Blanchard’s “Policy Model” v “Theory Model”
Back in November last year, Professor Olivier Blanchard discussed with me about his view that there should be four types of macroeconomics, and "theory models" like DSGEs is just one of them. Here is...
Rajan on what “New Rule for Monetary Game” actually means
Raghuram Rajan, former Governer of Reserve Bank of India and now Professor of Finance at Chicago Booth, visited Hong Kong and gave a keynote speech in Asian Financial Forum last week. I am lucky...
What do others think about Paul Romer’s worries… (II)
The discussion on Paul Romer's "The Trouble with Macroeconomics" continues in the blogosphere, and Simon Wren -Lewis's "Paul Romer on macroeconomics" is one of the Must-Reads.In his comments, Wren-Lewis said that Romer's view is...
Aging, Output Per Capita and Secular Stagnation
Gauti B. Eggertsson, Manuel Lancastre, and Lawrence H. Summers explain in their paper "Aging, Output Per Capita and Secular Stagnation" the role of aging in the Secular Stagnation model.
What is Payment on Reserves Process?
The payment on reserve process proposed by Robert Hall and Ricardo Reis is a way of remunerating reserves which would give the central bank better control over the price level.The basic intuition is that...
What is FTPL (Fiscal Theory of Price Level)?
The Fiscal Theory of the Price Level says that money has value because the government accepts it for taxes, and inflation is fundamentally a fiscal phenomenon
Bernanke on Trump’s Fiscal Policy
Ben Bernanke has a new blog post on Brookings. The focus of the post is to explain "the large difference between the reactions of the Fed and the markets to the change in fiscal prospects since the election"
Central Bank’s Balance Sheet and the Rise of Reserves
The above figure shows the balance sheet of four major central banks from 2005 to 2015. Above the horizontal axis is the asset side of the balance sheet, below is the liability side. All...
What is Hysteresis?
Hysteresis is referred to the hypothesis that recessions may have permanent effects on the level of output relative to trend.
Why Negative Rate is a better policy tool to Higher Inflation Target? Bernanke Explains…
In his latest Brookings blog post "Modifying the Fed’s policy framework: Does a higher inflation target beat negative interest rates?", Ben Bernanke compares two policy tools central banks can use to stimulate the economy...
Interviews
Is Inequality part of Macroeconomics? | Interview with Branko Milanovic |
Branko Milanovic discusses whether the study of inequality can be considered as part of macroeconomics and how should macroeconomists incorporate his idea of Kuznets Waves into their models.
Interview with Paul Romer – On Charter Cities (and HK) and Growth Theory
"There is a big difference between saying you want to allow for city-scale reform zones that will encourage reform of government and innovation in government, and saying that you want to do away with government entirely and let a corporate entity run a private city," says Nobel winning economist Paul Romer.
How to use Interest on Reserve for Inflation Targeting? | Q&A with Ricardo Reis...
This is the eighth installment of our interview series “Where is the General Theory of the 21st Century?”In this installment, we continue our talk...
Economics Rules – Why Economists do it with Models | Q&A with Dani Rodrik
Rodrik explained why good economists think in terms of models, and what are major differences between models and theory.
He also told us why macroeconomists' quest to find "the one true model" on the business cycle is probably misguided.