Money multiplier is really about credit out of “thin air”
According to traditional economics textbooks, the current monetary system amplifies the initial monetary injections of money. The popular story goes as follows: if the…
Liquidity trap – what is it all about?
Some economists such as Nobel Laureate Paul Krugman are of the view that if the US were to fall into liquidity trap the US…
Should bank regulation be relaxed?
Leading Federal Reserve policymaker Stanley Fischer has hit out at plans to unwind banking regulation, calling it a “terrible mistake.” President Donald Trump and…
Assessing the long-term structural risk for China
After falling to 6.4% in Q1 2009 the yearly growth rate of China’s real GDP climbed to 12.2% by Q1 2010. Afterwards the yearly…
Why reduction in unemployment not the key for economic growth
The US unemployment rate stood at 4.3% in July against 4.4% in the month before. The number of unemployed stood at 6.981 million –…
Saving and money – what is the relationship?
Conventional wisdom says that savings is the amount of money left after monetary income was used for consumer outlays, implying that saving is synonymous…
Why US wages growth remains subdued?
The yearly growth rate of average hourly earnings in production and non-supervisory employment in the private sector eased to 2.3% in June from 2.4%…
Why profitability and not risk should be primary consideration in asset allocation
It is widely held that financial asset markets always fully reflect all available and relevant information, and that adjustment to new information is virtually…
Is the criteria for the model selection its predictive power?
In order to make the data “talk,” economists utilize a range of statistical methods that vary from highly complex models to a simple display…
The velocity of money myth
Effect of changes in money supply on economic activity and prices is a velocity of money. It is alleged that when the velocity…