There is no r*
Like many economists, I have been trapped into thinking that there is an equilibrium real rate of interest - a level of the policy rate consistent with stable inflation, a closed output gap, or full employment....
There is no shortage of safe assets – a short proof
Safe assets are bunds, treasuries, gilts, JGBs and other government bonds issued by large developed economies. In one sense, they actually are ‘safe’ assets. They are typically negatively correlated with risk a...
Institutions matter
Definitions of Money, Economic History, Helicopter Money, Monetary Policy, Money in Europe, Theory & Other Problems
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The monetary & fiscal distinction revisited
Monetary policy involves changes in the supply of base money and is carried out by central banks. Fiscal policy involves taxation, spending and transfers carried o...
Eight pitfalls to avoid in the helicopter money debate
Learn first, then teach
Professors Stephen Cecchetti and Kermit Schoenholtz are the latest to opine on the subject of helicopter money. It is worth quoting from their opening paragraphs, it frees me up to re...
Monetary policy: transparency or obfuscation?
We live in a era where monetary policy is more transparent than ever - if measured by press conferences, publication of minutes and individual policy-makers forecasts.
At the same time, the behaviour of cent...
Helicopter money is different
The discussion of helicopter money may have moved from the periphery of the policy debate to its centre. Unfortunately, analytical confusion seems correlated with interest levels.
Keynes once remarked that w...
Bernanke’s four errors
I am a huge fan of Ben Bernanke. He can take a significant amount of personal credit for preventing a depression. Also, The Courage to Act is a superb book.
Disappointingly, Ben’s latest contribution to the ...
Buffett v the Landesbank – the US gets paid to have a trade deficit
It remains conventional wisdom that the US current account deficit is the accumulation of a debt that will one day need to be repaid. There are very good reasons to believe this is false. The US in fact has ne...
Nothing is permanent
To borrow a disparaging phrase from Paul Krugman, the concept of 'permanence' in economics seems “to have a special ability to create intellectual confusion, even in smart people.”
Personally, I don't reall...
The economics of language: David Hume & valuing Facebook
David Hume is the first great thinker to identify language, law and money as 'spontaneous' institutions of social organisation. Hume was on to something quite profound, which remains under-appreciated.
Langu...