Nice New Blog From Nick Edmonds: Reflections On Monetary Economics

Nick Edmonds, an ex-student of Wynne Godley from the 80s has a nice new blog Reflections on Monetary Economics.

I especially liked his posts on central bank asset purchases or QE – Modelling QE and The Short Rate, the Long Rate and the Exchange Rate which use Tobin’s theory of asset allocation. He also uses the preferred habitat or market segmentation theory of the yield curve for analysis of effects of QE on asset prices such as equities and on the exchange rate.

A lot of times people just hand-wave away effects by using the expectations theory in which long term rates are expectations of short term rates. Nick’s posts however use both market segmentation and expectations and show how this is useful in understanding the effects of central bank LSAPs/QE.

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