Professor Roger E. Farmer has been developing a macro theory that is built around the notion of animal spirits. (This article on the Phillips curve is an example that recently popped up.) I had some misgivings about his approach, and so I never got around to pursuing his research. However, I am now starting to think about writing a book on business cycles, and I realised that his analytical work is pretty much in line with what I have been thinking about. I cannot claim to completely understand his policy logic, but I believe that my views diverge from his with regards to the application of his model towards policy. Another issue that will be of interest to some of my readers is how to contrast and compare his models with existing post-Keynesian models. I will worry about that topic when I get around to writing the book itself.
Sunday, May 27, 2018
Friday, May 25, 2018
Note: Sticking to the European theme, the famous European privacy directive is kicking in. Readers in Europe are supposed to see some notices regarding the Google services I use (Blogger, and Google Analytics). I would welcome comments to let me know whether you see them; I do not see them over here. I have no idea how to get any information about particular users from these services, so you privacy is safe with me; you will need to consult Google's policies for their usage of user data. This website is also part of the Amazon affiliate network; links (and most book cover images) are part of that program. Once again, you will need to consult their documentation.
Wednesday, May 23, 2018
Some Preliminary Questions for MMT," in which he questions the Modern Monetary Theory (MMT) mantra that "exports are a cost, imports are a benefit." He points out: what is to stop everybody from running trade deficits? I discuss why his arguments are not particularly concerning from a policy perspective.
Sunday, May 20, 2018
Wednesday, May 16, 2018
Canadian policymakers have blundered into a perpetual motion machine, which is more commonly referred to as the housing market. By underwriting the credit risk of the mortgage market, the government has allowed the funding circuit to continue in an uninterrupted fashion. The lack of a crisis has frustrated economic bears, and there is no obvious catalyst for their vindication yet in sight. In addition to outlining the Canadian situation, this article discusses some of the theoretical issues, as well as the policy implications.
Sunday, May 13, 2018
Note: I hope to follow this up with one or two article discussing the Canadian housing bubble. This article covers some basic points, and I will get to the more hair-raising topics later. I have broken the discussion up as the full discussion would be too lengthy.