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Monthly Archives: December 2011
The Krugman Multiplier is too big
Paul Krugman is a very active blogger. Almost every time he writes a post on his New York Times blog, there are several comments made around the economic blogosphere. And sometimes Krugman will respond to a few of the comments made, and then it sets off further comments, and so on. It is a Krugman Blog Multiplier. I posit that it needs no formal empirical evidence to establish that it is way above 1. Way above. In this New Year’s post I’ll show a recent example, and argue why this multiplier is too high, and why one should not always “exploit” large multipliers. Probably one of the issues on which … Continue reading
Structural Divergence in Europe: Death Foretold
One of my mantras is that doing economics is not about “being right,” but about getting wiser all the times. Note that the two things may not overlap. I, for example, would rather be wrong all of the time but know why I am being wrong instead of being right without having a clue as to why. So, I think it is a good mantra, and I will stick with it. Now, after the beginning of the current financial crisis and recession, more or less prominent economists lined up to tell the world that they were “right” as they had seen the crisis coming. Some actually had something to back … Continue reading
Posted in Economics, Macroeconomics, Monetary policy
Tagged debt crisis, entry requirements, European Union, Financial crisis, inflation, monetary unification, nominal interest rates, structural reforms
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Sargent and Sims (2011): LIVE!
This year’s Nobel Prize Lectures in Economic Sciences: “United States Then, Europe Now” (at the nobelprize.org site) Thomas J. Sargent, New York University “Statistical Modeling of Monetary Policy and its Effects” (at the nobelprize.org site) Christopher A. Sims, Princeton University YouTube version of live TV broadcast of everything. Lectures start 10 minutes into the broadcast (with an introduction by Per Krusell):
Posted in Macroeconomics, Monetary policy
Tagged Christopher A. Sims, Nobel Prize, Thomas J. Sargent
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Draghi cuts and markets flip
Last week marked the second time where new President of the European Central Bank, Mario Draghi, governed an interest-rate decision for the Euro area. And for the second time it was and interest rate cut, implying an interest rate on main refinancing operations of 1.00% effective from 14 December. This ties the lowest level in Euro history, which was effective from 13 May 2009 to 13 April 2011. So, loosely speaking the interest rate is back at the financial crisis level. The decision makes sense given the economic outlook for the Euro area: A continuation of high unemployment and absence of inflationary pressures. It was, however, not a unanimous decision. … Continue reading
