April 2012

Private Indebtedness In CBO’s Forecasts

29 April 2012

Michael Stephens of the Levy Institute highlights the recent Levy Institute Strategic Analysis: Back To Business As Usual? Or A Fiscal Boost? in a post Where Will US Growth Come From If Austerity Reigns on the Institute’s blog Multiplier Effect.  According to the authors Dimitri Papadimitriou, Gennaro Zezza and Greg Hannsgen, The results of our simulation [...]

READ MORE >>

Debt Monetization

22 April 2012

Let us take the public sector budget equation: G – T = ΔH + ΔB Inspired by Milton Friedman’s popularity in the 1970s and the 80s, most textbooks and journal articles incorrectly claim that the central bank “controls” the money stock (such as M0, M1, M2 etc). Simultaneously they also claim – rightly – that the central [...]

READ MORE >>

Seven Unsustainable Processes – Original

18 April 2012

Of all the economists, Wynne Godley had the rarest of rare ability to model and imagine the economic dynamics of the whole world. “… a full macroeconomic model in his head, which, by some sort of subconscious process, he computed.” as his obituary from FT said. In the recent INET conference paper, Dirk Bezemer discusses Wynne [...]

READ MORE >>

G&L’s Monetary Economics – Second Edition

15 April 2012

I got my copy of Monetary Economics by Wynne Godley and Marc Lavoie yesterday. I know some people were waiting for the second edition of the book, and had postponed their purchase to get the newer edition – so they can get it now! There aren’t any changes in this edition – except for correction [...]

READ MORE >>

Debtor Exhaustion: Joseph Stiglitz

14 April 2012

Here’s Joe Stiglitz’s talk in the recent INET conference at Berlin on global imbalances: Here’s the presentation Stiglitz makes an argument about causality from trade deficit to fiscal deficit. I think it is a bit misleading. The causality works via demand and output at home and abroad. See this Imbalances Looking For A Policy for an [...]

READ MORE >>

I Like Martin Wolf

14 April 2012

Updated: 14 April 2012 at 3:30pm GMT (Chart added) Martin Wolf has just written an article on FT: Why the Bundesbank is wrong questioning the arguments made by Jens Weidmann, president of the Bundesbank. (This speech: Rebalancing Europe). This chart is interesting: (click to enlarge) Wolf says: Arguably, the crucial step is to agree on the nature of [...]

READ MORE >>

Kaldor’s Reflux Mechanism

12 April 2012

The recent debates of Post Keynesians with Neoclassical/New Keynesians has highlighted that the latter group continues to hold Monetarists’ intuitions. Somehow the exogeneity of money is difficult for them to get rid of, in spite of their statements and rhetoric that money is endogenous in their models. So there is an excess of money in [...]

READ MORE >>

Open Mouth Operations

5 April 2012

In the previous post Is Paul Krugman A Verticalist?, I discussed the confusions economists and market commentators have on open market operations. Even top economists such as Krugman suffer from confusions on central banking and monetary matters. I also mentioned the work of Alfred Eichner on bringing out more clarity on the defensive nature of [...]

READ MORE >>