Category Archives: Macroeconomics

Taylor legislation? Rules versus discretion misunderstood

John B. Taylor is one of the profession’s most recognized macroeconomists, and for good reason. He has made numerous contributions to theories on wage and price formation and monetary policy. Many concepts are so central that they carry his name. “Taylor contracts” (staggered nominal wage or price contracts that are a central ingredient in many macroeconomics models), “Taylor curves” (curves that simply illustrate the feasible monetary policy trade offs), and, of course, the “Taylor Rule”, which is a specification of a nominal interest rate rule for a central bank. Originally mentioned in a 1993 paper, Taylor showed that the simple rule—that recommends that the nominal interest rate adjust to inflation … Continue reading

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Posted in Economists, Macroeconomics, Monetary policy | Tagged , , , , , | 19 Comments

Partisanship and dismal economics blogging

I haven’t been blogging much lately. Frankly, I got tired of it. Of course, very few read what I write, but I have no problems with that. I blog mostly to maintain some record of my thoughts. I mainly got tired of the whole so-called academic blogosphere. In particular the one originating from the US, which of course tends to be quite dominating. My problem is the reductive nature of much academic US blogging. Many bloggers are high-profiled academic economists, who through their blogging are simplifying arguments so as to set up a “Them versus Us” feeling in the mind of the reader. Paul Krugman, of course, excels in this. … Continue reading

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Chris Auld’s 18 signs

Chris Auld really nails some common silly/ignorant ways of bashing economic sciences in his recent blog post. I could not have done it any better, and the funny/sad thing is that the 18 signs he lists which differentiate “crankery from solid criticism” are all signs that I see in my home-country media. Day after day. So these appear to be universal. Here is the post (and lots of the comments unintentionally prove several of his points)—enjoy: http://chrisauld.com/2013/10/23/18-signs-youre-reading-bad-criticism-of-economics/

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The case for negative nominal interest rates and how to attain them: Revisiting the Buiter-Eisler approach

Recently, I discovered that the debate on possibly removing the zero lower bound on nominal interest rates is quite hot in some blog circles in the US. For example, Miles Kimball is writing a lot about it these days, and I thought I would chime in with a piece I did on the issue a few years ago. It was written for a students’ blog at my department in Danish, and took the form of a run through of the arguments as Willem Buiter had presented them. Hence the title “Willem and the negative nominal interest rates”. Actually, Miles Kimball encouraged me to translate the Danish version, and I thank … Continue reading

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No Negative Rates in Euroland (yet)

Today, the ECB decided not to continue their decrease in interest rates implemented on May 8. All rates remained unchanged, so no new territory was explored. In particular, deposit rates remain at zero, so no negative rates were implemented. Apparently the 0.25 basis point cut on main refinancing operations in May was considered sufficient. It just seem a bit “to little to late” in the current situation, when the ECB simultaneously revised output projections downwards, and stressed that the risks are on the downside. Draghi emphasized at today’s press conference that no measure was set aside permanently, thereby signaling that a further cut cannot be ruled out. He also did … Continue reading

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Reinhart and Rogoff’s coding mistake: Much Ado About Nothing

This week saw a wide circulation of recent working paper by Thomas Herndon, Michael Ash and Robert Pollin, “Does High Public Debt Consistently Stifle Economic Growth? A Critique of Reinhart and Rogoff“, Working Paper Series Number 322, Political Economy Research Institute, University of Massachusetts Amherst. The authors challenge the findings in Carmen Reinhart and Kenneth Rogoff’s “Growth in a Time of Debt“, American Economic Review, Papers and Proceedings 100, 573-578. During their efforts to replicate Reinhart and Rogoff’s findings on the relationship between public debt and growth for 20 developed countries post-WWII, Herndon et al. received the original codes from Reinhart and Rogoff. Upon scrutiny, they discovered a coding error … Continue reading

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Happy 2013

Hi. I haven’t been too active lately here. Been busy doing proper academic work like teaching and research. I may become more active next year, but I will stick to my principle that one doesn’t have to have an opinion, and vent it, about everything. Actually, the day where the news on TV announce that they cut their program short by 15 minutes due to lack of interesting news, or when a newspaper come in a short, cheaper edition during summer due to lack of important stuff to write about, then I will be happy. Too many just write because they want to write, or have an obligation to write. … Continue reading

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From SMP to OMT: ECB commits to destroy monetary transmission

This is not a humorous title, and this is not a funny post. A couple of days ago, the ECB announced after its Governing Council meeting that it would initiate a new program of sovereign debt purchases. The program is named Outright Monetary Transactions, which adds OMT to the endless list of acronyms that has emerged after the onset of the financial crisis. The program replaces the Securities Markets Programme (SMP), or, rather, extends it in a number of directions. As mentioned in my post on the last ECB policy meeting, its need for emphasizing that what it does is not illegal strikes me as odd if not suspicious. At … Continue reading

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