News
Entertainment
Science & Technology
Life
Culture & Art
Hobbies
News
Entertainment
Science & Technology
Culture & Art
Hobbies
Thought and Details on the Fiscal Theory of the Price Level | Uneasy Money
The Fiscal Theory of the Price Level has been percolating among monetary theorists for over three decades: Eric Leeper being the first to offer a formalization of the idea, with Chris Sims and Michael Woodford soon contributed to its further development. But the underlying idea that the taxation power of the state is essential for…
My Article “Ralph Hawtrey: A Forgotten Pioneer of Macroeconomics” Has Been Published in Economic Affairs | Uneasy Money
The published version of the article is now available on the Economic Afairs website https://onlinelibrary.wiley.com/toc/14680270/2024/44/2. Here's the abstract: This article considers the contributions of Ralph Hawtrey to monetary theory and macroeconomics, focusing on his monetary business cycle theory and his monetary explanation of the Great Depression. Unlike Milton Friedman's US-centred explanation of the Great Depression,…
My New Paper on Hawtrey Is Available on SSRN | Uneasy Money
Last fall and early winter I posted a series of four blogposts (here, here, here, and here) about or related to Ralph Hawtrey as I was trying to gather my thoughts about an essay I wanted to write about Hawtrey as a largely forgotten pioneer of macroeconomics who has received the attention of two recent…
T. C. Koopmans Demolishes the Phillips Curve as a Guide to Policy | Uneasy Money
Nobel Laureate T. C. Koopmans wrote one of the most famous economics articles of the twentieth century, "Measurement Without Theory," a devastating review of an important, and in many ways useful and meritorious, study of business cycles by two of the fathers of empirical business-cycles research, Arthur F. Burns and Wesley C. Mitchell, Measuring Business…
Mattei Misjudges Hawtrey | Uneasy Money
Clara Mattei, associate professor of economics at the New School for Social Research, recently published a book, The Capital Order: How Economists Invented Austerity and Paved the Way to Fascism, (University of Chicago Press) in which she argues that the fiscal and monetary austerity imposed on Great Britain after World War I to restore the…
Hetzel Withholds Credit from Hawtrey for his Monetary Explanation of the Great Depression | Uneasy Money
In my previous post, I explained how the real-bills doctrine originally espoused by Adam Smith was later misunderstood and misapplied as a policy guide for central banking, not, as Smith understood it, as a guide for individual fractional-reserve banks. In his recent book on the history of the Federal Reserve, Robert Hetzel recounts how the…
Central Banking and the Real-Bills Doctrine | Uneasy Money
Robert Hetzel, a distinguished historian of monetary theory and of monetary institutions, deployed his expertise in both fields in his recent The Federal Reserve: A New History. Hetzel’s theoretical point departure is that the creation of the Federal Reserve System in 1913 effectively replaced the pre-World War I gold standard, in which the value…
Ralph Hawtrey, Part 1: An Overview of his Career | Uneasy Money
One of my goals when launching this blog in 2011 was to revive interest in the important, but unfortunately neglected and largely forgotten, contributions to monetary and macroeconomic theory of Ralph Hawtrey. Two important books published within the last year have focused attention on Ralph Hawtrey: The Federal Reserve: A New History by Robert Hetzel,…
The Road to Incoherence: Arthur Burns and the Agony of Central Banking | Uneasy Money
UPDATE: My concluding paragraph was inadverently deleted from my post, so even if you've already read the post, you may want to go back and read my concluding paragraph. Last December, Nathan Tankus wrote an essay for his substack site defending Arthur Burns and his record as Fed Chairman in the 1970s when inflation rose…
Jason Furman Hyperventilates about Wages and Inflation | Uneasy Money
Jason Furman has had an admirable career as an economist and policy adviser. He was on the staff of the Council of Economic Advisors in the Clinton administrations, was Assistant Director of the National Economic Policy under Larry Summers in Obama's first term served as Chairman of the CEA in his second. I am friendly…
A New Version of my Paper “Between Walras and Marshall: Menger’s Third Way” Is Now Available on SSRN | Uneasy Money
Last week I reposted a revised version of a blogpost from last November, which was a revised section from my paper "Between Walras and Marshall: Menger's Third Way." That paper was presented at a conference in September 2021 marking the 100th anniversary of Menger's death. I have now completed my revision of the entire paper,…
An Updated Version of my Paper “Robert Lucas and the Pretense of Science” Has Been Posted on SSRN | Uneasy Money
I have just submitted the paper to the European Journal of the History of Economic Thought. The updated version is not substantively different from the previous version, but I have cut some marginally relevant material and made what I hope are editorial improvements. Here's a link to the new version. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4260708 Any comments, questions, criticisms…
Franklin Fisher on the Disequilibrium Foundations of Economics and the Stability of General Equilibrium Redux | Uneasy Money
Last November I posted a revised section of a paper I'm now working on an earlier version of which is posted on SSRN. I have now further revised the paper and that section in particular, so I'm posting the current version of that section in hopes of receiving further comments, criticisms, and suggestions before I…
