Bond Economics

Note: This article would hopefully be worked into my banking manuscript. I think it overlaps other article(s), but I wanted to see how this line of argument looks. Needless to say, I have no put the articles into a single document…
One of the difficulties with understanding banking is that one needs to use relatively complex macro models to see how the formal banking system interacts with the non-bank financial system. Analysis based on looking at the motivations of a single bank...

I recently wrote about r*, which is now the preferred way to refer to the “neutral” or “natural rate” of interest (in real terms). Although my concerns appear hand-wavy, there is a way of expressing them mathematically. I have discussed this in the past...

The BIS Quarterly Review had a recent paper on r* (the preferred term for the “natural rate of interest”) by Benigno, Gianluca, Boris Hofmann, Galo Nuño Barrau, and Damiano Sandri. “Quo vadis, r*? The natural rate of interest after the pandemic.”
This paper is an example of why I have largely given up on the DSGE literature. From my perspective, the contents may be summarised as:...

Steve Keen recently wrote “I’m not Discreet, and Neither is Time” in which he discusses the alleged defects of discrete time models as opposed to continuous time ones.
(In discrete time, the model state is defined on a time axis that can be labelled as integers: step 1, step 2, etc. In a continuous time, a model’s time axis is the real axis. A discrete time model can be thought of as being defined by difference equations...