viernes, 30 de marzo de 2012
Money Circulation on the Eurozone- 'Banks’ Deposits' under the lens
Análisis monetarista de la situación europea usando MV=PY
"...This premise, which recalls the gold standard days, assumes a static relationship between money supply, prices and money velocity as per MV=PQ, but with a V set in concrete, which explains how the ECB ended up impaling itself on the Great Financial Crisis. It sparked the crisis in Europe by hiking key rates in July 2008, due to its total inability to understand that the collapse of the securitisation market would also collapse V!
...
If there is one thing that we can learn from the study of the functioning of a modern monetary system, it is that a central bank actually has no control whatsoever of money supply creation. Of course, it can increase the size of the “monetary base” by buying private-sector held securities on financial markets and replacing them with pure electronic money, as per quantitative easing. But the only way it can increase “real money supply” is for it to engage in a famous “helicopter drop”, which has never been tried by any of the major modern central banks.
The operational truth of today’s financial systems is that only commercial banks create money when they grant loans (as in “loans make deposits) and they can do so without the slightest size limitation, because even in the case of required reserves ratio restraints, the central bank to which it is dependent will have to provide it as much as these same reserves as it needs, because otherwise it would totally lose control of its benchmark interest rates!
The ECB’s insistence that it can navigate M3 money supply via adjustments in benchmark interest rates is in reality a subterfuge to avoid admitting that its interest rate moves have no impact on the cost of money. Since this is one of the major variables in determining investment projects and consumption via the credit cost channel, its real aim is to modulate the growth rate of the real economy. We can even say that that, when it hardens monetary policy, it is trying to increase the unemployment rate of the active population (decline in payroll costs), one of the key variables of its neo-classic bias, as illustrated by the famous ISLM curve.
"...This premise, which recalls the gold standard days, assumes a static relationship between money supply, prices and money velocity as per MV=PQ, but with a V set in concrete, which explains how the ECB ended up impaling itself on the Great Financial Crisis. It sparked the crisis in Europe by hiking key rates in July 2008, due to its total inability to understand that the collapse of the securitisation market would also collapse V!
...
If there is one thing that we can learn from the study of the functioning of a modern monetary system, it is that a central bank actually has no control whatsoever of money supply creation. Of course, it can increase the size of the “monetary base” by buying private-sector held securities on financial markets and replacing them with pure electronic money, as per quantitative easing. But the only way it can increase “real money supply” is for it to engage in a famous “helicopter drop”, which has never been tried by any of the major modern central banks.
The operational truth of today’s financial systems is that only commercial banks create money when they grant loans (as in “loans make deposits) and they can do so without the slightest size limitation, because even in the case of required reserves ratio restraints, the central bank to which it is dependent will have to provide it as much as these same reserves as it needs, because otherwise it would totally lose control of its benchmark interest rates!
The ECB’s insistence that it can navigate M3 money supply via adjustments in benchmark interest rates is in reality a subterfuge to avoid admitting that its interest rate moves have no impact on the cost of money. Since this is one of the major variables in determining investment projects and consumption via the credit cost channel, its real aim is to modulate the growth rate of the real economy. We can even say that that, when it hardens monetary policy, it is trying to increase the unemployment rate of the active population (decline in payroll costs), one of the key variables of its neo-classic bias, as illustrated by the famous ISLM curve.
Marx at 193
Aca
"Marx’s model works like this: competition pressures will always force down the cost of labour, so that workers are employed for the minimum price, always paid just enough to keep themselves going, and no more. The employer then sells the commodity not for what it cost to make, but for the best price he can get: a price which in turn is subject to competition pressures, and therefore will always tend over time to go down. In the meantime, however, there is a gap between what the labourer sells his labour for, and the price the employer gets for the commodity, and that difference is the money which accumulates to the employer and which Marx called surplus value. In Marx’s judgment surplus value is the entire basis of capitalism: all value in capitalism is the surplus value created by labour. That’s what makes up the cost of the thing; as Marx put it, ‘price is the money-name of the labour objectified in a commodity.’ And in examining that question he creates a model which allows us to see deeply into the structure of the world, and see the labour hidden in the things all around us. He makes labour legible in objects and relationships.
The theory of surplus value also explains, for Marx, why capitalism has an inherent tendency towards crisis. The employer, just like the employee, has competition pressures, and the price of the things he’s selling will always tend to be forced down by new entrants to the market. His way of getting round this will usually be to employ machines to make the workers more productive. He’ll try to get more out of them by employing fewer of them to make more stuff. But in trying to increase the efficiency of production, he might well destroy value, often by making too many goods at not enough profit, which leads to a surplus of competing goods which leads to a crash in the market which leads to massive destruction of capital which leads to the start of another cycle. It’s an elegant aspect of Marx’s thinking that the surplus theory of value leads directly and explicitly to the prediction that capitalism will always have cycles of crisis, of boom and bust.
"Marx’s model works like this: competition pressures will always force down the cost of labour, so that workers are employed for the minimum price, always paid just enough to keep themselves going, and no more. The employer then sells the commodity not for what it cost to make, but for the best price he can get: a price which in turn is subject to competition pressures, and therefore will always tend over time to go down. In the meantime, however, there is a gap between what the labourer sells his labour for, and the price the employer gets for the commodity, and that difference is the money which accumulates to the employer and which Marx called surplus value. In Marx’s judgment surplus value is the entire basis of capitalism: all value in capitalism is the surplus value created by labour. That’s what makes up the cost of the thing; as Marx put it, ‘price is the money-name of the labour objectified in a commodity.’ And in examining that question he creates a model which allows us to see deeply into the structure of the world, and see the labour hidden in the things all around us. He makes labour legible in objects and relationships.
The theory of surplus value also explains, for Marx, why capitalism has an inherent tendency towards crisis. The employer, just like the employee, has competition pressures, and the price of the things he’s selling will always tend to be forced down by new entrants to the market. His way of getting round this will usually be to employ machines to make the workers more productive. He’ll try to get more out of them by employing fewer of them to make more stuff. But in trying to increase the efficiency of production, he might well destroy value, often by making too many goods at not enough profit, which leads to a surplus of competing goods which leads to a crash in the market which leads to massive destruction of capital which leads to the start of another cycle. It’s an elegant aspect of Marx’s thinking that the surplus theory of value leads directly and explicitly to the prediction that capitalism will always have cycles of crisis, of boom and bust.
jueves, 29 de marzo de 2012
miércoles, 28 de marzo de 2012
martes, 27 de marzo de 2012
Análisis de Doug Noland sobre el crédito
Aca
The Fed and money:
"And I have argued over the years that "M2" is a much too narrow definition of "money" to provide a useful barometer of overall credit and liquidity conditions."
"In the 'old days', the banking system dominated system credit creation. Bank lending was integral to credit growth, with new bank deposits created through the process of expanding bank loans. 'M2' provided a good indication of bank lending - that was a decent indicator of overall credit conditions. As such, the Fed reigned supreme over the credit mechanism through its careful regulation of bank reserves. Rather mechanically, our central bank would add reserves - the fodder for new bank loans - when it sought a boost in lending. It would extract reserves when it preferred to lean against the wind. Bank deposits were the critical component of 'money' supply, and our central bank judiciously monitored their expansion."
"The financial world - certainly including monetary management - was turned upside down with the unleashing of (unconstrained) non-bank credit instruments. No longer did the banks dominate system credit creation. In a process that gained fateful momentum throughout the 1990s, the bank loan was relegated to second-class citizen in the age of the booming Wall Street securitization marketplace. Meanwhile, the Fed's entire process of manipulating bank reserves became moot. Fed policy immediately gravitated toward manipulating the securities markets"
"Especially with the advent of non-bank credit, the definition of what might operate as "money" in the markets and real economy had to be broadened significantly. The greater the boom in marketable debt instruments the more paramount the role of market perceptions in determining the stability of our financial markets and real economy."
"Over the years, I have explored the concept of the "moneyness of credit." Moneyness is driven by the marketplace's perception of safety and liquidity. Generally speaking, "money" is a debt instrument perceived as a highly liquid store of nominal value. Money has always enjoyed a special role and, hence, unique demand characteristics: folks simply can't get enough of it, which nurtures a propensity to create it in overabundance. Money operates with its own problematic supply and demand dynamics, and never has moneyness enjoyed such capacity to wreak global havoc as it does today. With all their good intentions, central bankers are nonetheless at the root of the problem."
"'Moneyness' was fundamental to the doubling of mortgage debt in just about six years during the mortgage finance bubble. Over time, the expanding gulf between market perceptions of moneyness and the true underlying state of mortgage credit ensured a crisis of confidence. Moreover, the trillions of additional mortgage credit had played havoc with spending and investing patterns and, increasingly over time, the underlying economic structure. These days, the attribute of "moneyness" in Treasury debt is on track to ensure the doubling of federal borrowings in the neighborhood of four years. For this round, the 'expanding gulf' is much more pernicious and the consequences of a crisis of confidence potentially more devastating."
The Fed and money:
"And I have argued over the years that "M2" is a much too narrow definition of "money" to provide a useful barometer of overall credit and liquidity conditions."
"In the 'old days', the banking system dominated system credit creation. Bank lending was integral to credit growth, with new bank deposits created through the process of expanding bank loans. 'M2' provided a good indication of bank lending - that was a decent indicator of overall credit conditions. As such, the Fed reigned supreme over the credit mechanism through its careful regulation of bank reserves. Rather mechanically, our central bank would add reserves - the fodder for new bank loans - when it sought a boost in lending. It would extract reserves when it preferred to lean against the wind. Bank deposits were the critical component of 'money' supply, and our central bank judiciously monitored their expansion."
