alternative policies to mitigate the risk of hitting the Zero Lower Bound: Raise the inflation target from 2% to 3%. Announce a crawling peg exchange rate between the paper money it issues (currency) and the silicon money it issues (reserves), so that paper depreciates at 1% per year […]
This post is not as clear as it should be. Sorry. It's because my head is not very clear either. I wrote this to try to get my head clearer. An imaginary country uses 7 different media of exchange, issued by 6 different banks. There is one alpha bank, and 5 beta banks. The alpha […]
Many grocery stores have a bulk food section, where shoppers scoop flour or nuts or spices from big bins into little plastic bags, and then take them up to the cash, where each individual purchase is weighed and priced. There are no brand names. There is no fancy packaging. Shoppers do all the work of […]
The question: What causes unemployment? The answer: Over the fold, taken from a textbook currently used for O-level (roughly grade 11) social studies in Pakistan.
Take this post with a truckload of salt. This is a second in my series in which "Lost Macro Farmboy tries to get his head around Urban Economics". Think of it as sceptical pushback. I might easily be wrong, but those who know a lot more Urban Economics than I do should be able to […]
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