tag:blogger.com,1999:blog-5908830827135060852.post2583187817022614915..comments2024-03-01T02:40:14.946-05:00Comments on Bond Economics: Monetary Impotence And The Triumph Of The Fiscal Theory Of The Price LevelBrian Romanchukhttp://www.blogger.com/profile/02699198289421951151noreply@blogger.comBlogger7125tag:blogger.com,1999:blog-5908830827135060852.post-13663055653837871402014-12-24T19:36:39.186-05:002014-12-24T19:36:39.186-05:00Thanks, I will take a look. Merry Christmas to you...Thanks, I will take a look. Merry Christmas to you too.Brian Romanchukhttps://www.blogger.com/profile/02699198289421951151noreply@blogger.comtag:blogger.com,1999:blog-5908830827135060852.post-90041707830538250612014-12-24T19:05:13.386-05:002014-12-24T19:05:13.386-05:00You might be interested in this chart at the Feder...You might be interested in this chart at the Federal Reserve web site. <br /><br />http://research.stlouisfed.org/fred2/graph/?g=Vqj<br /><br />It shows private GDP divided by the accumulated Federal Borrowing which I would call the velocity of Federal Borrowing.. <br /><br />I think of private GDP (PGDP) as the equation GDP less government expense. If we use accumulated federal borrowing as the money supply (the MMT money supply?), we could use the Federal Reserve series "Federal Debt Held by the Public" (FYGFDPUN) .<br /><br />The reference chart shows PGDP / FYGFDPUN. It shows a declining number of turnovers over the 40+ years of display. If monetary policy were strongly affecting prices, I would expect to see a line closer to level (with the horizontal axis).with bumps up for periods of increased bank borrowing. I see the bank borrowing but not the horizontal relationship.<br /><br />Just thought you might be interested. Merry Christmas.Roger Sparkshttps://www.blogger.com/profile/01734503500078064208noreply@blogger.comtag:blogger.com,1999:blog-5908830827135060852.post-1166948718503941342014-12-21T21:16:57.399-05:002014-12-21T21:16:57.399-05:00I cannot remember what he wrote, but it makes sens...I cannot remember what he wrote, but it makes sense. The fiscal authority is hamstrung within a gold standard, as the central bank cannot ensure that Treasury Bills can always be rolled over. <br /><br />There is a monetary commitment (convertability), but convertability is not an issue if fiscal policy is sufficiently tight.Brian Romanchukhttps://www.blogger.com/profile/02699198289421951151noreply@blogger.comtag:blogger.com,1999:blog-5908830827135060852.post-19252783500649617232014-12-21T19:59:02.196-05:002014-12-21T19:59:02.196-05:00"Under a Gold Standard, I believe the Central..."Under a Gold Standard, I believe the Central Bank could monetise a lot of gold. This would also act like a "helicopter drop". Although I would prefer to classify that as fiscal policy as well, but I would be fighting convention on that one"<br /><br />In Cochrane's paper on interest on reserves, he refers to the gold standard as a fiscal commitment.Philippenoreply@blogger.comtag:blogger.com,1999:blog-5908830827135060852.post-86431593214508246062014-12-21T15:36:08.498-05:002014-12-21T15:36:08.498-05:00For all intents and purposes, the MMT/PK prescript...For all intents and purposes, the MMT/PK prescription is the same as the IS-LM solution, essentially, "helicopter drops" or monetizing the debt. <br /><br />As for the difference between fiscal and monetary, I consider that any transaction that the CB can do within its legislative mandate can be defined as monetary. If the CB doesn't have the statutory authority, then it should be considered fiscal (as it would be done by the fiscal authority). I guess outright purchases could be considered fiscal operations but then almost everything the BC does would fall under this category, no?circuithttps://www.blogger.com/profile/08565443970730261572noreply@blogger.comtag:blogger.com,1999:blog-5908830827135060852.post-43844295710168323752014-12-21T14:50:22.870-05:002014-12-21T14:50:22.870-05:00My problem is that I do not see how Krugman's ...My problem is that I do not see how Krugman's model works; when I look at the optimisation problem, what I see as the optimum is not what he says it is. Since the solution I am looking at maximises the utility function, I cannot see how people are arriving at other solutions.<br /><br />Using a "big tent" definition of Post-Keynesian thought, MMT is Post-Keynesian. (I believe that some of the self-identified Post-Keynesians prefer to use a narrower definition.) Most (all?) of the MMT writers view "helicopter drops" etc. to be fiscal policy, and although they "work", they are not really monetary policy. I would guess that the other strands of Post-Keynesians have a similar view, but I am less familiar with them.<br /><br />Under a Gold Standard, I believe the Central Bank could monetise a lot of gold. This would also act like a "helicopter drop". Although I would prefer to classify that as fiscal policy as well, but I would be fighting convention on that one. <br /><br />In a modern setting, you might be able to classify the monetisation of foreign currency as monetary policy. Once again, this is an increase of aggregate government liabilities, which I would prefer to view as fiscal. It also could be ineffective, if two central banks started buying each other's currency.Brian Romanchukhttps://www.blogger.com/profile/02699198289421951151noreply@blogger.comtag:blogger.com,1999:blog-5908830827135060852.post-13180053397116969652014-12-21T14:04:18.055-05:002014-12-21T14:04:18.055-05:00Nice post.
I believe this discussion about PK'...Nice post.<br /><br />I believe this discussion about PK's 1998 proposal and its relevance for Japan yesteryear and the US today is really important. As I wrote in my last post, there are serious problems in the NK assumption relating to inflation and expected inflation. That said, I thought PK's follow-up is interesting. He says he wrote-up the model as a way to be consistent, not as a preferred course of action (this completely blew my mind when I read this in his last post "More Macro Modelling). He seems to be saying IS-LM provides the most realistic option (ie, combined fiscal and monetary stimulus).<br /><br />Now, he's putting others to the task (market monetarists, Nick Rowe, Sumner) to put their cards on the table, show their model and demonstrate how they see how monetary policy can be used to boost spending.<br /><br />Looking forward to reading more on your take from a post-keynesian position. circuithttps://www.blogger.com/profile/08565443970730261572noreply@blogger.com