07-05-2003 04:39									#271
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No, GP doesn't need Mankiw, just my posts here to run rings around you. /jk

	07-05-2003 04:45									#272
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Mankiw is the one to start with?

	07-05-2003 04:53									#273
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1. I thought about it a little during my run. Assuming we have a sudden spurt of new growth opportunities, it is a supply side change (shifting the curve of the supply of projects). Since nothing change with the population, the demand curve is the same. Of course demand shifts to a new point of intersection. This means that interest rates will be lower, more projects will get done and more money will be invested in projects. (I'm using interest rate instead of price here.) So does this have an immediate deflationary aspect? Let's say that it will be two years until the new productive capacity comes on line. (obviously at that point more goods get produced and there is deflationary pressure.)

2. How exactly does the Federal bank "inject" money supply?

	07-05-2003 05:15									#274
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Yes Mankiw is entry level. There are other books that do 1st year micro and macro together, but they are mostly not that good. Mankiw I use for 1st and 2nd years........3rd year courses need other texts to supplement the material in Mankiw.

As you probably found out when musing over these problems in your run it is hard to analyse.....so many "but move this and I have to move that then he goes there and takes my bishop" moments.......which is why a clear model helps cut through the crap and give you something to work with.

1. What you are talking about is most accurately modelled as an AS shift within the AS/AD (aggregate supply/aggregate demand) model. IS/LM is a short run model with fixed prices.......AS/AD includes IS/LM but lets the price level vary and also attempts a basic stab at the dynamics of the problem (how do we get from one equilibrium to the other).

There is an immediate deflationary impact if the fed choose not to increase the money supply, which shifts AD to yield the original price level with higher output than the original equilibrium.

2. How the CB controls the money supply is indirectly thorugh control of certain key short term interest rates within the financial system. In the 80s we tried to hit money supply targets using interest rates, and hence control inflation.......now we just move the interest rates to hit an inflation target. The money supply stills moves in the right direction (up when rates are cut) but we don't explicitly care by how much, although we keep an eye on it.

It may not seem a huge distinction about what one should target, but it turns out in practice (in an uncertain world, with uncertain effect of policies and how soon they will have an impact) the inflation target has much better properties than the money supply target.

Mankiw doesn't really get this far (though he does discuss the banking system), since you need to adapt IS/LM quite a lot to include a central bank in the model.

	07-05-2003 05:15									#275
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Which Mankiw book? There are a bunch of them:

http://www.amazon.com/exec/obidos/s...8072455-9001602

I think I will get it by ILL. I would buy it if you were more effusive. But you weren't. So I borrow.

	07-05-2003 05:18									#276
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I have a micro book: MANAGERIAL ECONOMICS by Mansfield. That seemed pretty decent to me. Will Mankiw mess well with that? I also have Brealey and Myers. Ummm and the Valuation book.

	07-05-2003 05:19									#277
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The one you want is just called "Macroeconomics". I'd buy it. Or if you borrow it and read it you may feel you want to buy it then, since you will need to review it from time to time. It's not really a case of read once and remember everything and not need to read it again.

	07-05-2003 05:19									#278
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quote: Originally posted by DrSpike 2. How the CB controls the money supply is indirectly thorugh control of certain key short term interest rates within the financial system.

How. What do they do. How does it get money into circulation?

	07-05-2003 05:21									#279
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quote: Originally posted by DrSpike The one you want is just called "Macroeconomics". I'd buy it. Or if you borrow it and read it you may feel you want to buy it then, since you will need to review it from time to time. It's not really a case of read once and remember everything and not need to read it again.

You're talking to a man who read Brealey and Myers in the tub. (Actually I thought that book was a stitch. Lots of interesting asides. And lots of cool references to hardcore literature. They even were very upfront about presenting unsolved problems and explaining where others might have a different point of view (while still maintaining the orthodoxy of NPV/CAPM thinking.))

Are nested parentheses an abortion in writing?

	07-05-2003 05:23									#280
	Increase Your PM Length

quote: Originally posted by DrSpike The one you want is just called "Macroeconomics". I'd buy it. Or if you borrow it and read it you may feel you want to buy it then, since you will need to review it from time to time. It's not really a case of read once and remember everything and not need to read it again.

