tag:blogger.com,1999:blog-2499715909956774229.post2729835397168775085..comments2024-03-22T22:37:02.639-07:00Comments on Stephen Williamson: New Monetarist Economics: More PerilsStephen Williamsonhttp://www.blogger.com/profile/01434465858419028592noreply@blogger.comBlogger7125tag:blogger.com,1999:blog-2499715909956774229.post-9583467060741450182013-08-16T13:43:08.721-07:002013-08-16T13:43:08.721-07:00You could also say that the financial problems lea...You could also say that the financial problems leading up to the crisis were the "shock" (speaking loosely), and the oil price path was one of the symptoms.Stephen Williamsonhttps://www.blogger.com/profile/01434465858419028592noreply@blogger.comtag:blogger.com,1999:blog-2499715909956774229.post-9588517238290267772013-08-15T12:23:00.648-07:002013-08-15T12:23:00.648-07:00Jim Hamilton would maybey say the real shock was o...Jim Hamilton would maybey say the real shock was oil, which hit almost $150/barrel in 2008. The financial crisis was a symptom.<br />Is it a coincidence that most postwar recessions followed oil price spikes ?<br />Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2499715909956774229.post-43831636297203962312013-08-14T20:29:51.434-07:002013-08-14T20:29:51.434-07:00Got it, thank you! Got it, thank you! aptnoreply@blogger.comtag:blogger.com,1999:blog-2499715909956774229.post-34620164544690921542013-08-14T06:54:28.343-07:002013-08-14T06:54:28.343-07:00No, greater patience increases the demand for bond...No, greater patience increases the demand for bonds - people want to save for the future they now like so much. But, effectively, in the NK story the price of bonds can't adjust (the price wants to go up - i.e. the real rate wants to go down), so something else has to adjust to reduce demand. In the NK story, what adjusts is current consumption - it goes down.Stephen Williamsonhttps://www.blogger.com/profile/01434465858419028592noreply@blogger.comtag:blogger.com,1999:blog-2499715909956774229.post-81247461476446247242013-08-13T20:16:24.587-07:002013-08-13T20:16:24.587-07:00Right, what I said was complete non-sense.
But you...Right, what I said was complete non-sense.<br />But you say that before (or while) getting to A "What has to adjust is the demand for bonds, which falls enough to give an equilibrium at A through a reduction in current consumption.". Shouldn't the demand for bonds actually have to rise to make the real rate an equilibrium rate?aptnoreply@blogger.comtag:blogger.com,1999:blog-2499715909956774229.post-36424409030572324202013-08-13T06:39:49.865-07:002013-08-13T06:39:49.865-07:00I guess what you should take away from this are tw...I guess what you should take away from this are two things:<br /><br />(1) There can be important factors influencing interest rates other than central bank policy, even in the long run. Sometimes central banks ignore those things, and that can lead them astray.<br />(2) Unemployment is currently high, and growth in employment and real gdp is currently low, but it seems unlikely that this is an output gap - i.e. an inefficiency - caused by some sticky-price Keynesian phenomenon associated with the financial crisis. Unemployment is high and growth sluggish for other reasons that we may or may not understand, and that may or may not be amenable to macro policy solutions. Understanding that can help us understand what is going on with inflation, for example. Stephen Williamsonhttps://www.blogger.com/profile/01434465858419028592noreply@blogger.comtag:blogger.com,1999:blog-2499715909956774229.post-24804341632540789612013-08-12T20:55:09.145-07:002013-08-12T20:55:09.145-07:00As I was beggining to read your post (which I thin...As I was beggining to read your post (which I think gives an incredible insight and is really well explained, even to me, an undergraduate), I drew this conclusion right away: wouldn't it be contradictive then that they are lowering interest rates thereby increasing demand for bonds wich in theory would damage demand for goods and amplify the output gap? This holding everything else constant, but even with other outputs to the model it would still hold the recovery back. I guess this is what you ended up saying?<br />Thank you for the blog and for this post.aptnoreply@blogger.com