Monthly Archives: January 2014

Why money targeting would not be a good way to implement forward guidance

As the ECB slides inexorably towards a liquidity trap, debate focuses on whether it might be prepared to engage in a forward guidance policy that implied a Woodford-style inflation target overshoot.  Simon Wren Lewis suggests that a more palatable way … Continue reading

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Why Kydland, Prescott and Sims got the Nobel and why it isn’t weird

This is really just a comment on Noah Smith’s blog post about the oddity of the Nobel Committee awarding the Economics prize to Kydland and Prescott for finding that the business cycle was caused by technology shocks, and then later … Continue reading

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What is Buiter writing for his clients about the current ECB shenanigans?

Reading about Draghi’s comments that the ECB would not be engaging in quantitative easing (QE) because this would amount to ‘monetary financing’ prompted a burst of nostalgia for the time when Willem Buiter was writing his ‘Maverecon’ for public consumption, … Continue reading

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What they talk about when they talk about taxes

The last few days have seen the UK Chancellor George Osborne and Ed Balls try to out-do each other in promising a fiscal surplus.  Labour have also put on the table the proposal to bring back the 50% income tax … Continue reading

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Coping with segular stagnation by raising the inflation target. Respose to Kaminska and Delong

Brad Delong and Isabella Kaminska are against raising the inflation target as a response to secular stagnation.  To recap.  Larry Summers argued that currently the natural real rate is very low and may remain so for quite some time ahead.  … Continue reading

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At the ZLB, reducing unemployment benefits increases total unemployment AND reduces frictional unemployment

Paul Krugman has been accused recently of being inconsistent with his own textbook on the issue of whether higher benefits for the unemployed raise or lower unemployment.  His textbook explained the consensus view that such benefits can increase ‘frictional’ unemployment – or the … Continue reading

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This time only the names are different

Roger Farmer tweeted this quote from a Martin Wolf article today:  ‘in essence, today’s financial system is the same as before’.  Without checking, I am guessing that ‘before’ means before the latest crisis.  But perhaps ‘before’ might not be so … Continue reading

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Fiscal policy: as if Carney had said ‘we won’t stick to this forward guidance’ and then stuck to it anyway

Another thought on the Coalition’s attempt to manage expectations about fiscal policy. My last post on the Coalition’s fiscal policy, in a nutshell, said that although the eventual path of the deficit, ex post, turned out not too far wrong, … Continue reading

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Why the lack of private sector DSGE models is weak evidence of the worth of DSGE models

For some Friday night fun, and, caution, after a day grinding through DSGE models of credit frictions, preparing for an MSc Masters module at Bristol later this year, I thought I would comment on Noah Smith’s typically entertaining macro-smackdown. For … Continue reading

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The UK Coalition’s fiscal ‘mission accomplished’ twaddle

George Osborne and fellow Conservatives are attempting – seemingly with success – to run the argument that the fact that the economy is now growing quickly proves that their austerity policy was the right one.  The message gets pumped out … Continue reading

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