"The financial world - certainly including monetary management - was turned upside down with the unleashing of (unconstrained) non-bank credit instruments. No longer did the banks dominate system credit creation. In a process that gained fateful momentum throughout the 1990s, the bank loan was relegated to second-class citizen in the age of the booming Wall Street securitization marketplace. Meanwhile, the Fed's entire process of manipulating bank reserves became moot. Fed policy immediately gravitated toward manipulating the securities markets"
"Especially with the advent of non-bank credit, the definition of what might operate as "money" in the markets and real economy had to be broadened significantly. The greater the boom in marketable debt instruments the more paramount the role of market perceptions in determining the stability of our financial markets and real economy."
"Over the years, I have explored the concept of the "moneyness of credit." Moneyness is driven by the marketplace's perception of safety and liquidity. Generally speaking, "money" is a debt instrument perceived as a highly liquid store of nominal value. Money has always enjoyed a special role and, hence, unique demand characteristics: folks simply can't get enough of it, which nurtures a propensity to create it in overabundance. Money operates with its own problematic supply and demand dynamics, and never has moneyness enjoyed such capacity to wreak global havoc as it does today. With all their good intentions, central bankers are nonetheless at the root of the problem."
"'Moneyness' was fundamental to the doubling of mortgage debt in just about six years during the mortgage finance bubble. Over time, the expanding gulf between market perceptions of moneyness and the true underlying state of mortgage credit ensured a crisis of confidence. Moreover, the trillions of additional mortgage credit had played havoc with spending and investing patterns and, increasingly over time, the underlying economic structure. These days, the attribute of "moneyness" in Treasury debt is on track to ensure the doubling of federal borrowings in the neighborhood of four years. For this round, the 'expanding gulf' is much more pernicious and the consequences of a crisis of confidence potentially more devastating."
Crítica de Scott Sumner a DeLong y Summers
Aca
Lars Christensen lo apoya:
"Said in another way Scott – as do I – strongly believe that the impact of fiscal policy strongly dependent the monetary policy reaction to fiscal tightening or fiscal easing (Even today Scott has a discussion of the fiscal multiplier). In fact I don’t even think it is meaningful to talk about fiscal policy as something that can “stimulate” demand. Hence, in a pure barter economy we cannot imagine fiscal policy having any impact on demand as demand always will equal supply in a barter economy. The famous Say’s Law holds in a barter economy and as such there would be full crowding out of fiscal policy. Hence, fiscal policy will only have an impact on demand if monetary policy “plays along”.
Our view is however far from the consensus among economists. Rather most economists think that you can use fiscal policy to “manage” nominal spending/demand. Even economists who in general do not find activist fiscal policy desirable tend to think that fiscal policy can impact nominal demand.
Today after working on some macroeconomic models myself I finally realised that the problem is that the “models” that most economists have in their heads are missing an equation (or at least one equation). Hence, most economists – and here I am talking about practicing macroeconomists like central bank economists or financial sector economists like myself – tend to give very little or no attention at all to the monetary policy regime of the economy they are analysing.
Therefore, the missing equation in most “models” is the policy reaction function of the central bank."
Un par de links sobre Delong y Summers (y de otras cosas)
Lars Christensen lo apoya:
"Said in another way Scott – as do I – strongly believe that the impact of fiscal policy strongly dependent the monetary policy reaction to fiscal tightening or fiscal easing (Even today Scott has a discussion of the fiscal multiplier). In fact I don’t even think it is meaningful to talk about fiscal policy as something that can “stimulate” demand. Hence, in a pure barter economy we cannot imagine fiscal policy having any impact on demand as demand always will equal supply in a barter economy. The famous Say’s Law holds in a barter economy and as such there would be full crowding out of fiscal policy. Hence, fiscal policy will only have an impact on demand if monetary policy “plays along”.
Our view is however far from the consensus among economists. Rather most economists think that you can use fiscal policy to “manage” nominal spending/demand. Even economists who in general do not find activist fiscal policy desirable tend to think that fiscal policy can impact nominal demand.
Today after working on some macroeconomic models myself I finally realised that the problem is that the “models” that most economists have in their heads are missing an equation (or at least one equation). Hence, most economists – and here I am talking about practicing macroeconomists like central bank economists or financial sector economists like myself – tend to give very little or no attention at all to the monetary policy regime of the economy they are analysing.
Therefore, the missing equation in most “models” is the policy reaction function of the central bank."
Un par de links sobre Delong y Summers (y de otras cosas)
lunes, 26 de marzo de 2012
What is the Economic Rationale for the Health Care Law’s Individual Mandate?
Aca
The economic question at the core of the individual mandate
Health care is not like any other product; everyone consumes it, whether they buy insurance or not. ‘That is a virtually universal feature of human existence,’ he told the judges. ‘Everyone is going to seek health care. Nobody can know precisely when.’
The passage of the Affordable Care Act sets the United States on the course to making health care a public good, which is why conservatives are so deeply opposed to it. For the first time, the government has a legal obligation to make health care affordable. The ACA accomplishes this in a uniquely American way, a combination of a big expansion of public coverage through Medicaid, financial penalties for employers who do not provide coverage for their workers, and income-based government subsidies for people to buy regulated private insurance.
The individual mandate is a key component of that last measure. Without the mandate, the regulated market would fail, since allowing people to buy coverage only when they need it drives up costs for everyone else and leaving people without coverage shifts the costs of their care to others. In short, a private decision not to buy a public good has substantial public consequences.
James Kwak
Paul Krugman
"When people choose not to buy broccoli, they don’t make broccoli unavailable to those who want it. But when people don’t buy health insurance until they get sick — which is what happens in the absence of a mandate — the resulting worsening of the risk pool makes insurance more expensive, and often unaffordable, for those who remain. As a result, unregulated health insurance basically doesn’t work, and never has.
There are at least two ways to address this reality — which is, by the way, very much an issue involving interstate commerce, and hence a valid federal concern. One is to tax everyone — healthy and sick alike — and use the money raised to provide health coverage. That’s what Medicare and Medicaid do. The other is to require that everyone buy insurance, while aiding those for whom this is a financial hardship."
The economic question at the core of the individual mandate
Health care is not like any other product; everyone consumes it, whether they buy insurance or not. ‘That is a virtually universal feature of human existence,’ he told the judges. ‘Everyone is going to seek health care. Nobody can know precisely when.’
The passage of the Affordable Care Act sets the United States on the course to making health care a public good, which is why conservatives are so deeply opposed to it. For the first time, the government has a legal obligation to make health care affordable. The ACA accomplishes this in a uniquely American way, a combination of a big expansion of public coverage through Medicaid, financial penalties for employers who do not provide coverage for their workers, and income-based government subsidies for people to buy regulated private insurance.
The individual mandate is a key component of that last measure. Without the mandate, the regulated market would fail, since allowing people to buy coverage only when they need it drives up costs for everyone else and leaving people without coverage shifts the costs of their care to others. In short, a private decision not to buy a public good has substantial public consequences.
James Kwak
Paul Krugman
"When people choose not to buy broccoli, they don’t make broccoli unavailable to those who want it. But when people don’t buy health insurance until they get sick — which is what happens in the absence of a mandate — the resulting worsening of the risk pool makes insurance more expensive, and often unaffordable, for those who remain. As a result, unregulated health insurance basically doesn’t work, and never has.
There are at least two ways to address this reality — which is, by the way, very much an issue involving interstate commerce, and hence a valid federal concern. One is to tax everyone — healthy and sick alike — and use the money raised to provide health coverage. That’s what Medicare and Medicaid do. The other is to require that everyone buy insurance, while aiding those for whom this is a financial hardship."
domingo, 25 de marzo de 2012
Disentangling the channels of the 2007-2009 recession
James Hamilton reseña el paper
Scott Sumner dice al respecto:
"This is what we’ve been saying all along. The massive decline in NGDP after mid-2008 was by far the worst demand-side shock since the 1930s. A severe recession would have occurred after such a shock even if there had been no financial crisis at all. They don’t attribute all of the decline to monetary policy, but that’s probably because of the way they identify monetary policy: the fed funds rate. In 2003 Ben Bernanke pointed out that the fed funds rate is not a reliable indicator of monetary policy, and suggested that aggregates such as NGDP and inflation are “the only” reliable indicators. If you average those two indicators, then 2008-09 was the tightest money since the Great Depression. Had Stock and Watson used that indicator, they would have blamed the Fed for almost all of the Great Recession."
Scott Sumner dice al respecto:
"This is what we’ve been saying all along. The massive decline in NGDP after mid-2008 was by far the worst demand-side shock since the 1930s. A severe recession would have occurred after such a shock even if there had been no financial crisis at all. They don’t attribute all of the decline to monetary policy, but that’s probably because of the way they identify monetary policy: the fed funds rate. In 2003 Ben Bernanke pointed out that the fed funds rate is not a reliable indicator of monetary policy, and suggested that aggregates such as NGDP and inflation are “the only” reliable indicators. If you average those two indicators, then 2008-09 was the tightest money since the Great Depression. Had Stock and Watson used that indicator, they would have blamed the Fed for almost all of the Great Recession."
viernes, 23 de marzo de 2012
What isn't for sale?
Artículo de Michael Sandel
"Economists often assume that markets are inert, that they do not affect the goods being exchanged. But this is untrue. Markets leave their mark. Sometimes, market values crowd out nonmarket values worth caring about."
"These examples illustrate a broader point: some of the good things in life are degraded if turned into commodities. So to decide where the market belongs, and where it should be kept at a distance, we have to decide how to value the goods in question—health, education, family life, nature, art, civic duties, and so on. These are moral and political questions, not merely economic ones. To resolve them, we have to debate, case by case, the moral meaning of these goods, and the proper way of valuing them."
