Recent Posts

Tuesday, May 26, 2015

Heading Out To The CEA 2015 Conference

I will be going to the Canadian Economics Association conference in Toronto this week. There are some interesting sessions, including one on MMT. I will not be able to post new articles until next week at least.

Sunday, May 24, 2015


The recent eruption around "mathiness" is the latest burst of discontent about the state of macroeconomic theory.  There is an undercurrent of politics within the argument. Once again, I seem to be in agreement with those who probably are on the opposite side of political economy debates from myself. To summarise my views: mathematics is a neutral tool that allows the creation of internally consistent models, but those models may or may not bear any resemblance to the real world. And within the world of DSGE macro, the fact that the consensus appears to have endorsed so-called "New Keynesian" models tells us little about their validity.

Saturday, May 23, 2015

Book - The National Deb(i)t

I ran into this book from a link at Mike Norman Economics. The book is called The National Debit: Second Edition: How The Post-Gold-Standard, Modern Monetary System Really Works, by Edward J. Delzio. Mr. Delzio had a long career in the bond-broking business before publishing this book. It was just issued, and it appears to be an introduction to Modern Monetary Theory. The author has a web site here.

Wednesday, May 20, 2015

eReport: Understanding Government Finance

The first BondEconomics eReport: "Understanding Government Finance" is expected to be released for sale in mid-June. It provides an introduction to the operations behind government finance, aimed at a non-specialist audience. It will be initially published in ebook formats (epub and Kindle), followed by pdf and paperback editions.

Guest Post At RWER On DSGE Models

Thanks to Merijn Knibbe, I have the article "DSGE macro models criticism, a round up. Part 5, the intertemporal government budget constraint" posted on the Real-World Economics Review Blog. It gives an overview about my complaints about the mathematical framework for fiscal policy within DSGE macro models. (A round up of my articles here.)

I have not written about "mathiness" (Tom Hickey compiled a list of articles here), but mangling the constraints on fiscal policy seems to qualify.

Sunday, May 17, 2015

Primer: Par And Zero Coupon Yield Curves

Par and zero coupon curves are two common ways of specifying a yield curve. Par coupon yields are quite often encountered in economic analysis of bond yields, such as the Fed H.15 yield series. Zero coupon curves are a building block for interest rate pricers, but they are less commonly encountered away from such uses.

Wednesday, May 13, 2015

Is 100% Reserve Banking Feasible?

The Icelandic Sovereign Money System Proposal has increased interest in the possibility of 100% reserve banking. I am quite skeptical about 100% reserve banking, and prefer the Canadian 0% reserve system. That said, I have not looked too deeply at the details of various 100% bank reserve systems, such as the Icelandic proposal. In this article, I will outline what I see as potential problems with such a system.

Sunday, May 10, 2015

No Acceleration In U.S. Growth (Again)

Chart: U.S. Wage And Consumer Price Inflation Trends (

The latest labour market data in the United States gives no justification for tighter policy settings, which probably is not a surprise. There is little sign of an acceleration in the economy, and there is ample slack in the labour market. The chart above shows that annual wage and core CPI inflation are stuck at low levels, In the case of wage inflation, it is just a touch higher than it was during the low of the post-2001 recovery.