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Nick Edmonds
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What is the Benefit to Banks from Money Creation?
In a response to a recent post by Brian Romanchuk, somebody
made the following comment: "If private banks are ..... allowed to create and lend
out their own money, they can undercut the ..... free market rate of interest,
and for the simple reason that prin...
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Automation and Real Wages
Economists generally work on the basis that improvements in
technology lead to higher real wages.   Conventional
production functions (when combined with other assumptions) invariably produce
this result.   Looking at the Cobb-Douglas
production function, a...
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The Irrelevance of Private Money Creation to Loanable Funds Critiques
A frequently repeated claim deployed in critiques of
loanable funds theory is that private bank money creation removes the constraint on
investment being limited by "prior" savings.   In a generally good article on loanable funds here , Servaas Storm spends...
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Comparative Advantage With Labour Inflexibility
My last post adapted Ricardo's model of comparative
advantage to include internationally mobile capital.   However, what I think is much more important is the ability of labour to be redeployed between industries when production
patterns are disrupted by tr...
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Comparative Advantage And Offshoring
In a recent post Lars Syll quotes Steve Keen on Ricardo's
model of comparative advantage.   Keen thinks
you can "prove" that the idea that free trade benefits all is a
fallacy by considering the following: "Ricardo’s model assumed that you could produce win...
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Trade, the Exchange Rate and Real Wages in the UK
Simon-Wren Lewis wrote an interesting post recently, which
among other things referred to the impact of sterling depreciation on UK real
wage levels. Any increase in domestic demand in the UK will lead to a
greater demand for imports and potential pressure ...
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Role of the Exchange Rate in Portfolio Preference Weightings
Brian Romanchuk has a post on portfolio allocation,
including its representation in SFC models.   One area he discusses compares different ways of weighting portfolios. In Monetary Economics, Godley & Lavoie use portfolio
allocation functions that assign fi...
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The NAIRU and Nominal Wage Rigidity
Simon Wren-Lewis has a post discussing the NAIRU.   He acknowledges that it has its problems but
struggles to find a good alternative. The idea with the NAIRU is that, when unemployment falls
below that level, we don't simply have a higher rate of inflation...
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Global Saving and Current Account Imbalances
I've read various stuff recently on the role of savings
behaviour in the causes and effects of current account imbalances, some of
which I'd say is rather confused. It has to be said that this is quite a tricky topic, because
it has a number of moving parts...
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The Net Internation Investment Position and the Trade Balance
In commenting on tariffs and the trade balance , Paul Krugman
states that, in the "simple story", tariffs result in an exchange
rate appreciation which leaves the trade balance unchanged.   A critical point here (which Krugman goes on to explore) is
the ide...
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