"This is a debate we didn’t have during the era of market triumphalism. As a result, without quite realizing it—without ever deciding to do so—we drifted from having a market economy to being a market society.
The difference is this: A market economy is a tool—a valuable and effective tool—for organizing productive activity. A market society is a way of life in which market values seep into every aspect of human endeavor. It’s a place where social relations are made over in the image of the market."
Varias opiniones sobre el libro de Sandel
"Economists often assume that markets are inert, that they do not affect the goods being exchanged. But this is untrue. Markets leave their mark. Sometimes, market values crowd out nonmarket values worth caring about."
"These examples illustrate a broader point: some of the good things in life are degraded if turned into commodities. So to decide where the market belongs, and where it should be kept at a distance, we have to decide how to value the goods in question—health, education, family life, nature, art, civic duties, and so on. These are moral and political questions, not merely economic ones. To resolve them, we have to debate, case by case, the moral meaning of these goods, and the proper way of valuing them."
"This is a debate we didn’t have during the era of market triumphalism. As a result, without quite realizing it—without ever deciding to do so—we drifted from having a market economy to being a market society.
The difference is this: A market economy is a tool—a valuable and effective tool—for organizing productive activity. A market society is a way of life in which market values seep into every aspect of human endeavor. It’s a place where social relations are made over in the image of the market."
Varias opiniones sobre el libro de Sandel
jueves, 22 de marzo de 2012
Aca
"We were in a 'risk on' mode, with equity markets rising and bond markets falling, based on the idea that the economy was looking rather better than feared and that the Europeans had averted complete disaster with the Greek deal. But that story was already looking shaky when today, the Chinese PMI came in at a disappointing 48.1, the European composite PMI fell to 48.7 and the UK's retail sales dropped 0.8% in February."
"When the government dis-saves, of course, it spends more than it takes in. That spending either goes on goods and services (bought from the corporate sector) or is paid to workers or benefit recipients, and is then spent on goods and services. (Before you leap to comment. of course repeated deficits mean higher taxes later on, but that doesn't affect profit margins now.) Profits are 10.2% of US GDP, and the deficit is 7.6%, so one can roughly (very roughly, as there are many offsetting factors) say that the deficit is responsible for three-quarters of profits."
"We were in a 'risk on' mode, with equity markets rising and bond markets falling, based on the idea that the economy was looking rather better than feared and that the Europeans had averted complete disaster with the Greek deal. But that story was already looking shaky when today, the Chinese PMI came in at a disappointing 48.1, the European composite PMI fell to 48.7 and the UK's retail sales dropped 0.8% in February."
"When the government dis-saves, of course, it spends more than it takes in. That spending either goes on goods and services (bought from the corporate sector) or is paid to workers or benefit recipients, and is then spent on goods and services. (Before you leap to comment. of course repeated deficits mean higher taxes later on, but that doesn't affect profit margins now.) Profits are 10.2% of US GDP, and the deficit is 7.6%, so one can roughly (very roughly, as there are many offsetting factors) say that the deficit is responsible for three-quarters of profits."
Clase de Bernanke sobre política monetaria
Aca
David Glasner critica la explicación del patrón oro. Más de Glasner
David Warsh
Otra crítica a Bernanke
Otra:
"The last, first. The purpose here is to throw light on a mind so inadequately prepared, yet 100% sure, of extracting the world from an unprecedented gamble. The gamble is Bernanke’s dry run of his professorial emissions. The professor’s chalkboard smog is the basis for his current policy. Real interest rates are below zero and the central bank is creating immeasurable quantities of dollar bills that Bernanke is sure will right the U.S. economy while not sacrificing his wandering price stability."
"Wolfgang Pauli would probably agree that Bernanke’s attempt at clarification is neither right nor wrong. It is meaningless. As a general statement, rising house prices do not constitute a bubble. Nor, are falling house prices synonymous with a crash. The most important distinction is the degree of borrowing that contributed to the upswing. Of the recent housing enthusiasm, Panderer to Power made this clear. During the Greenspan-Bernanke chairmanship, the U.S. did not experience a housing crash, it suffered a mortgage collapse."
"Bernanke claims the “decline in house prices by itself was not obviously a major threat [before it crashed in 2007 - FJS].” The man was either unaware of how housing finance was conducted in the U.S. during bubble years or considered it irrelevant."
"Like Sisyphus, California real estate prices pushed and pushed harder up the hill from 1995 to 2005. This is too well known to recall here. Some reminders: The median price for an existing, single-family house in California rose from $237,060 in 2000 to $542,720 in 2005. That this was a mortgage bubble par excellence, and not so much a housing bubble, can be seen in the evolution of financing: Mortgages written in California responded to Bernanke’s “zero-bound policy” in spectacular form. Only 2% of home mortgages were of the non-principal paying “interest-only” version in 2002. This rose to 47% in early 2004 and to 67% by late 2004. In February 2012, the median price for an existing, single-family house in California was $266,600, and falling at a 7% annual rate.
Doug Noland, author of the Prudent Bear’s Credit Bubble Bulletin, wrote untiringly during the boom years of the “moneyness of credit.” (He still writes every week and is still well worth reading.) Noland wrote that the Fed and Wall Street refused to understand the explosion of credit and credit derivatives were behaving like money and inflating house prices. This should have been understood. It was the ability to buy (sort of) a house without showing up with one penny at the closing that gave Sisyphus his third and fourth wind."
Conversación de Bernanke con un 'estudiante'
Más sobre Bernanke y el patrón oro
David Beckworth sobre lo que le faltó decir a Bernanke
David Glasner critica la explicación del patrón oro. Más de Glasner
David Warsh
Otra crítica a Bernanke
Otra:
"The last, first. The purpose here is to throw light on a mind so inadequately prepared, yet 100% sure, of extracting the world from an unprecedented gamble. The gamble is Bernanke’s dry run of his professorial emissions. The professor’s chalkboard smog is the basis for his current policy. Real interest rates are below zero and the central bank is creating immeasurable quantities of dollar bills that Bernanke is sure will right the U.S. economy while not sacrificing his wandering price stability."
"Wolfgang Pauli would probably agree that Bernanke’s attempt at clarification is neither right nor wrong. It is meaningless. As a general statement, rising house prices do not constitute a bubble. Nor, are falling house prices synonymous with a crash. The most important distinction is the degree of borrowing that contributed to the upswing. Of the recent housing enthusiasm, Panderer to Power made this clear. During the Greenspan-Bernanke chairmanship, the U.S. did not experience a housing crash, it suffered a mortgage collapse."
"Bernanke claims the “decline in house prices by itself was not obviously a major threat [before it crashed in 2007 - FJS].” The man was either unaware of how housing finance was conducted in the U.S. during bubble years or considered it irrelevant."
"Like Sisyphus, California real estate prices pushed and pushed harder up the hill from 1995 to 2005. This is too well known to recall here. Some reminders: The median price for an existing, single-family house in California rose from $237,060 in 2000 to $542,720 in 2005. That this was a mortgage bubble par excellence, and not so much a housing bubble, can be seen in the evolution of financing: Mortgages written in California responded to Bernanke’s “zero-bound policy” in spectacular form. Only 2% of home mortgages were of the non-principal paying “interest-only” version in 2002. This rose to 47% in early 2004 and to 67% by late 2004. In February 2012, the median price for an existing, single-family house in California was $266,600, and falling at a 7% annual rate.
Doug Noland, author of the Prudent Bear’s Credit Bubble Bulletin, wrote untiringly during the boom years of the “moneyness of credit.” (He still writes every week and is still well worth reading.) Noland wrote that the Fed and Wall Street refused to understand the explosion of credit and credit derivatives were behaving like money and inflating house prices. This should have been understood. It was the ability to buy (sort of) a house without showing up with one penny at the closing that gave Sisyphus his third and fourth wind."
Conversación de Bernanke con un 'estudiante'
Más sobre Bernanke y el patrón oro
David Beckworth sobre lo que le faltó decir a Bernanke
miércoles, 21 de marzo de 2012
Gran debate sobre los bancos y el sistema financiero (sobre Minsky también)
Paper de Steve Keen: 'Instability in financial markets: Sources and remedies'. Y un resumen
Crítica de Krugman
Randall Wray responde (explicando a Minsky):
"Minsky took a broad approach to money creation, arguing that “everyone can create money; the problem is to get it accepted.” (2008b p. 255) Money is really just an IOU denominated in the money of account, but there is a hierarchy of monies—some are more widely accepted than others—with the monetary IOUs issued by the treasury and the central bank sitting at the top of the money pyramid. He saw banking as essentially the business of “accepting” IOUs, making payments on behalf of customers and holding their liabilities. Banks make payments in their own IOUs, which are then cleared using the central bank’s reserves."
"...In other words, the “money supply” expands and contracts as bankers accommodate the demands of their customers in a pro-cyclical manner."
"This pro-cyclical behavior amplifies the business cycle, increasing the thrust toward instability. Minsky’s theory can be summarized as “an investment theory of the cycle and a financial theory of investment”; the first is the usual Keynesian view, and the second stresses that modern investment is expensive and must be financed—and it is the financing that generates structural fragility. During an upswing, profit-seeking firms and banks become more optimistic, taking on riskier financial structures. Firms commit larger portions of expected revenues to debt service. Lenders accept smaller down-payments and lower quality collateral. Financial institutions innovate new products and finesse rules and regulations imposed by supervisory authorities. Borrowers use more external finance (rather than retained earnings), and increasingly issue short-term debt that is potentially volatile (it must be “rolled-over” so there is risk that lenders might refuse to do so). As the boom heats up, the central bank hikes its interest rate—and with greater use of short-term finance, borrowers face higher debt service costs."
