Economics and similar, for the sleep-deprived
A subtle change has been made to the comments links, so they no longer pop up. Does this in any way help with the problem about comments not appearing on permalinked posts, readers?
Update: seemingly not
Update: Oh yeah!
Monday, June 28, 2010
The future of monetary economics
I think we can all agree that things will go better if all currently working monetary economists stop teaching their models to undergraduates and instead adopt my modelling approach:
- A bank is a box, with "BANK" written on it
- A central bank is a box with a pitched roof and lines on the front representing the fascia of the Bank of England
- The household sector is a stick man
- The industrial sector is a box with a sawtooth roof
- Long term savings are a stick figure with a top hat
With these basic concepts, plus sufficient scribbled arrows, more or less any problem in monetary economics can be solved, up to the level of accuracy of any other model. You can even do international monetary economics by drawing circles round one monetary system and scribbling somewhat larger arrows in and out of the circle.
Update! Lots and lots of consensus building on this one and I may yet win that Nobel Prize after all. Two big points of controversy - 1) does the box representing a bank really need "BANK" written on it? and 2) shouldn't the industrial sector also have a chimney? I think that's enough of a debate to keep the journal publishers in business.
Update! Brad DeLong shows us how it's done. Note that in this version of the model, bonds are a perfect substitute for money, hence the absence of a stick figure with a top hat.
Update! Eric Rauchway provides historical context, in a sectoral model which has three types of industry (chimney + sawtooth roof, chimney but no sawtooth roof, stylised steel mill) and an extractive sector. That's clearly Sraffian.
Update A more substantial objection in BdeL comments - we haven't got a government sector or fiscal policy in this model. I tend to draw the government as a big bag of money, but frankly this isn't satisfactory as it is tends to result in people pointing and saying "what's that? it looks like a balloon with a pound sign on it". If anyone has a bright graduate student and some crayons, I think this could make a good dissertation topic.
this item posted by the management 6/28/2010 04:20:00 AM