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Nick riffs on Y = C + I + G + (X-M) and MV = PY (or PT).
Read it at Worthwhile Canadian Initiative Identity Economics
by Nick Rowe | Associate Professor, Carleton Unversity
1 comment:
OhMy
said...
I posted that at Nick's:
Another crucial difference between Y=C+I+G+NX and MV=PY is that in the former all quantities are *independently measurable*. MV=PY is a *definition* of v, nothing more. The only thing you could use it for is to measure v, which is useless because v doesn't plug into any other equation. If v was stable, you could maybe use it in the very same equation for a different point of time, different economy etc., but since it is not, you just stop. That is, unless you are an economist.
1 comment:
I posted that at Nick's:
Another crucial difference between Y=C+I+G+NX and MV=PY is that in the former all quantities are *independently measurable*. MV=PY is a *definition* of v, nothing more. The only thing you could use it for is to measure v, which is useless because v doesn't plug into any other equation. If v was stable, you could maybe use it in the very same equation for a different point of time, different economy etc., but since it is not, you just stop. That is, unless you are an economist.
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