"While Minsky’s FIH is usually interpreted as a theory of the business cycle, he also developed a theory of the long-term transformation of the economy. Briefly, capitalism evolves through several stages, each marked by a different financial structure. The 19th century saw “commercial capitalism” where commercial banking dominated—banks made short-term commercial loans and issued deposits. This was replaced by the beginning of the 20th century, with “finance capitalism,” after Rudolf Hilferding, where investment banks ruled. The distinguishing characteristic was the use of long-term external finance to purchase expensive capital assets. The financial structure was riskier, and collapsed into the Great Depression—which he saw as the failure of finance capitalism. We emerged from WWII with a new form of capitalism, “managerial welfare-state capitalism” in which financial institutions were constrained by New Deal reforms, and with large oligopolistic corporations that financed investment out of retained earnings. Private sector debt was small, but government debt left over from war finance was large—providing safe assets for households, firms, and banks. This system was financially robust, unlikely to experience deep recession because of the Big Government and Big Bank constraints discussed above."
Sobre la discusión
Crítica a Krugman
Steve Keen le responde a Krugman.
Keen:
"Why does it matter that “once you include banks, lending increases the money supply”? Simply, because the endogenous increase in the stock of money caused by the banking sector creating new money is a far larger determinant of changes in aggregate demand than changes in the velocity of an unchanging stock of money. And in reverse, the reduction in demand caused by borrowers repaying debt rather than spending is the cause of the downturn we are now in—and of the Great Depression too."
Keen, Krugman and National Accounting
"Borio and Disyatat have written a nice article outlining the differences between the concept of saving and investment on one side and ‘financing’ on the other side. and its indeed telling that when it comes to money and lending these practical economists from the Bank of International Settlements/Central Bank of Thailand use the same concepts as Post-Keynesians and, to an extent, Austrians – but not the same concepts as neo classical economists."
Lending, velocity and aggregate demand
Steve Keen le responde a Krugman otra vez
Nick Rowe: "The supply of money is demand determined". Krugman comenta
Banking mysticism and the hot potato
Slack Wire critica a Keen
"First, he argues that a tradition running from Minsky back to Keynes and Schumpeter (and, I would add, Wicksell and on back to the "caps" in 17th century Sweden) sees money as endogenously created by the banking system, rather than exogenously set by central banks (or, earlier, by the supply of gold). This means that banks can lend to borrowers without a prior decision by anyone to save, which in turn means that changes in the terms on which banks extend credit are an important source of fluctuations in aggregate demand that drive movements in output and prices. With all this, I am in perfect agreement.
Keen repeatedly says that "aggregate demand is income plus change in debt." There are many variations on this through his writing, he evidently regards it as a central contribution. But what does it mean? To a non-economist, it appears to be a challenge to another, presumably orthodox, view that aggregate demand is equal to income. But if you are an economist you know that there is no such view, whether neoclassical, Keynesian or radical.
What economist do believe, across the spectrum, is that total expenditure = total output = total income, or Y = Z = C + I + G + X - M. Given the way our national accounts are set up, this is an identity. The question, as always, is which way causality runs. The term "aggregate demand" is shorthand for the argument that causality runs from aggregate expenditure to aggregate income, whereas pre-Keynesian orthodoxy held that causality ran strictly from income to expenditure. (It's worth noting that in this debate Krugman is solidly with Keen -- and me -- on the Keynesian side.) But there isn't any separate variable called "aggregate demand"; AD is just another name for aggregate expenditure insofar as it determines output. Nobody ever says that AD is equal to income; what they typically say is that AD is a function of income, along with other variables such as interest rates, wealth, and changes in sentiment. (People do say that income is equal to AD, but that is a very different claim, and it's true by definition.)
Krugman vs Scott Fullwiler
Banks are not mystical
Comentario en el blog de Keen
Más de Randall Wray sobre Minsky
"From the 1920s a peculiarly American misunderstanding developed according to which the quantity of bank reserves issued by the Fed could somehow control bank lending and deposit creation. This was called the “exogenous money” approach (the money supply is “exogenously” controlled by the central bank through restriction of the quantity of reserves supplied). It became the starting point for Milton Friedman’s monetarism—which finally ended in the disastrous Great Monetarist Experiment of the early 1980s in the US and the UK in which the central banks tried formal targeting of growth of the money supply.
There was always another tradition, dating back to the Banking School of the early 19th century through Marx and then Keynes, and on to Schumpeter, Gurley&Shaw, Minsky, N. Kaldor, B. Moore and finally to yours truly at the end of the 1980s. It is called the “endogenous money” approach that insists central banks cannot control private money creation by banks through control over reserves.
This stuff is way too wonky for this particular blog. But very briefly the idea runs like this. Modern central banks are responsible for maintaining a smoothly operating payments system, which among other things requires that bank liabilities clear “at par” (a one dollar deposit at Chase is valued the same as a one dollar deposit at Bank of America). The Fed makes sure that checks clear among banks and that depositors can use the ATM machines. That means banks must have reserves as required. So the Fed’s control is based on “price”, not “quantity”: it can set the interest rate at which it lends reserves to banks, but cannot determine the quantity.
Nick Rowe: "Monetary policy is just one damn interest rate after another"
Krugman: A teachable money moment
A propósito de la discusión: 'The bank lending channel revisited' de Piti Disyatat
Resumen del debate
Is Paul Krugman a verticalist? Más
Daniel Kuehn opina
Ultima respuesta de Keen
Who is right? Krugman or Keen or / and 9 Central Bank economists?
Edward Harrison: Endogenous or exogenous money? y resumen del debate
Not so Keen on Krugman (muy buen post)
Slaves of some defunct economist
Keen vs Krugman and why it matters
The strange case of the Nobel economist who doesn’t understand how banks work (wonkish)
Más sobre Minsky de Randall Wray. Y otro
David Glasner What about all those excess reserves at the Fed? Otro en contra de Krugman Crítica a la metodología de la economía
Keen cree que Krugnman ha cambiado su postura sobre la deuda y la demanda agregada
Crítica de Krugman
Randall Wray responde (explicando a Minsky):
"Minsky took a broad approach to money creation, arguing that “everyone can create money; the problem is to get it accepted.” (2008b p. 255) Money is really just an IOU denominated in the money of account, but there is a hierarchy of monies—some are more widely accepted than others—with the monetary IOUs issued by the treasury and the central bank sitting at the top of the money pyramid. He saw banking as essentially the business of “accepting” IOUs, making payments on behalf of customers and holding their liabilities. Banks make payments in their own IOUs, which are then cleared using the central bank’s reserves."
"...In other words, the “money supply” expands and contracts as bankers accommodate the demands of their customers in a pro-cyclical manner."
"This pro-cyclical behavior amplifies the business cycle, increasing the thrust toward instability. Minsky’s theory can be summarized as “an investment theory of the cycle and a financial theory of investment”; the first is the usual Keynesian view, and the second stresses that modern investment is expensive and must be financed—and it is the financing that generates structural fragility. During an upswing, profit-seeking firms and banks become more optimistic, taking on riskier financial structures. Firms commit larger portions of expected revenues to debt service. Lenders accept smaller down-payments and lower quality collateral. Financial institutions innovate new products and finesse rules and regulations imposed by supervisory authorities. Borrowers use more external finance (rather than retained earnings), and increasingly issue short-term debt that is potentially volatile (it must be “rolled-over” so there is risk that lenders might refuse to do so). As the boom heats up, the central bank hikes its interest rate—and with greater use of short-term finance, borrowers face higher debt service costs."
"While Minsky’s FIH is usually interpreted as a theory of the business cycle, he also developed a theory of the long-term transformation of the economy. Briefly, capitalism evolves through several stages, each marked by a different financial structure. The 19th century saw “commercial capitalism” where commercial banking dominated—banks made short-term commercial loans and issued deposits. This was replaced by the beginning of the 20th century, with “finance capitalism,” after Rudolf Hilferding, where investment banks ruled. The distinguishing characteristic was the use of long-term external finance to purchase expensive capital assets. The financial structure was riskier, and collapsed into the Great Depression—which he saw as the failure of finance capitalism. We emerged from WWII with a new form of capitalism, “managerial welfare-state capitalism” in which financial institutions were constrained by New Deal reforms, and with large oligopolistic corporations that financed investment out of retained earnings. Private sector debt was small, but government debt left over from war finance was large—providing safe assets for households, firms, and banks. This system was financially robust, unlikely to experience deep recession because of the Big Government and Big Bank constraints discussed above."
Sobre la discusión
Crítica a Krugman
Steve Keen le responde a Krugman.
Keen:
"Why does it matter that “once you include banks, lending increases the money supply”? Simply, because the endogenous increase in the stock of money caused by the banking sector creating new money is a far larger determinant of changes in aggregate demand than changes in the velocity of an unchanging stock of money. And in reverse, the reduction in demand caused by borrowers repaying debt rather than spending is the cause of the downturn we are now in—and of the Great Depression too."
Keen, Krugman and National Accounting
"Borio and Disyatat have written a nice article outlining the differences between the concept of saving and investment on one side and ‘financing’ on the other side. and its indeed telling that when it comes to money and lending these practical economists from the Bank of International Settlements/Central Bank of Thailand use the same concepts as Post-Keynesians and, to an extent, Austrians – but not the same concepts as neo classical economists."
Lending, velocity and aggregate demand
Steve Keen le responde a Krugman otra vez
Nick Rowe: "The supply of money is demand determined". Krugman comenta
Banking mysticism and the hot potato
Slack Wire critica a Keen
"First, he argues that a tradition running from Minsky back to Keynes and Schumpeter (and, I would add, Wicksell and on back to the "caps" in 17th century Sweden) sees money as endogenously created by the banking system, rather than exogenously set by central banks (or, earlier, by the supply of gold). This means that banks can lend to borrowers without a prior decision by anyone to save, which in turn means that changes in the terms on which banks extend credit are an important source of fluctuations in aggregate demand that drive movements in output and prices. With all this, I am in perfect agreement.
