Negative interest rates are in the news. In response to imploding economies and very low inflation rates, some commentators have argued that central banks should cut nominal interest rates below zero to try and stimulate economic activity. Others including Federal Reserve Chairman Jerome Powell are less enthusiastic, noting that that there is little evidence that negative interest rates have a substantial stimulatory effect. Either way, the whole proposition raises several interesting economic issues that concern the way that monetary policy affects the distribution of income and consumption.Read more
One week, two big topics! Today we’re discussing Game Theory.
This topic is awesome, and really wish we could give it more space – in future economics you will.
So what are we thinking about here.Read more
As you know this is a course on microeconomics … so it is a bit random to teach macroeconomics. However, as this is the only economics course many students do we think it is a good idea to introduce some of the jargon you will see a lot in your work life!
Usually this is a week of lectures, but given the semester is a week shorter we teach this in a single lecture – and it will be assessed as such.
So what is macroeconomic, why do we care, and what are we measuring?Read more
This weeks discussion is something a bit different. For the first six weeks we were building up models of producer and consumer choice, and finished with our market model of “perfect competition”. Given this we were able to discuss gains from trade where all producers were the same – but consumers were a bit different.
What we have done this week is actually quite similar – we have asked about gains from trade when the production possibilities were actually a bit different. Given that we have noted that, with different productive opportunities specialisation can generate gains from trade!
As a practice exercise, can you describe the current shock associated with COVID in terms of a Production Possibility Frontier diagram based on the Australia and NZ trade example in lectures. Graphically what does the shock look like? Could the shock increase New Zealand’s comparative advantage in making Wool? What does this mean?
I’ll put up an answer to this after you test on Monday – as this content is not in this test.
New Zealand banks noticed an increase in cash withdrawals by households since the day of lockdown announcement. Banks believe this might be due to the panic stockpiling of nervous households as was mentioned in the article.
In this post I want to discuss what drives the households to behave in this way, and how this comes into our thinking about economics and monetary policy.Read more
Hi all. As you will have noticed from the lecture videos there is a lot of content in this week – more than in any other single week. But it is because we are tying all the prior weeks together, and trying to make sure we are clear regarding what we are saying! The lecture slides can be found here and here.
Furthermore, we are focusing on a set of assumptions – so lets start with those:Read more