"The Simple Analytics of Monetary Impotence (Wonkish)", in which he gives a simplified Dynamic Stochastic General Equilibrium (DSGE) model which he says demonstrates something about monetary policy when at the zero bound. When I look at the model, it appears that there are internal contradictions to his suggested solution. Instead, it appears that the model solution is determined by the Fiscal Theory of the Price Level (FTPL). When it comes to DSGE models, it appears that all roads lead to the FTPL.
Saturday, December 20, 2014
Wednesday, December 17, 2014
gave the world a textual disaster. The FOMC continues to point towards rate hikes starting in mid-2015. Although there have been worries in markets that we are headed towards a repeat of 1998, the FOMC is unlikely to buy into those theories (possibly until it is too late).
Monday, December 15, 2014
Saturday, December 13, 2014
Although they are now thin on the ground within academia, 'Austrian' economists are ubiquitous in the financial markets and across the internet. (They are called Austrian because many of the founders of the school of thought were originally from that country.) Since Austrian economics is a fairly pure 'free markets' doctrine, it is politically attractive to many in finance, which partially explains its appeal. But the question is whether it offers any insights that give an 'edge' to analysts? I recently read "Paper Money Collapse: The Folly of Elastic Money" by Detlev Schlichter, and I am somewhat unconvinced about the amount of insights that are on offer.
Wednesday, December 10, 2014
In case that made sense to you, I just wanted to let you know that Luca Pezzotta translated my Moody's article into Italian.