Keen repeatedly says that "aggregate demand is income plus change in debt." There are many variations on this through his writing, he evidently regards it as a central contribution. But what does it mean? To a non-economist, it appears to be a challenge to another, presumably orthodox, view that aggregate demand is equal to income. But if you are an economist you know that there is no such view, whether neoclassical, Keynesian or radical.
What economist do believe, across the spectrum, is that total expenditure = total output = total income, or Y = Z = C + I + G + X - M. Given the way our national accounts are set up, this is an identity. The question, as always, is which way causality runs. The term "aggregate demand" is shorthand for the argument that causality runs from aggregate expenditure to aggregate income, whereas pre-Keynesian orthodoxy held that causality ran strictly from income to expenditure. (It's worth noting that in this debate Krugman is solidly with Keen -- and me -- on the Keynesian side.) But there isn't any separate variable called "aggregate demand"; AD is just another name for aggregate expenditure insofar as it determines output. Nobody ever says that AD is equal to income; what they typically say is that AD is a function of income, along with other variables such as interest rates, wealth, and changes in sentiment. (People do say that income is equal to AD, but that is a very different claim, and it's true by definition.)
Krugman vs Scott Fullwiler
Banks are not mystical
Comentario en el blog de Keen
Más de Randall Wray sobre Minsky
"From the 1920s a peculiarly American misunderstanding developed according to which the quantity of bank reserves issued by the Fed could somehow control bank lending and deposit creation. This was called the “exogenous money” approach (the money supply is “exogenously” controlled by the central bank through restriction of the quantity of reserves supplied). It became the starting point for Milton Friedman’s monetarism—which finally ended in the disastrous Great Monetarist Experiment of the early 1980s in the US and the UK in which the central banks tried formal targeting of growth of the money supply.
There was always another tradition, dating back to the Banking School of the early 19th century through Marx and then Keynes, and on to Schumpeter, Gurley&Shaw, Minsky, N. Kaldor, B. Moore and finally to yours truly at the end of the 1980s. It is called the “endogenous money” approach that insists central banks cannot control private money creation by banks through control over reserves.
This stuff is way too wonky for this particular blog. But very briefly the idea runs like this. Modern central banks are responsible for maintaining a smoothly operating payments system, which among other things requires that bank liabilities clear “at par” (a one dollar deposit at Chase is valued the same as a one dollar deposit at Bank of America). The Fed makes sure that checks clear among banks and that depositors can use the ATM machines. That means banks must have reserves as required. So the Fed’s control is based on “price”, not “quantity”: it can set the interest rate at which it lends reserves to banks, but cannot determine the quantity.
Nick Rowe: "Monetary policy is just one damn interest rate after another"
Krugman: A teachable money moment
A propósito de la discusión: 'The bank lending channel revisited' de Piti Disyatat
Resumen del debate
Is Paul Krugman a verticalist? Más
Daniel Kuehn opina
Ultima respuesta de Keen
Who is right? Krugman or Keen or / and 9 Central Bank economists?
Edward Harrison: Endogenous or exogenous money? y resumen del debate
Not so Keen on Krugman (muy buen post)
Slaves of some defunct economist
Keen vs Krugman and why it matters
The strange case of the Nobel economist who doesn’t understand how banks work (wonkish)
Más sobre Minsky de Randall Wray. Y otro
David Glasner What about all those excess reserves at the Fed? Otro en contra de Krugman Crítica a la metodología de la economía
Keen cree que Krugnman ha cambiado su postura sobre la deuda y la demanda agregada
martes, 20 de marzo de 2012
lunes, 19 de marzo de 2012
Empiezan a subir las tasas de interés en EEUU
The bond vigilantes are coming!
"Of course, the truth is that the USA is an autonomous issuer of its own currency. That means it can never “run out” of money (see here if you’re getting confused already). This is very different than what’s going on in Europe where each country is analogous to a state in the USA and a currency user. The difference is critical when understanding the economy and the markets. Because there is no solvency risk in the USA the bond markets are almost entirely controlled by the Fed (private credit markets are different). That’s right. James Carville was wrong – when you come back you want to come back as the Federal Reserve, not the bond market! Of course, we could print so much money (since we can’t run out of money we can certainly issue too much of it!) that inflation becomes wildly out of control and our currency collapses to nothing and causes the US to become a third world country, but that’s a very different phenomenon than the USA becoming Greece who can literally run out of Euro…."
DAvid Beckworth dice que el aumento de las tasas significa que se espera mayor crecimiento
Lars Christensen
"What we need to know when we look at market action is to know why asset prices are moving and the best way to do that is to compare how different asset markets are moving."
"Of course, the truth is that the USA is an autonomous issuer of its own currency. That means it can never “run out” of money (see here if you’re getting confused already). This is very different than what’s going on in Europe where each country is analogous to a state in the USA and a currency user. The difference is critical when understanding the economy and the markets. Because there is no solvency risk in the USA the bond markets are almost entirely controlled by the Fed (private credit markets are different). That’s right. James Carville was wrong – when you come back you want to come back as the Federal Reserve, not the bond market! Of course, we could print so much money (since we can’t run out of money we can certainly issue too much of it!) that inflation becomes wildly out of control and our currency collapses to nothing and causes the US to become a third world country, but that’s a very different phenomenon than the USA becoming Greece who can literally run out of Euro…."
DAvid Beckworth dice que el aumento de las tasas significa que se espera mayor crecimiento
Lars Christensen
"What we need to know when we look at market action is to know why asset prices are moving and the best way to do that is to compare how different asset markets are moving."
domingo, 18 de marzo de 2012
Partial equilibrium intuitions about choice
Aca
"It is true, in this world, that giving any one person a choice never makes her worse off. But it does not follow, unfortunately, that giving everyone an extra choice will make everyone, or even anyone, better off. That is, to use one of the stylized insults of economists, “partial equilibrium thinking”. If you give me an extra choice, I will only pursue it if it benefits me. But if you give my customer an extra choice, that may very well harm me. If you give everyone a new choice, where the benefits conferred by our own freedom and the costs imposed by the choices of others take us is anybody’s guess.
This fact should be elementary to economists, but somehow it isn’t, at least not when it comes to policy debates. All economists encounter the “prisoner’s dilemma” prenatally. In a prisoner’s dilemma, what is clearly the best “partial equilibrium” choice for every participant — the best choice holding everybody else’s behavior constant — leads to a poor “general equilibrium” outcome when everybody does it. The prisoner’s dilemma is a situation in which all parties would be made better off if everybody involved had an attractive option taken off the table. Another common example is the “tragedy of the commons“. These situations are not at all rare in real life.
It never, ever, follows that creating a new option for people in an economy must make everyone, or even anyone, better off. Economists who worship at the alter of the first welfare theorem and sloppily equate more choice with “more complete” markets need to recall the Theory of the Second Best (ht Yves Smith, long ago). Markets are either complete or they are not. If they are not complete, the kind of intervention often described as “completing markets” (creating new choices, inventing new contracts) might help, but might also lead to very poor outcomes. For example, “more complete” financial markets have recently served to enable banks and institutional investors to customize payoff distributions in order to extract maximum value from government guarantees and foreseeable bailouts."
"It is true, in this world, that giving any one person a choice never makes her worse off. But it does not follow, unfortunately, that giving everyone an extra choice will make everyone, or even anyone, better off. That is, to use one of the stylized insults of economists, “partial equilibrium thinking”. If you give me an extra choice, I will only pursue it if it benefits me. But if you give my customer an extra choice, that may very well harm me. If you give everyone a new choice, where the benefits conferred by our own freedom and the costs imposed by the choices of others take us is anybody’s guess.
This fact should be elementary to economists, but somehow it isn’t, at least not when it comes to policy debates. All economists encounter the “prisoner’s dilemma” prenatally. In a prisoner’s dilemma, what is clearly the best “partial equilibrium” choice for every participant — the best choice holding everybody else’s behavior constant — leads to a poor “general equilibrium” outcome when everybody does it. The prisoner’s dilemma is a situation in which all parties would be made better off if everybody involved had an attractive option taken off the table. Another common example is the “tragedy of the commons“. These situations are not at all rare in real life.
It never, ever, follows that creating a new option for people in an economy must make everyone, or even anyone, better off. Economists who worship at the alter of the first welfare theorem and sloppily equate more choice with “more complete” markets need to recall the Theory of the Second Best (ht Yves Smith, long ago). Markets are either complete or they are not. If they are not complete, the kind of intervention often described as “completing markets” (creating new choices, inventing new contracts) might help, but might also lead to very poor outcomes. For example, “more complete” financial markets have recently served to enable banks and institutional investors to customize payoff distributions in order to extract maximum value from government guarantees and foreseeable bailouts."
viernes, 16 de marzo de 2012
jueves, 15 de marzo de 2012
Inflation 'floodgates'
Sobre la dinámica de la inflación. Se puede contener una vez empieza?
"So in a sense this seems to confirm some of the hawks’ fears. Inflation expectations are now above target, and they are not coming down in line with forecaster’s projections. Has this started a wage-price spiral, with inflation out of control?
In a word, no. From the peak of 5.2% in September, inflation has fallen rapidly, and was 3.6% in January. The OECD expects year on year inflation to be 2.7% in 2012, and only 1.3% in 2013. What we have seen is a classic and temporary cost push or supply shock caused by a VAT increase and rising commodity prices."
