Mediamacro myth 4: The immediate necessity of belt tightening

In previous posts in this series ( 0 , 1 , 2 , 3 ) we have established that the large increase in the deficit in 2010 was a consequence of t...

A criticism of the IFS

Everyone agrees that the UK Institute of Fiscal Studies is great. It is perhaps best known for its commentary of macro budgetary issues, but...

On the Stupidity of Demand Deficient Stagnation

In my last post I wrote about “why recessions caused by demand deficiency when inflation is below target are such a scandalous waste. It is ...

Draghi at Jackson Hole

To understand the significance of yesterday's  speech (useful extract from FT Alphaville here ), it is crucial to know the background. ...

More thoughts on ‘expectations driven’ liquidity traps

Warning - this is technical, so really just for macroeconomists. The idea that we could get stuck in a steady state with nominal interest ra...

Werning on Liquidity Trap Policy

For macroeconomists I finally got round to reading this paper by Iván Werning - Managing a Liquidity Trap: Monetary and Fiscal Policy. It t...

Why the Pigou Effect does not get you out of a liquidity trap

For macroeconomists This issue has surfaced again (see  Krugman  and  Rowe ). I wrote a  post  awhile back on this, but it was quite difficu...

Expectations driven liquidity traps

For macroeconomists This is my own take on the idea of expectations driven liquidity traps (as opposed to liquidity traps where the natural ...