Nick works a rather clever narrative about teaching supply and demand in Econ 101 into an explanation of how expectations drive GDP expansion through using NGDP targeting instead of inflation targeting, and it does this, he believes, without bringing in a causal transmission mechanism.
Read it at Worthwhile Canadian Initiative
Artsie non-linearity, economics, and the concrete steppes
by Nick Rowe | Associate Professor, Carleton University
The explanation seems to me to be "stuff happens."
Good comments, by the way. I am partial to rsj, who argues against "stuff happens."
The explanation seems to me to be "stuff happens."
Good comments, by the way. I am partial to rsj, who argues against "stuff happens."
3 comments:
“You see, wire telegraph is a kind of a very, very long cat. You pull his tail in New York and his head is meowing in Los Angeles. Do you understand this? And radio operates exactly the same way: you send signals here, they receive them there. The only difference is that there is no cat.”
Albert Einstein (perhaps apocryphally)
Radio signals have a transmission mechanism called a wave.
Apparently Rowe doesn't know that or imagines because he can't see it it isn't there.
He's in the death throes of monetarism, flailing.
He's resorted to using magic to explain it's processes.
If there's no transmission mechanism, then it's irrational to act as if there is. Not that people do not act irrationally, but the deductive logic of neoclassical economics always assumes rationality.
So, I'm with Paul--apparently there was a choice between irrationality and magic and magic was selected.
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