"So in a sense this seems to confirm some of the hawks’ fears. Inflation expectations are now above target, and they are not coming down in line with forecaster’s projections. Has this started a wage-price spiral, with inflation out of control?
In a word, no. From the peak of 5.2% in September, inflation has fallen rapidly, and was 3.6% in January. The OECD expects year on year inflation to be 2.7% in 2012, and only 1.3% in 2013. What we have seen is a classic and temporary cost push or supply shock caused by a VAT increase and rising commodity prices."
Financing U.S debt
Menzie Chinn. Paper
"Although the United States has had little trouble financing its large budget deficits in recent years and at low interest rates, the results of the paper show the extent to which Federal Reserve policies (from expanding its holdings of Treasuries and government-backed securities) and the large purchases of Treasuries by foreign governments and central banks (foreign official assets) have contributed to keeping longer-term Treasury security yields low (and low relative to the low short-term interest rates from Federal Reserve policy). Once the U.S. and major developed world economies return to a more established economic expansion, however, the United States likely will face greater challenges in financing its debt -- and at a higher cost with much higher interest rates."
"Although the United States has had little trouble financing its large budget deficits in recent years and at low interest rates, the results of the paper show the extent to which Federal Reserve policies (from expanding its holdings of Treasuries and government-backed securities) and the large purchases of Treasuries by foreign governments and central banks (foreign official assets) have contributed to keeping longer-term Treasury security yields low (and low relative to the low short-term interest rates from Federal Reserve policy). Once the U.S. and major developed world economies return to a more established economic expansion, however, the United States likely will face greater challenges in financing its debt -- and at a higher cost with much higher interest rates."
miércoles, 14 de marzo de 2012
martes, 13 de marzo de 2012
Rising inflation expectations work their magic
David Glasner
"The rise in real interest rates provides further evidence that the way to get out of the abnormally low interest-rate environment in which we have been stuck for over three years is through increased inflation expectations. Under current abnormal conditions, expectations of increasing prices and increasing demand would be self-fulfilling, causing both nominal and real interest rates to rise along with asset values. As I showed in this paper, there is no theoretical basis for a close empirical correlation between inflation expectations and stock prices under normal conditions. The empirical relationship emerged only in the spring of 2008 when the economy was already starting the downturn that culminated in the financial panic of September and October 2008. That the powerful relationship between inflation expectations and stock prices remains so strikingly evident suggests that further increases in expected inflation would help, not hurt, the economy."
Comenta Lars Christensen
Inflation expectations are falling; run for cover
De nuevo Glasner
Equity prices vs inflation expectations
"The rise in real interest rates provides further evidence that the way to get out of the abnormally low interest-rate environment in which we have been stuck for over three years is through increased inflation expectations. Under current abnormal conditions, expectations of increasing prices and increasing demand would be self-fulfilling, causing both nominal and real interest rates to rise along with asset values. As I showed in this paper, there is no theoretical basis for a close empirical correlation between inflation expectations and stock prices under normal conditions. The empirical relationship emerged only in the spring of 2008 when the economy was already starting the downturn that culminated in the financial panic of September and October 2008. That the powerful relationship between inflation expectations and stock prices remains so strikingly evident suggests that further increases in expected inflation would help, not hurt, the economy."
Comenta Lars Christensen
Inflation expectations are falling; run for cover
De nuevo Glasner
Equity prices vs inflation expectations
Understanding the keynesian cross
Nick Rowe
"The Keynesian Cross AE curve is a quantity-constrained aggregate Engel Curve. An "Engel curve" shows the relation between quantity demanded and income. A "notional" Engel curve assumes that income is equal to that generated when you can sell as much as you want to sell. A "quantity-constrained" Engel curve assumes that income is constrained because you cannot sell as big a quantity as you want to sell. That's how Qd=a+bQ should be interpreted.
To my mind, the Keynesian Cross only makes sense in a monetary exchange economy. It would be complete nonsense in a barter economy. In a barter economy, if the apple producer cannot sell as many apples as he wants, and would demand more pears if he could sell more apples; and if the pear producer cannot sell as many pears as he wants, and would demand more apples if he could sell more pears: then the two of them would just get together and do a swap."
New keynesian macro, with and without barter
"The Keynesian Cross AE curve is a quantity-constrained aggregate Engel Curve. An "Engel curve" shows the relation between quantity demanded and income. A "notional" Engel curve assumes that income is equal to that generated when you can sell as much as you want to sell. A "quantity-constrained" Engel curve assumes that income is constrained because you cannot sell as big a quantity as you want to sell. That's how Qd=a+bQ should be interpreted.
To my mind, the Keynesian Cross only makes sense in a monetary exchange economy. It would be complete nonsense in a barter economy. In a barter economy, if the apple producer cannot sell as many apples as he wants, and would demand more pears if he could sell more apples; and if the pear producer cannot sell as many pears as he wants, and would demand more apples if he could sell more pears: then the two of them would just get together and do a swap."
New keynesian macro, with and without barter
lunes, 12 de marzo de 2012
domingo, 11 de marzo de 2012
Graeber cycles and the wicksellian Judgement Day
Aca
"One of the things you hope students learn in a course like this is that money consists of three things: demand deposits (checking accounts and the like), currency and bank reserves. The first is a liability of private banks, the latter two are liabilities of the central bank. That money is always someone's liability -- a debt -- is often a hard thing for students to get their heads around..."
"We are lumping together two very different kinds of "money." Currency looks like classical money, like gold; but demand deposits do not. The most obvious difference, at least in the context of macroeconomics, is that one is exogenous (or set by policy) and the other endogenous. We paper this over by talking about reserve requirements, which allow the central bank to set "the" money supply to determine "the" interest rate. But everyone knows that reserve requirements are a dead letter and have been for decades, probably. While monetarists like Nick Rowe insist that there's something special about currency -- they have to, given the logic of their theories -- in the real world the link between the "money" issued by central banks and the "money" that matters for the economy has attenuated to imperceptible gossamer, if it hasn't been severed entirely. The best explanation for how conventional monetary policy works today is pure convention: With the supply of money entirely in the hands of private banks, policy is effective only because market participants expect it to be effective."
"What looked potential a dozen years ago is now actual, if it wasn't already then. It's impossible to tell any sensible macroeconomic story that hinges on the quantity of outside money. The shift in our language from money, which can be measured -- that one could formulate a "quantity theory" of -- to discussions of liquidity, still a noun but now not a tangible thing but a property that adheres in different assets to different degrees, is a key diagnostic. And liquidity is a result of the operations of the financial system, not a feature of the natural world or a dial that can be set by the central bank."
"One of the things you hope students learn in a course like this is that money consists of three things: demand deposits (checking accounts and the like), currency and bank reserves. The first is a liability of private banks, the latter two are liabilities of the central bank. That money is always someone's liability -- a debt -- is often a hard thing for students to get their heads around..."
"We are lumping together two very different kinds of "money." Currency looks like classical money, like gold; but demand deposits do not. The most obvious difference, at least in the context of macroeconomics, is that one is exogenous (or set by policy) and the other endogenous. We paper this over by talking about reserve requirements, which allow the central bank to set "the" money supply to determine "the" interest rate. But everyone knows that reserve requirements are a dead letter and have been for decades, probably. While monetarists like Nick Rowe insist that there's something special about currency -- they have to, given the logic of their theories -- in the real world the link between the "money" issued by central banks and the "money" that matters for the economy has attenuated to imperceptible gossamer, if it hasn't been severed entirely. The best explanation for how conventional monetary policy works today is pure convention: With the supply of money entirely in the hands of private banks, policy is effective only because market participants expect it to be effective."
"What looked potential a dozen years ago is now actual, if it wasn't already then. It's impossible to tell any sensible macroeconomic story that hinges on the quantity of outside money. The shift in our language from money, which can be measured -- that one could formulate a "quantity theory" of -- to discussions of liquidity, still a noun but now not a tangible thing but a property that adheres in different assets to different degrees, is a key diagnostic. And liquidity is a result of the operations of the financial system, not a feature of the natural world or a dial that can be set by the central bank."
Sobre Why Nations Fail de Acemoglu y Robinson
Paul Collier
"Their argument is that the modern level of prosperity rests upon political foundations. Proximately, prosperity is generated by investment and innovation, but these are acts of faith: investors and innovators must have credible reasons to think that, if successful, they will not be plundered by the powerful."
The Economist
"They offer instead a striking diagnosis: some governments get it wrong on purpose. Amid weak and accommodating institutions, there is little to discourage a leader from looting. Such environments channel society’s output towards a parasitic elite, discouraging investment and innovation. Extractive institutions are the historical norm. Inclusive institutions protect individual rights and encourage investment and effort. Where inclusive governments emerge, great wealth follows."
Pete Boettke
William Easterly:
"For Messrs. Acemoglu and Robinson, it is institutions that determine the fate of nations. Success comes, the authors say, when political and economic institutions are "inclusive" and pluralistic, creating incentives for everyone to invest in the future. Nations fail when institutions are "extractive," protecting the political and economic power of only a small elite that takes income from everyone else."
"Messrs. Acemoglu and Robinson insist that getting the economics right requires getting the politics right."
"Just as inclusive institutions feed on each other, so do their opposites: Extractive political institutions support the economic institutions that protect the interests of the elite against new entry from competitors. The wealth of the elite so created can make the hierarchical, authoritarian state even larger and more repressive, increasing elite wealth even more. This vicious cycle means that bad history persists into bad present outcomes."
"'Why Nations Fail' also offers this crucial insight: Experts cannot engineer prosperity with the right advice to rulers on policies and institutions. Rulers "get it wrong not by mistake or ignorance but on purpose." Change happens only when a broad coalition revolts, forcing the elite to allow more pluralistic political competition (e.g., the Glorious Revolution in England, the Meiji overthrow of Japanese feudalism and Botswana's democratic ouster of British colonizers)."
