No expectations
Nick Rowe and his colleagues in Canada have a superb blog. If you’re interested in economics and don't already follow it - take a look.
Recently, Nick and I have been discussing the relevance of ‘permanence...
Is it permanent? A reply to Nick Rowe
Nick Rowe has written a typically-lucid note which makes clear why it might make a difference to consumer behaviour if a tax cut is permanent, or temporary. To this extent, we are in full agreement: giving some...
The distinction between monetary and fiscal policy
Policies which have fiscal effects are not necessarily fiscal policy. To believe otherwise is a fallacy.
The distinction between fiscal and monetary policy is rarely, if ever, made clear by economists of an...
The BoJ has started helicopter drops
Oddly, some economists think that helicopter drops are either beyond the capacity of central banks or highly unlikely. Neither is true - they have already started.
It is now clear that the Bank of Japan is e...
Legal helicopter drops in the Eurozone
Helicopter drops in the Eurozone may be a legal obligation of the European Central Bank (ECB).
The laws governing the ECB are extremely clear, and repeat three features which policy must comply with:
1. T...
Cashless dreams … Or nightmares?
Martin Sandbu wittily suggests that advocates of competing contingency plans for central banks resemble Pythonesque political factions. He thinks a compromise could be a marriage made in heaven. But as a paid u...
A short reply to Tony Yates (on helicopters)
Tony Yates is a superb economist and has a great blog. He also tends to be relentlessly logical. But his argument against helicopter drops is a rare exception. He makes three points:
“I’m against helicopter dr...
The “Pigou effect” is smarter than you think, and more relevant than ever
I was taught to dismiss the Pigou effect. Arthur Cecil Pigou (or “Pig” if you believe spell-check) was a great Cambridge economic theorist, known to most of us as the object of Keynes’s repeated ridicule in the...
The Constant Reserves Multiplier
Central banks should pursue simpler, less costly and more effective policies. If policymakers want higher spending, they should transfer cash directly to households.
Some advocates of helicopter drops have arg...
Further thoughts on TZB
This way of framing the problem also provides an administrative alternative for the ECB to effect cash transfers. Rather than posting checks to households, it could launch an ATLTRO - a TLTRO for all. Under thi...