Eric Crampton points out that the RBNZ seems quite inconsistent at the moment. Now I have a high level of respect for our central bank, but Crampton is completely right. How are they inconsistent? They complained that retail banks aren’t cutting interest rates far enough, then they stated that they think household’s need to save […]
Monetary policy is ultimately all about expectations. As Nick Rowe from Worthwhile Canadian Initiative points out, this feature of monetary policy makes the idea of “targeting asset prices” difficult – and ensures that any attempt to pop bubbles will be difficult, even if the bubbles are observable (which most of the time they are not): […]
I was raised as a microeconomist so I guess I have a bias, but all this discussion about our poor debt position being the fault of households makes me nervous. It is easy to blame households, hell the RBNZ did that just today. As they point out, household savings is extremely low, and real consumption […]
Scott Fullwiler from New Economic Perspectives (ht Economists View) describes some issues he has with the “negative interest rate” idea being put forward by Willem Buiter , Greg Mankiw , and Scott Sumner Now I have previously put my foot forward and said I agree with this idea (here and here) and I still feel […]
Paul Krugman has just mentioned that the “paradox of thrift” has shown up in the data. Now my opinion has moved over time, and I do think that the US is now experiencing a paradox of thrift – but his evidence appears to have nothing to do with this. I believe that we are hitting […]
There have been wild debates surrounding the BERL report into the social costs of alcohol. I haven’t read the report, I haven’t read the replies, I have to admit I have been busy. However, in one of Eric Crampton’s many posts on the issue I see that generally an externality from lost output, excessive unemployment, […]