Economic Logic

Economies may need to be stimulated sometimes, through tax reductions or public expenditures. The problem is that this costs. Opposition to ...

Economics is based on a small set of very powerful axioms that a the foundation of utility theory, general equilibrium theory, and more. Exp...

IS-LM models have always left me puzzled. To me, they are the equivalent to a reduced-form regression with omitted variables and endogeneity...

Inflation rates across industrialized economies have been remarkably low in the past decades, and at the same time these economies have been...

From anecdotal evidence, it appears that many Americans like to use the refund from their yearly tax filing for various home improvement pro...

The recent financial crisis has scared a lot of countries into adopting so called macro-prudential policies that introduce frictions into ca...

Nominal wage downward rigidity is a feature of many macro-models that help justify positive optimal inflation rates. In fact, that is pretty...

During the last financial crisis, it was quite obvious that at least some banks were taking excessive risks. What do economists usually advo...

It is a fact of life that governments need revenue. How to get this revenue without hurting the economy too much has been the topic of much ...

Much has been written, including here, about how policy uncertainty is bad for business. Firms do not want to invest much when it is not cle...

The companion blog, Economic Logic, Too that was created last December has started posting. This blog features similar posts to Economic Lo...

Snnk cost do not matter once spent. Yet, we just cannot help thinking that if we already paid so much for something, we should rather use it...

It is sometimes difficult for a shopper to understand all the consequences of purchasing choices. Take lightbulbs, for example. The variety ...

What is the purpose of financial innovation? I would say it is to find new ways to insure against risk, to finance projects and to allocate ...

I have complained several times already that house ownership should not be encouraged by public authorities, mainly because it prevents dive...