How about the study guide? Any good? And is there a "Teacher's study guide". I like to get that if I am doing something self-study as it has the answers to all the problems, and has more info.

	07-05-2003 05:23									#281
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Anybody remember Andrew Livingstone? He was teaching me this stuff on the boards at one time...

	07-05-2003 05:25									#282
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I don't know the Mansfield book, but most management meets economics texts are for management students. Unfortunately management studies is for students who can't get on the economics course.

As I said at this level you can study macro almost completely independently of macro, since basic macro has no microfoundations.

A great entry level micro book if you want one is Hal Varian's: Intermediate Micro, a modern approach.

This is of interest to anyone that wants to understand policies like pollution control, public good provision, competition policy, financial market regulation, monopoly regulation, and so on.

	07-05-2003 05:28									#283
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quote: Originally posted by DrSpike No, GP doesn't need Mankiw, just my posts here to run rings around you. /jk

When he's up to speed you can teach me something.

	07-05-2003 05:29									#284
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quote: Originally posted by DrSpike I don't know the Mansfield book, but most management meets economics texts are for management students. Unfortunately management studies is for students who can't get on the economics course. As I said at this level you can study macro almost completely independently of macro, since basic macro has no microfoundations. A great entry level micro book if you want one is Hal Varian's: Intermediate Micro, a modern approach. This is of interest to anyone that wants to understand policies like pollution control, public good provision, competition policy, financial market regulation, monopoly regulation, and so on.

I thought Mansfield was pretty clear. And yes I learned it under an MBA umbrella (sorta). But I had Ron Bratigan from Northwestern as my teacher. Great prof. Really made things clear. Adam Smith knows him from Northwestern.

There is a lot of favorable commentary on the Mankiw PRINCIPLES OF MACROECONOMICS but no reader reviews for MACROECONOMICS.

	07-05-2003 05:32									#285
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quote: Originally posted by GP How. What do they do. How does it get money into circulation?

They don't...........they 'encourage' the commercial banking sector to do it for them by manipulating key short term interest rates.......like the rate at which the CB acts as lender of last resort. Ultimately through this control they have some control over all commercial rates.....and hence over the money supply.

As to the other post.........I don't have the study guide, though if you are working at it yourself it probably would be useful.

Bed now.

zzzzzzzzzz

	07-05-2003 05:33									#286
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quote: Originally posted by GP There is a lot of favorable commentary on the Mankiw PRINCIPLES OF MACROECONOMICS but no reader reviews for MACROECONOMICS.

I think he renamed it. I'll check amazon for you tomorrow morning and see if it's the same book.

	07-05-2003 05:34									#287
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quote: Originally posted by DrSpike They don't...........they 'encourage' the commercial banking sector to do it for them by manipulating key short term interest rates.......like the rate at which the CB acts as lender of last resort.

How. I'm not being a ****. Well not on purpose. I need to understand it more tactically to have any idea what is going on. What do they physically do. How does the money move?

	07-05-2003 10:56									#288
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All right I'll shut up after this.http://www.bis.org/review/r030212c.pdf

quote: The main cost of having an international currency is that it can complicate the conduct of monetary policy. Because foreigners hold a substantial share of the currency, a portfolio shift away from the currency, for example, can lead to large capital outflows and/or large declines in the exchange rate. Concerns about the effects of changes in portfolio preferences caused both the German and the Japanese governments to take measures to restrict the international uses of the deutsche mark and yen, respectively, during the 1970s and early 1980s. Concerns that the imbalances in the US economy, including the large current account deficit, could lead to a massive sell-off by foreigners of their holdings of US dollar balances have underpinned concerns of a possible hard landing for the US currency.

Nevermind about my source. He's not Alan Greenspan but he knows more than you. Next time don't be such an ass

	07-05-2003 11:47									#289
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Spikey:

"Trust me, a touch of reading and you'll be able to run macroweenie rings around Roland, who has some grasp of economic statistics without the backbone of understanding he needs to use his knowledge well."

Oooh, cutie. But instead of debating with you, let's just wait for the US easy money boom you predicted, shall we.

GP:

"How. I'm not being a ****. Well not on purpose. I need to understand it more tactically to have any idea what is going on. What do they physically do. How does the money move?"

