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Actually, the babysitting co-op is a bad example of a hypothetical situation, since it uses real people and real numbers. http://en.wikipedia.org/wiki/Capitol_

by jcl 16y ago

Actually, the babysitting co-op is a bad example of a hypothetical situation, since it uses real people and real numbers. http://en.wikipedia.org/wiki/Capitol_Hill_Babysitting_Co-op http://en.wikipedia.org/wiki/Capitol_Hill_Babysitting_Co-op

yummyfajitas 16y ago
But using it as Krugman does, namely as a predictive model of the real economy, is little but analogy. So technically that's an analogy, rather than a hypothetical. My bad. It's still a far cry from using real people and real numbers to argue for inflationary monetary policy. (Incidentally, one very common liberal hypothetical is that "tax cuts for the poor have a higher velocity than those for the rich, since the poor live hand to mouth and must spend everything they get." It turns out this is false - the poor pay down their debts with tax cuts, while the upper middle class spend it. http://www-personal.umich.edu/~shapiro/TaxRebates.pdf http://www-personal.umich.edu/~shapiro/TaxRebates.pdf http://papers.nber.org/papers/w16246 http://papers.nber.org/papers/w16246 )
- borism 16y ago
  inflationary monetary policy which other monetary policies you know of? inflation is the underpinning of monetarism - very little to do with Krugman or liberals.
  - hnal943 16y ago
    I suppose the alternative would be a stable monetary policy. The difference would be that under a stable policy you would only print money to keep the currency stable as inflation occurs, rather than printing money to fund government initiatives.
    - borism 16y ago
      And how exactly would you differentiate between printing money "to fund government initiatives" and printing money to fuel the economy? The fact is, even if all the money printed would be given away to non-governmental entities (that is, central bank would not be engaging in Quantitative Easing), it will still be funding the government (e.g. some of it will be collected back as taxes).

by jcl 16y ago

yummyfajitas 16y ago

But using it as Krugman does, namely as a predictive model of the real economy, is little but analogy. So technically that's an analogy, rather than a hypothetical. My bad. It's still a far cry from using real people and real numbers to argue for inflationary monetary policy. (Incidentally, one very common liberal hypothetical is that "tax cuts for the poor have a higher velocity than those for the rich, since the poor live hand to mouth and must spend everything they get." It turns out this is false - the poor pay down their debts with tax cuts, while the upper middle class spend it. http://www-personal.umich.edu/~shapiro/TaxRebates.pdf http://www-personal.umich.edu/~shapiro/TaxRebates.pdf http://papers.nber.org/papers/w16246 http://papers.nber.org/papers/w16246 )

borism 16y ago
inflationary monetary policy which other monetary policies you know of? inflation is the underpinning of monetarism - very little to do with Krugman or liberals.
- hnal943 16y ago
  I suppose the alternative would be a stable monetary policy. The difference would be that under a stable policy you would only print money to keep the currency stable as inflation occurs, rather than printing money to fund government initiatives.
  - borism 16y ago
    And how exactly would you differentiate between printing money "to fund government initiatives" and printing money to fuel the economy? The fact is, even if all the money printed would be given away to non-governmental entities (that is, central bank would not be engaging in Quantitative Easing), it will still be funding the government (e.g. some of it will be collected back as taxes).