A commenter on our Angry Bear blog, Axt113, asked questions to understand what effective demand is. He/she like many think that effective demand is simply aggregate demand. But that is not true. They are different concepts. It is very important in the current economic sickness to understand the role of effective demand. So I will […]
Quick take on how things are shaking out in House Leadership including Committees: Paul Ryan: from Budget to Ways and Means Tom Price: to Budget Jeb Hensarling: to Financial Services Hal Rogers: maintains House Appropriations Let’s just say that none of those guys seems like champions of the New Deal or likely members of any […]
Mark Thoma at MoneyWatch points to : Why income redistribution doesn’t hurt growth, by Mark Thoma: Thomas Piketty’s book “Capital in the Twenty-First Century” documents the increase in inequality in recent decades, and it has rekindled an old debate about the effects of income redistribution on economic growth. Until recently, most economists believed there’s a trade-off between […]
As the ECB (European Central Bank) loosens monetary policy even more in the face of falling inflation, we will see a test of the Fisher Effect. The idea is that inflation is low because nominal rates have been low and projected to stay low for a considerable length of time. The actions of the ECB […]
Former attorney general Michael Mukasy said “”Whether you impeach somebody doesn’t depend on whether they violate the law,” Mukasey said. “”The president can stay within his lawful powers and still commit an impeachable offense. …” He totally rejects opposes and declares his contempt for the US Constition which says “The President, Vice President and all […]
Republicans said the bill wouldn’t have done anything to lower education costs or reduce borrowing, and they accused Democrats of playing politics by highlighting an issue that was bound to fail. — Senate Republicans block student loan bill, Erica Werner, Associated Press, today The bill, written and sponsored by Elizabeth Warren, would allowed borrowers, including those […]
Barry Ritholtz has a post showing that rates are very low in many countries. He isn’t quite sure what is going on with such low yields on 10-year bonds, so he asks… “What is up with Yields?” Maybe we could say that there is lots of liquidity out there. Maybe we could say that there […]
Brad DeLong quotes Joseph Stiglitz and notes that Stiglitz disagrees with Keynes Stiglitz said a peculiar doctrine came to be accepted, the so-called “neoclassical synthesis.” It argued that once markets were restored to full employment, neoclassical principles would apply. The economy would be efficient. We should be clear: this was not a theorem but a […]
Novice Tea-bagger Representative candidate Dave Brat just handed Republican House Majority Leader Eric Cantor a defeat in the Virginia GOP primary. A $200,000 campaign fund challenging a 6-digit campaign fund. Apparently, Cantor was not backwards, conservative enough for the 7th District Tea-baggers. “‘There needs to be a change,’ said Joe Mullins, who voted in Chesterfield […]
Many macroeconomists use models of aggregate consumption based on utility maximization by a rational representative agent. Some models also include liquidity constrained or rule of thumb consumers, but all micro founded models include inter-temporal substitution subject to a lifetime budget constraint. It is also standard to assume that utility is additively separable in consumption and […]