What does it means your first equation?µ1 + µ2 = 1 Professor Farmer,Stock markets in most advanced countries have recovered. Yet, job markets have not doing very well. For example, U6 unemployment rate in the US is still near 10 per cent de…
I looked at your EJ piece, which I liked a lot.However, you make the comment in section 8: "If a firm were to offer less than the competitive wage, it would receive no applications." I find that quite difficult to square with the idea of a
Full of honesty, an ingredient of another mysterious category: the excellent. The graph on http://www.philipji.com/item/2015-06-24/the-history-of-the-US-economy-in-one-graph explains both why economies grow and why growth has fallen after t…
There is a very simple reason why raising the Fed Funds Rate from very low levels increases inflation. Very low interest rates favour the financial sector because it makes leverage very cheap. Higher interest rates move money from the finan…
My book "Macroeconomics Redefined" http://www.amazon.com/dp/B00ZX9O5XQ deals entirely with this. It argues that it is no accident that the Great Depression and the Great Recession both followed huge asset market crashes. The arrow of causat…
This comment has been removed by the author. This comment has been removed by the author. The relationship between money and asset prices may be fine in practice. But the sad problem is that neither Keynesian economics nor monetary economic…
Great post; agree fully. Complement to Dan Rodrik's recent plea for more public investment on Project Syndiate. The need for MoF-CB cooperation is discussed well in two BIS WP from 2013 403 & 415) by Phillip Turner. He makes the same plea f…
"Sunspots" is a bad name: because Jevons used it first to mean something quite different; because only experts with telescopes can see sunspots, so they can't be common knowledge. But maybe it's too late! Great blog, many thanks for this, a…
Roger: I still don't get it. OK, the unborn cannot insure themselves against the risk of being born in a bad year. But why does that create sunspots? If we banned left-handed people from buying home insurance, we would not have a Pareto Opt…
Roger, In my view, the type of QE you propose would lead to nominal interest rates rising all on their own (through the Fisher equation). Naturally, the Fed would follow these rates up as inflation ramps up. So, in my view, raising FFR now
This is all a bit ridiculous, as Dean Baker notes ( http://www.cepr.net/blogs/beat-the-press/quick-thoughts-on-the-stock-market-and-the-economy ), the stock market is not strongly associated with the health of the economy.If GDP tanks and u…
Are you seriously suggesting that stock market P and D are functions of U? I would think that P is largely determined as a function of expectations. If the stock market believes that the economy is going to improve very soon, the price will…