tag:blogger.com,1999:blog-5908830827135060852.post3050705562467664168..comments2024-03-01T02:40:14.946-05:00Comments on Bond Economics: Mathematics Of The Budget Constraint (Again)Brian Romanchukhttp://www.blogger.com/profile/02699198289421951151noreply@blogger.comBlogger2125tag:blogger.com,1999:blog-5908830827135060852.post-55165577260448616782017-04-25T12:02:25.596-04:002017-04-25T12:02:25.596-04:00Sure, *one* household can do that. But in aggregat...Sure, *one* household can do that. But in aggregate? Aggregate financial balances have to conform to the goverment's 1-period accounting identity. The DSGE modellers implicitly recognise this, although they certainly do their best to obfuscate the point. (The only real disclaimer that shows up is the question of the zero bound; money holdings can have whatever real interest rates you want, given sufficient deflation.)<br /><br />I will get to that micro logic in the next post.Brian Romanchukhttps://www.blogger.com/profile/02699198289421951151noreply@blogger.comtag:blogger.com,1999:blog-5908830827135060852.post-81035997454651560552017-04-25T11:02:10.359-04:002017-04-25T11:02:10.359-04:00I'm not keen to defend this kind of analysis, ...I'm not keen to defend this kind of analysis, but isn't the optimisation point that: if b(t) > 0 in the limit, then households could increase utility simply by spending such extra amount today as reduces that limit to zero.Nick Edmondshttps://www.blogger.com/profile/15342983814699700396noreply@blogger.com