"Extractive states can have bursts of growth. After all, even a kleptocratic elite will covet a larger economy ripe for plundering. The elites have an incentive to invest in their own businesses. But authoritarian growth miracles cannot last."
Francis Fukuyama
"So far, so good. AR have done a great deal over the years to focus the attention of both theorists and policymakers on institutions, and to shape the emerging consensus on the importance of politics to growth within the economics profession. It is, then, very disappointing that their more fully fleshed out book fails to go very much further than these broad conclusions, skirting critical issues of exactly what sort of institutions are necessary to promote growth, and failing to come to grips with some critical historical facts."
"The first problem with their analysis is conceptual. They present a sharply bifurcated distinction between what they call good “inclusive” economic and political institutions, which are sometimes also labeled “pluralistic,” in contrast to what they call bad “extractive” or “absolutist” ones. Unfortunately, these terms are way too broad, so broad indeed that AR never provide a clear definition of everything they encompass, or how they map onto concepts already in use."
"'Inclusive' political institutions would seem to imply modern electoral democracy, but they also include an impersonal centralized state as well as access to legal institutions, and forms of political participation that fall well short of modern democracy. We find, for example, that England following the Glorious Revolution of 1688-89 was incipiently inclusive, despite the fact that well under ten percent of the population had a right to vote. When AR first used the term 'extractive' in their early articles, it referred to truly extractive practices like the mines of Potosí or the sugar plantations of the Caribbean which extracted commodities out of the labor of slaves. In the current book extractive seems to mean any institution that denies any degree of participation to citizens, from tribal communities to ranchers in 19th century Argentina to the contemporary Chinese Communist Party."
"Since each of these broad terms (inclusive/extractive, absolutist/pluralistic) encompasses so many possible meanings, it is very hard to come up with a clear metric of either. It also makes it hard to falsify any of their historical claims. Since more real-world societies are some combination of extractive and inclusive institutions, any given degree of growth (or its absence) can then be attributed either to inclusive or extractive qualities ex post."
"All of the good things in the “inclusive” basket, in other words, don’t necessarily go together, and in some cases may be at odds."
"Like many other works making use of history but written by economists, the AR volume contains some pretty problematic facts and interpretations. It makes the case, for example, that Rome shifted away from an inclusive Republic towards absolutist Empire, and that this was then responsible for Rome’s subsequent economic decline. Leave aside the fact that Rome’s power and wealth continued to increase in the two centuries after Augustus, and that its eastern wing managed to hold on remarkably until the fifteenth century. It can be argued that the shift from the narrow oligarchy of the Republic to a monarchy with highly developed legal institutions actually increased access to the political system on the part of ordinary Roman citizens, while solving the acute problem of political instability that bedeviled the late Republic.
Similarly, following on a tradition begun by Douglass North and Barry Weingast, AR point to the Glorious Revolution of 1688/89 as a critical juncture marking both the establishment of secure property rights and an “inclusive” political system. The latter point is fair enough, but English property rights were rooted in a much older tradition of common law dating from the Norman invasion, and had created a strong commercial civilization well before 1689. The Glorious Revolution was much less important in establishing the credibility of property rights per se, than of the Crown as a borrower, which explains why English public debt exploded in the century following that event."
"Given their overall framework, the hardest thing for AR to explain is contemporary China. China today according to them is more inclusive than Maoist China, but still far from the standard of inclusion set by the US and Europe, and yet has been the fastest growing large country over the past three decades. The Chinese restrict access to the market, engage in financial repression, fail to secure property rights, have no Western-style rule of law, and are ruled by a non-transparent oligarchy called the Communist Party. How to explain their economic success? Rather than see this as a threat to their model (i.e., more inclusion, more growth) AR pull a slight of hand by arguing that Chinese growth won’t last and that their system will eventually come crashing down (like Rome did, after about 200 years?). I actually agree that China will eventually crash. But even if that happens, a theory of development that can’t really explain the most remarkable growth story of our time is not, it seems to me, much of a theory."
"The broad conclusions of Why Nations Fail are, thus, incontrovertible and of great importance to policy (which is why, incidentally, I gave it a positive blurb). One only wishes then that the authors had made better use of basic categories long in play in other parts of the social sciences (state, rule of law, patrimonialism, clientelism, democracy, and the like) instead of inventing neologisms that obscure more than they reveal."
Jared Diamond
Arvind Subramanian. Respuesta de Acemoglu y Robinson
A y R le responden a Jeffrey Sachs
Bill Gates. The Economsit sobre la opinión de Gates. Respuesta de A&R
"Their argument is that the modern level of prosperity rests upon political foundations. Proximately, prosperity is generated by investment and innovation, but these are acts of faith: investors and innovators must have credible reasons to think that, if successful, they will not be plundered by the powerful."
The Economist
"They offer instead a striking diagnosis: some governments get it wrong on purpose. Amid weak and accommodating institutions, there is little to discourage a leader from looting. Such environments channel society’s output towards a parasitic elite, discouraging investment and innovation. Extractive institutions are the historical norm. Inclusive institutions protect individual rights and encourage investment and effort. Where inclusive governments emerge, great wealth follows."
Pete Boettke
William Easterly:
"For Messrs. Acemoglu and Robinson, it is institutions that determine the fate of nations. Success comes, the authors say, when political and economic institutions are "inclusive" and pluralistic, creating incentives for everyone to invest in the future. Nations fail when institutions are "extractive," protecting the political and economic power of only a small elite that takes income from everyone else."
"Messrs. Acemoglu and Robinson insist that getting the economics right requires getting the politics right."
"Just as inclusive institutions feed on each other, so do their opposites: Extractive political institutions support the economic institutions that protect the interests of the elite against new entry from competitors. The wealth of the elite so created can make the hierarchical, authoritarian state even larger and more repressive, increasing elite wealth even more. This vicious cycle means that bad history persists into bad present outcomes."
"'Why Nations Fail' also offers this crucial insight: Experts cannot engineer prosperity with the right advice to rulers on policies and institutions. Rulers "get it wrong not by mistake or ignorance but on purpose." Change happens only when a broad coalition revolts, forcing the elite to allow more pluralistic political competition (e.g., the Glorious Revolution in England, the Meiji overthrow of Japanese feudalism and Botswana's democratic ouster of British colonizers)."
"Extractive states can have bursts of growth. After all, even a kleptocratic elite will covet a larger economy ripe for plundering. The elites have an incentive to invest in their own businesses. But authoritarian growth miracles cannot last."
Francis Fukuyama
"So far, so good. AR have done a great deal over the years to focus the attention of both theorists and policymakers on institutions, and to shape the emerging consensus on the importance of politics to growth within the economics profession. It is, then, very disappointing that their more fully fleshed out book fails to go very much further than these broad conclusions, skirting critical issues of exactly what sort of institutions are necessary to promote growth, and failing to come to grips with some critical historical facts."
"The first problem with their analysis is conceptual. They present a sharply bifurcated distinction between what they call good “inclusive” economic and political institutions, which are sometimes also labeled “pluralistic,” in contrast to what they call bad “extractive” or “absolutist” ones. Unfortunately, these terms are way too broad, so broad indeed that AR never provide a clear definition of everything they encompass, or how they map onto concepts already in use."
"'Inclusive' political institutions would seem to imply modern electoral democracy, but they also include an impersonal centralized state as well as access to legal institutions, and forms of political participation that fall well short of modern democracy. We find, for example, that England following the Glorious Revolution of 1688-89 was incipiently inclusive, despite the fact that well under ten percent of the population had a right to vote. When AR first used the term 'extractive' in their early articles, it referred to truly extractive practices like the mines of Potosí or the sugar plantations of the Caribbean which extracted commodities out of the labor of slaves. In the current book extractive seems to mean any institution that denies any degree of participation to citizens, from tribal communities to ranchers in 19th century Argentina to the contemporary Chinese Communist Party."
"Since each of these broad terms (inclusive/extractive, absolutist/pluralistic) encompasses so many possible meanings, it is very hard to come up with a clear metric of either. It also makes it hard to falsify any of their historical claims. Since more real-world societies are some combination of extractive and inclusive institutions, any given degree of growth (or its absence) can then be attributed either to inclusive or extractive qualities ex post."
"All of the good things in the “inclusive” basket, in other words, don’t necessarily go together, and in some cases may be at odds."
"Like many other works making use of history but written by economists, the AR volume contains some pretty problematic facts and interpretations. It makes the case, for example, that Rome shifted away from an inclusive Republic towards absolutist Empire, and that this was then responsible for Rome’s subsequent economic decline. Leave aside the fact that Rome’s power and wealth continued to increase in the two centuries after Augustus, and that its eastern wing managed to hold on remarkably until the fifteenth century. It can be argued that the shift from the narrow oligarchy of the Republic to a monarchy with highly developed legal institutions actually increased access to the political system on the part of ordinary Roman citizens, while solving the acute problem of political instability that bedeviled the late Republic.
Similarly, following on a tradition begun by Douglass North and Barry Weingast, AR point to the Glorious Revolution of 1688/89 as a critical juncture marking both the establishment of secure property rights and an “inclusive” political system. The latter point is fair enough, but English property rights were rooted in a much older tradition of common law dating from the Norman invasion, and had created a strong commercial civilization well before 1689. The Glorious Revolution was much less important in establishing the credibility of property rights per se, than of the Crown as a borrower, which explains why English public debt exploded in the century following that event."