Dangerous Metaphors | Uneasy Money
A couple of days ago, I wrote post gently (I hope) chiding Olivier Blanchard for what seemed to me to be a muddled attempt to attribute inflation to conflicts between various interest groups (labor, capital, creditors, debtors) that the political system is unable, or unwilling, to resolve,leavin, those conflicts to be addressed, albeit implicitly, by…
My Paper “Robert Lucas and the Pretense of Science” Is now Available on SSRN | Uneasy Money
Peter Howitt, whom I got to know slightly when he spent a year at UCLA while we were both graduate students, received an honorary doctorate from Côte d'Azur University in September. Here is a link to the press release of the University marking the award. Peter wrote his dissertation under Robert Clower, and when Clower…
You Say Potato, I Say Potahto; You Say Tomato, I Say Tomahto; You Say Distribution, I Say Expectation | Uneasy Money
Once again, the estimable Olivier Blanchard is weighing in on the question of inflation, expressing fears about an impending wage-price spiral that cannot be controlled by conventional monetary policy unless the monetary authority is prepared to impose sufficiently tight monetary conditions that would entail substantially higher unemployment than we have experienced since the aftermath of…
Robert Lucas and Real Business-Cycle Theory | Uneasy Money
In 1978 Robert Lucas and Thomas Sargent launched a famous attack on Keynes and Keynesian economics, which they viewed as having been discredited by the confluence of high inflation and high unemployment in the 1970s. They also expressed optimistism that an equilibrium approach to business-cycle modeling would succeed in replicating reasonably well the observed time-series…
Although RATEX Must Be a Contingent Property of any Economic Model, RATEX Is an Unlikely Property of Reality | Uneasy Money
Without searching through my old posts, I'm confident that I've already made this point many times in passing, but I just want to restate this point up front -- highlighted and underscored. Any economic model must satisfy the following rational-expectations condition: If the agents in the model expect the equilibrium outcome of the model (or,…
Hayek and the Lucas Critique | Uneasy Money
In March I wrote a blog post, "Robert Lucas and the Pretense of Science," which was a draft proposal for a paper for a conference on Coordination Issues in Historical Perspectives to be held in September. My proposal having been accepted I'm going to post sections of the paper on the blog in hopes of…
Summer 2008 Redux? | Uneasy Money
Nearly 14 years ago, in the summer of 2008, as a recession that started late in 2007 was rapidly deepening and unemployment rapidly rising, the Fed, mainly concerned about rising headline inflation fueled by record-breaking oil prices, kept its Fed Funds target at the 2% level set in May (slightly reduced from the 2.25% target…
On the Labor Supply Function | Uneasy Money
The bread and butter of economics is demand and supply. The basic idea of a demand function (or a demand curve) is to describe a relationship between the price at which a given product, commodity or service can be bought and the quantity that will bought by some individual. The standard assumption is that the…
Lucas and Sargent on Optimization and Equilibrium in Macroeconomics | Uneasy Money
In a famous contribution to a conference sponsored by the Federal Reserve Bank of Boston, Robert Lucas and Thomas Sargent (1978) harshly attacked Keynes and Keynesian macroeconomics for shortcomings both theoretical and econometric. The econometric criticisms, drawing on the famous Lucas Critique (Lucas 1976), were focused on technical identification issues and on the dependence of…
Franklin Fisher on the Disequilibrium Foundations of Economics and the Stability of General Equilibium | Uneasy Money
As I've pointed out many times on this blog, equilibrium is an extremely important, but very problematic, concept in economic theory. What economists even mean when they talk about equilibrium is often unclear and how the concept relates to the real world as opposed to an imagined abstract world is even less clear. Nevertheless, almost…
Axel Leijonhufvud and Modern Macroeconomics | Uneasy Money
For many baby boomers like me growing up in Los Angeles, UCLA was an almost inevitable choice for college. As an incoming freshman, I was undecided whether to major in political science or economics. PoliSci 1 didn’t impress me, but Econ 1 did. More than my Econ 1 professor, it was the assigned textbook, University…
Why I’m not Apologizing for Calling Recent Inflation Transitory | Uneasy Money
I’ve written three recent blogposts explaining why the inflation that began accelerating in the second half of 2021 was likely to be transitory (High Inflation Anxiety, Sic Transit Inflatio del Mundi, and Wherein I Try to Calm Professor Blanchard’s Nerves). I didn't deny that inflation was accelerating and likely required a policy adjustment, but I…
Supply Shocks and the Summer of our Inflation Discontent | Uneasy Money
This post started out as a short Twitter thread discussing the role of supply shocks in our current burst of inflation. The thread was triggered by Skanda Aramanth’s tweet arguing that, within a traditional aggregate-demand/aggregate-supply framework, a negative supply shock would have an effect sufficiently inflationary to cause the rate of NGDP growth to rise…