Just consider what a CB usually does in its relations with commercial banks. The CB lends to the banks at a certain interest rate (secured or unsecured), and the banks lend to borrowers. At the CB and the banks, this shows up as bookkeeping entries. Bank X owes Y to the CB, and bank X has Y to lend around. The lower the rate, the higher the demand. The CB can pre- or refund bank lending.

This does not have to be, but can be converted to cash. In a fiat money system, the claim the bank has against the CB is that CB accounts are converted to paper money.

Another factor is the money multiplier. If you pay 100 $ cash into a bank account, and the bank lends the 100 $ to someone else, the money supply is 200 $ (100 $ held in cash, 100 $ held in short term accounts by the non-banking sector). This can be repeated infinately unless there is a minimum reserve requirement. (at say 10 %, this would mean that the bank could only lend 90 $ of the 100 $ it recieved).

One way to inject money directly is for the CB to buy securities.

Of course Spiky will desperately try to find a hair in that soup.

	07-05-2003 14:38									#290
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quote: Originally posted by Kidicious All right I'll shut up after this.http://www.bis.org/review/r030212c.pdf Nevermind about my source. He's not Alan Greenspan but he knows more than you. Next time don't be such an ass

Read the whole article............the parargraph you quote is sound, but the article by no means suggests that loss of key currency status means that monetary policy can no longer be used..........which is precisely what you suggested on more than one occasion.

	07-05-2003 14:41									#291
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quote: Originally posted by HershOstropoler Oooh, cutie. But instead of debating with you, let's just wait for the US easy money boom you predicted, shall we.

Lol.........clearly we are living in a world where the US is in a deflationary spiral Roland.

In actual fact we are much closer to what I said would happen since I predicted a year of below trend growth before the recovery. This still looks sound to me.

As to the explanation of central banking, I find it adequate.

	07-05-2003 14:45									#292
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The UK's currency is no longer "key" yet monteray policy is used almost exclusivley to control the economy

	07-05-2003 14:46									#293
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"...clearly we are living in a world where the US is in a deflationary spiral Roland."

You forgot that one of your main beefs with me is that I don't believe in deflationary spirals.

"As to the explanation of central banking, I find it adequate."

I'm shocked, SHOCKED.

	07-05-2003 14:56									#294
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Don't be shocked.........I am a fair man. You have potential........if you would just put aside your love of the argument and take some honest advice and learn some of the material I suggested.......Then perhaps you wouldn't make such comments about deflationary spirals.

What you predicted hasn't happened, and since we fought realised events have definitely been somewhat closer to my predictions that yours. But it's not over yet.......we shall see.

	07-05-2003 14:59									#295
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quote: Originally posted by DrSpike What you predicted hasn't happened, and since we fought realised events have definitely been somewhat closer to my predictions that yours. But it's not over yet.......we shall see.

Maybe you should go and dig up the predictions.

	07-05-2003 15:11									#296
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Yes I thought you'd try and be slippery on what was said, and meant. That is why I took an entire day out to nail you down.

When the situation clears I will be posting the predictions.......if you want to do it now I ask only that you quote me directly without using your 'interpretation' and do not quote me out of context.

Thanks

Btw it is by no means over.......AG is gloomy today.

	07-05-2003 15:28									#297
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And that after I had to extort numbers from you over several pages. I think we stuck with this for 2003-2006:

"I gave you my opinion, just below trend (say 0.5% below if you want a number) for 1 year then trend growth."

I can't remember for sure but I think you put US trend growth at 3-3.5% ?

Or do you feel misrepresented?

Btw, in this point your arguing style has an eery similarity to that of GP. Maybe it's some anglosaxon thing.

	07-05-2003 15:41									#298
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You didn't post yours. IIRC the US should look something like Japan around now......but I don't want to misrepresent you.

Tbh given recent events now is a bad time to take stock of the situation........it will be clearer in a few months. I suggest further arguing then.

	07-05-2003 15:50									#299
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Avoiding the trend growth rate again, hmm?

I only said: "Should your scenario be realised over the next few years I will accept that post 2000 expansionary policy to avert a recession that otherwise would have happened was the right choice."

I also said 50/50 on doing a Japan. So if you want nrs, no pro. Japan scenario, around zero. Simple hangover scenario, something around 5 % accumulated.

	07-05-2003 15:51									#300
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And what "recent events"?