Entries by Gulnara Nolan

What is the cost of capital and investment link?

In this post I intend to motivate research that is underway by Lynda Sanderson and myself on the investment behaviour of New Zealand firms. [“Taxation, user cost of capital and investment behaviour of NZ firms” forthcoming] The goal of our current research is to understand how changes in tax settings in New Zealand have influenced […]

Do we make choices based on income or prices?

Last time we noted the following regarding thinking about NGDP level targeting: To understand what is going on we need to ask what expectations are being “set”, what is the “target” and how do these reflect what a central bank can “do”? Expectations: We know they can be adaptive (backward looking) or rational (forward looking), […]

How does nominal income targeting work?

Thanks to Dr. Kirdan Lees for prompting me to write today’s post. Today’s topic of discussion is nominal income targeting. What is nominal income targeting?  Nominal income targeting is usually viewed as an alternative monetary strategy to inflation targeting, and has never explicitly been applied in practice by any central bank. However, there is an […]

Randomized control trials and economic models: friends or foes?

Randomized control trial (RTC) studies are getting more and more attention among policymakers in the last few decades. In addition, the RCT is one of the core experimental methodologies used by the recent nobel prize laureates in economics Duflo, Kremer and Banerjee.  Given the excitement around these methods, Chicago University has recently run the IGM […]

Should a central bank target wage inflation instead of price stability?

Olivier Blanchard’s recent speech at the Brookings Institution event “What’s (not) up with inflation?” encouraged me to write this post. Blanchard is still my second favourite economist (after Matt Nolan of course 🙂 ). But despite that I felt that some of the important elements of the discussion was missing, and I didn’t fully agree with some of Blanchard’s arguments […]

When to run the economy hot?

Former Fed Chair Janet Yellen has recently suggested it is a good time to run the US economy hot (in the short-run) underpinned by the argument that the further fall in unemployment rate didn’t drag the inflation up. The justification behind this is that the Phillips curve appears to have become quite flat.  As a result, stronger […]