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August 23, 2014

Latest Posts from Economist's View

Latest Posts from Economist's View

A Conversation with Edmund Phelps

Posted: 23 Aug 2014 12:33 AM PDT

Links for 8-23-14

Posted: 23 Aug 2014 12:06 AM PDT

'Three Conditions Must be Satisfied for Helicopter Money Always to Boost Aggregate Demand'

Posted: 22 Aug 2014 10:10 AM PDT

David Keohane at FT Alphaville:

Buiter on helicopter drops: Some further, further reading on Friday — a new paper from Citi's Willem Buiter, on why helicopter drops of money always work. From the abstract...:

Three conditions must be satisfied for helicopter money always to boost aggregate demand. First, there must be benefits from holding fiat base money other than its pecuniary rate of return. Second, fiat base money is irredeemable – viewed as an asset by the holder but not as a liability by the issuer. Third, the price of money is positive. Given these three conditions, there always exists – even in a permanent liquidity trap – a combined monetary and fiscal policy action that boosts private demand – in principle without limit. Deflation, 'lowflation' and secular stagnation are therefore unnecessary. They are policy choices.

The full paper is here.

Minority Mortgage Market Experiences During the Financial Crisis

Posted: 22 Aug 2014 09:51 AM PDT

Via Vox EU:

Minority mortgage market experiences leading up to and during the financial crisis, by Stephen L. Ross, Vox EU: The foreclosure crisis that followed the subprime crisis has had significant negative consequences for minority homeowners. This column reviews recent evidence in the racial and ethnic differences in high cost loans and in loan performance. Minority homeowners, especially black homebuyers, faced higher price of mortgage credit and had worse credit market outcomes during the crisis. This is largely due to the fact that minority borrowers are especially vulnerable to the economic downturn. ...

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