I wrote a post with many graphs to visualize the various paths that interest rates can take in order to normalize monetary policy in the Long-run. (link to previous post) Here is a basic graph from that post… To recap… Nominal rates on the y-axis. Real rates on the x-axis. Up-sloping lines represent constant rates […]

As if any more proof were needed, I recently came across yet more evidence that U.S. state and local governments give far more in location incentives than EU Member States do. A paper given this spring at the annual meeting of the Association des Économistes Québécois (Association of Quebecois Economists) includes a summary of project-by-project […]

(Dan here. NDD takes a shot at one reason for the loss of Democratic candidates in this election.) – by New Deal democrat It’s (also) the interest rates, stupid! You know the old saw, “it’s the economy, stupid!”  Both Robert Reich and Atrios have boiled last week’s election results down to that maxim. Atrios said, […]

Calculate Risk reminds us of the importance of education… Unemployment by Education This graph shows the unemployment rate by four levels of education (all groups are 25 years and older). Unfortunately this data only goes back to 1992 and only includes one previous recession (the stock / tech bust in 2001). Clearly education matters with […]

Let’s go beyond the issue of the Fisher Effect and visualize the whole issue of nominal interest rates, real rates and inflation. The Fisher Effect is only a part of the whole issue. So we start with a model that blends all 3 rates… nominal rates on the y-axis, real rates on the x-axis and […]

Core inflation is low in China… 1.4%. (link) Inflation is always pretty low in China due to weak labor share and weak domestic demand. But there is a concern that inflation will continue to fall as over-productive capacity reveals itself more and more. China is able to produce much more than there is demand for. […]

In response to the the Neo-Fisherite view that persistently low interest rates leads to low inflation, Nick Rowe writes that we have to see what happens to the money base in order to determine inflation. He implies that the Fisher Effect has to have an explanation based on the growth rate of the money supply. […]

Amateur Socialist at Angry Bear asked me about how much was being spent per vote in 2014, and did the due diligence of finding me a spreadsheet showing how many ballots were cast per state. Ask and ye shall receive. Based on that data, here’s a rough-and-ready calc of how much was spent on each […]

Follow-up post here to John Cochrane’s clarification of the Fisher Effect. In his post, Mr. Cochrane pointed out the different ways (with stability or instability) that inflation could change to changes in nominal rates. His post includes a graph that since the Fed rate hit the ZLB, inflation has been stabilizing… something which supports the […]

John Cochrane responded to recent blogs about the Fisher Effect instigated by Noah Smith. The best thing that John Cochrane showed in his post is that there are short-run effects and long-run effects of policy rate changes upon inflation. The Fisher Effect represents the long-run effects. There are nice comments under his post. “…this is […]