"Given their overall framework, the hardest thing for AR to explain is contemporary China. China today according to them is more inclusive than Maoist China, but still far from the standard of inclusion set by the US and Europe, and yet has been the fastest growing large country over the past three decades. The Chinese restrict access to the market, engage in financial repression, fail to secure property rights, have no Western-style rule of law, and are ruled by a non-transparent oligarchy called the Communist Party. How to explain their economic success? Rather than see this as a threat to their model (i.e., more inclusion, more growth) AR pull a slight of hand by arguing that Chinese growth won’t last and that their system will eventually come crashing down (like Rome did, after about 200 years?). I actually agree that China will eventually crash. But even if that happens, a theory of development that can’t really explain the most remarkable growth story of our time is not, it seems to me, much of a theory."
"The broad conclusions of Why Nations Fail are, thus, incontrovertible and of great importance to policy (which is why, incidentally, I gave it a positive blurb). One only wishes then that the authors had made better use of basic categories long in play in other parts of the social sciences (state, rule of law, patrimonialism, clientelism, democracy, and the like) instead of inventing neologisms that obscure more than they reveal."
Jared Diamond
Arvind Subramanian. Respuesta de Acemoglu y Robinson
A y R le responden a Jeffrey Sachs
Bill Gates. The Economsit sobre la opinión de Gates. Respuesta de A&R
viernes, 9 de marzo de 2012
jueves, 8 de marzo de 2012
miércoles, 7 de marzo de 2012
lunes, 5 de marzo de 2012
domingo, 4 de marzo de 2012
sábado, 3 de marzo de 2012
viernes, 2 de marzo de 2012
Muy seguramente la caricatura es más llamativa para un economista que para alguien que no lo es.
Un no economista ve simplemente una paradoja
Para un economista resulta extraña la nocion de unas ganancias de intercambio potenciales tan evidentes: hay personas que necesitan casas. hay casas disponibles para ser ocupadas. Uno de los pilares de la ciencia económica es la nocion de equilibrio; de que los mercados tienden a equilibrarse.
Cual seria el mecanismo de equilibrio que podría corregir esta situación? Una caída del precio de las casas
En ese sentido el momento que se muestra en la imagen empieza a ser ‘chocante’ para un economista en la medida en que se prolongue en el tiempo. Por que no hay un ajuste de los mercados?
Es más fácil explicar desequilibrios en un momento del tiempo: el ingreso de las personas cayó y no tienen con que comprar casas
Pero, y si esta situación se prolonga en el tiempo??
hay varias posibles maneras de pensarlo:
el problema puede ser con la nocion misma de ‘ganancias de intercambio’. Sí, es cierto que hay personas sin casa y hay casas disponibles para ser ocupadas. Pero que pueden las personas ‘intercambiar’ para obtener una casa?
Nuestra economía es una en que el intercambio se lleva a cabo mediante dinero.
La economía clásica lo considera necesario para resolver el problema de la ‘doble coincidencia’
La teoría marxista va mas alla ……….
Hay dos nociones de dinero. Y resultan ser diametralmente opuestas:
Dinero es la solución porque es lo que solucionel problema de la doble coincidencia. Los manes pueden dar dinero a cambio de casa, en vez de tener que buscar algo que los dueños de las casas quieran
Dinero es el problema. Su papel en la transacción no se puede tomar tan a la ligera. El dinero parte la transacción en dos. Un man tiene que obtener dinero mediante algo. Y luego usa el dinero para comprar la casa
tenemos un mercado. el mercado de casas. a la izquierda se encuentran los demandantes de casas. a la derecha la oferta de casas.
podria haber un intercambio directo de trabajo por casas. "yo le trabajo un mes en su empresa y ud me da una casa"
podria ocurrir, pero surge entonces el problema que los economistas llaman de la 'doble coincidencia: es muy poco probable que las personas que estan buscando casa sean precisamente las que pueden ofrecer el tipo de trabajo que el dueño de las casas necesita.
este es tal vez el principal motivo por el que utilizamos dinero. para no tener que ajustar nuestras decisiones de trabajo a nuestras decisiones de consumir. "como yo quiero comprar una casa, tengo que ver que es lo que necesitan los dueños de las casas para darselos a cambio". el dinero cumple el rol de medio de intercambio, es decir 'algo' que todos aceptamos como pago de una transaccion porque sabemos que sera recibido como pago de otra transaccion
Un no economista ve simplemente una paradoja
Para un economista resulta extraña la nocion de unas ganancias de intercambio potenciales tan evidentes: hay personas que necesitan casas. hay casas disponibles para ser ocupadas. Uno de los pilares de la ciencia económica es la nocion de equilibrio; de que los mercados tienden a equilibrarse.
Cual seria el mecanismo de equilibrio que podría corregir esta situación? Una caída del precio de las casas
En ese sentido el momento que se muestra en la imagen empieza a ser ‘chocante’ para un economista en la medida en que se prolongue en el tiempo. Por que no hay un ajuste de los mercados?
Es más fácil explicar desequilibrios en un momento del tiempo: el ingreso de las personas cayó y no tienen con que comprar casas
Pero, y si esta situación se prolonga en el tiempo??
hay varias posibles maneras de pensarlo:
el problema puede ser con la nocion misma de ‘ganancias de intercambio’. Sí, es cierto que hay personas sin casa y hay casas disponibles para ser ocupadas. Pero que pueden las personas ‘intercambiar’ para obtener una casa?
Nuestra economía es una en que el intercambio se lleva a cabo mediante dinero.
La economía clásica lo considera necesario para resolver el problema de la ‘doble coincidencia’
La teoría marxista va mas alla ……….
Hay dos nociones de dinero. Y resultan ser diametralmente opuestas:
Dinero es la solución porque es lo que solucionel problema de la doble coincidencia. Los manes pueden dar dinero a cambio de casa, en vez de tener que buscar algo que los dueños de las casas quieran
Dinero es el problema. Su papel en la transacción no se puede tomar tan a la ligera. El dinero parte la transacción en dos. Un man tiene que obtener dinero mediante algo. Y luego usa el dinero para comprar la casa
tenemos un mercado. el mercado de casas. a la izquierda se encuentran los demandantes de casas. a la derecha la oferta de casas.
podria haber un intercambio directo de trabajo por casas. "yo le trabajo un mes en su empresa y ud me da una casa"
podria ocurrir, pero surge entonces el problema que los economistas llaman de la 'doble coincidencia: es muy poco probable que las personas que estan buscando casa sean precisamente las que pueden ofrecer el tipo de trabajo que el dueño de las casas necesita.
este es tal vez el principal motivo por el que utilizamos dinero. para no tener que ajustar nuestras decisiones de trabajo a nuestras decisiones de consumir. "como yo quiero comprar una casa, tengo que ver que es lo que necesitan los dueños de las casas para darselos a cambio". el dinero cumple el rol de medio de intercambio, es decir 'algo' que todos aceptamos como pago de una transaccion porque sabemos que sera recibido como pago de otra transaccion
jueves, 1 de marzo de 2012
Debate sobre microfundamentacion
Aca
Paul Krugman
Noah Smith. Krugman responde
Simon Wren-Lewis contesta
Interesante análisis
Haugen's critique of microfoundations in finance: "Haugen's criticism is that the aggregate of very complicated, highly interacted, micro behavior can be better understood if you just observe the behavior of that aggregate, rather than trying to understand it, predict it, and make good policy from modeling micro unit behavior and then aggregating up."
Wren-Lewis otra vez
Can you say Sonnenschein?......I knew you could
The real problem with microfoundations
Macro and micro: The case of balance sheet recessions
What have micro foundations ever done for us?
David Glasner
Mark Thoma
De nuevo Wren-Lewis
Krugman otra vez
Resumen del debate
David Glasner: Microfoundations (aka Macroeconomic Reductionism) Redux
John Quiggin: The macrofoundations of microeconomics. Krugman comenta
Paul Krugman
Noah Smith. Krugman responde
Simon Wren-Lewis contesta
Interesante análisis
Haugen's critique of microfoundations in finance: "Haugen's criticism is that the aggregate of very complicated, highly interacted, micro behavior can be better understood if you just observe the behavior of that aggregate, rather than trying to understand it, predict it, and make good policy from modeling micro unit behavior and then aggregating up."
Wren-Lewis otra vez
Can you say Sonnenschein?......I knew you could
The real problem with microfoundations
Macro and micro: The case of balance sheet recessions
What have micro foundations ever done for us?
David Glasner
Mark Thoma
De nuevo Wren-Lewis
Krugman otra vez
Resumen del debate
David Glasner: Microfoundations (aka Macroeconomic Reductionism) Redux
John Quiggin: The macrofoundations of microeconomics. Krugman comenta
The capital debates: A brief introduction
Aca
"The capital debates are associated with the very notion of capital. Classical political economy authors, from William Petty to Karl Marx, including Quesnay, Smith and Ricardo, treated the process of production as a circular one. In this context, capital is a produced means of production, rather than a factor of production used in the process of obtaining final goods. The most important result of the capital debates is that, once capital is defined as produced means of production, there is no direct relation between the relative abundance or scarcity of the means of production and its remuneration. Distribution, in other words, is not governed by supply and demand."
Lachmann sobre los debates.
Eatwell sobre Garegnani
"The capital debates are associated with the very notion of capital. Classical political economy authors, from William Petty to Karl Marx, including Quesnay, Smith and Ricardo, treated the process of production as a circular one. In this context, capital is a produced means of production, rather than a factor of production used in the process of obtaining final goods. The most important result of the capital debates is that, once capital is defined as produced means of production, there is no direct relation between the relative abundance or scarcity of the means of production and its remuneration. Distribution, in other words, is not governed by supply and demand."
Lachmann sobre los debates.
Eatwell sobre Garegnani
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