I have been following Sandwichman for a long period of time. Since I do shop floor throughput exercises which no economist appears to understand in a micro sense, Sandwichman comes the closest to what I deal with on a day to day basis. Paul Krugman in 2003: “Traditionally, it is a fallacy of the economically […]

In a post yesterday, I presented a graph of how inflation moves with changes in the Fed rate. I want to explore the graph further, because at some point the Federal Reserve will start to steadily raise their nominal Fed rate. How might inflation respond when the Fed rate starts to increase? The orange line […]

I’ve bruited the notion in the past that “money” should be technically defined, as a term of art, as “the exchange value embodied in financial assets.” In this definition, counterintuitively relative to the vernacular, dollar bills aren’t money. They’re embodiments of money, as are checking-account balances, stocks, bonds, etc. etc. Money and currency aren’t the […]

Via Naked Capitalism, Yves writes: If you are in Boston and not leaving town on Friday, please consider seeing some or all of this full-day program at Harvard Law School: Institutional Corruption and the Capital Markets, sponsored by the Safra Center on Ethics. How often do you hear Serious People talking about systematic corruption, and […]

by Peter Dorman (re-posted with author’s permission from Econospeak) Regression Analysis and the Tyranny of Average Effects What follows is a summary of a mini-lecture I gave to my statistics students this morning.  (I apologize for the unwillingness of Blogger to give me subscripts.) You may feel a gnawing discomfort with the way economists use […]

Mark Thoma wrote that the Fed should not have already raised its nominal Fed rate. He wrote that justifications for already raising the Fed rate are misguided. Now I am one who is saying that the Fed should have already raised nominal interest rates for two reasons… Potential output is lower than people think which […]

by Joseph Joyce China’s Trilemma Maneuvers China’s exchange rate, which had been appreciating against the dollar since 2005, has fallen in value since February. U.S. officials, worried about the impact of the weaker renminbi upon U.S.-China trade flows, have expressed their concern. But the new exchange rate policy most likely reflects an attempt by the […]

by Peter Dormand The Two Inequalities In the wake of Piketty, “inequality” is in.  But it comes marinated in confusion. The problem is that there are two inequalities with relatively little in common.  The one we had been arguing about for several decades is wage inequality.  Most pay has stagnated in the US, while a […]

Paul Krugman wrote today the obvious criticism against the Fisher Effect. He completely based his criticism on monetary shocks, which is a short-sighted view.  He is not thinking beyond the shocks. “And we know what happens after a positive shock to policy interest rates: output and inflation both fall.” Yes, that is obvious, but what […]