Naked Keynesianism

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I promised to discuss Nick Rowe's claim that one must start with Aggregate Demand and Supply (AS/AD) to explain macroeconomics. Nick's argument is that the AS/AD model is useful to analyze monetary economies, and he quite correctly points out that money must be part of the discussion from the start. In his words: And if you don't start with money, monetary exchange, and AD and AS, you are doing macro wrong. Because the only thing that makes macro different from micro general equilibrium...

Why Did Latin American Import Substitution Industrialisation Run into Serious Problems by 1970s/1980s? -- Lord Keynes provides a summary of Erik Reinert views. If he is accurate, I have a lot of problems with Reinert's views, btw (perhaps more on that in a post) Scarce workers? -- In which David Ruccio says workers are abundant and that's why wages have been growing slowly. I think pay goes beyond scarcity/abundance, but he is not wrong on the state of the labor market Post Keynesian...

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The New York Times had a while ago a whole piece on Chetty, Saez and co-authors about the lack of capital mobility in the US. No surprises really. Turns out that universities can increase social mobility. The problem is that universities don't do enough. Bucknell actually has considerably more students from the 1% than from the bottom fifth. One way to increase social mobility would be to expand the scholarships to low income students. Somehow I doubt that the guy from Trump University...

No, not to the SCOTUS position. I'll leave that for more qualified analysts. I'm just saying that it seems that Trump will appoint more hawkish appointees for the two vacancies on the Fed’s Board of Governors, which are part of the FOMC, that decided monetary policy (the other 5 are the Governor of the NY Fed, and governors of the rotating member banks). It seems that Trump wants higher interest rates, even if that contradicts his rhetoric about the dollar being appreciated and hurting...

The Macroeconomics of Reality-TV Populism -- Krugman mildly critical of Dornbusch's idea of macroeconomic populism, which is good. The problem with redistribution and high wages is not that it produces a crash, at least not because of unsustainable public debt. In the case of Latin America it was always the external accounts. And he is right, it is far from clear that Trump will be a populist in that sense Keynesian Economics without the Consumption Function -- Roger Farmer wants to get...

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I was teaching the conventional labor market story in the intermediate macro class last week. I showed students how, involuntary unemployment would be by definition a contradiction in terms in the neoclassical model, since unemployment, other than frictional and voluntary, was not possible in equilibrium. In disequilibrium, unemployment results from some friction or market imperfection, or a shock, but it can be solved by lower real wages.But in equilibrium, unemployment basically means...

The announcement, and backtracking, on a 20% tax on Mexican imports caused a lot of confusion yesterday. I assumed like most that this was a proposal for a tariff, which would both ditch NAFTA rules and run afoul of the WTO rules. The wall and the tariff led to a cancellation of the Mexican president's trip, and a souring of the diplomatic relations. But in all fairness, it seems that this had little to do with Mexico.The Republican Tax Plan basically is to eliminate the corporate income...