July 8, 2008

Of nominal stickiness and a package too small

Tyler Cowen writes:
Maybe it's a good thing the stimulus package is too small to be very "effective."


If nominal stickiness is not a major binding problem (and I suspect this is the relevant case), then even a single-country stimulus plan will be ineffective.
To the non-economist in me, the above lines did not mean much and in fact, all this talk of small packages and nominal stickiness induced an adolescent snicker or two - just like this cartoon did this morning.

But its a good discussion with arguments on why economic stimulus packages do not work.

Also read this other post by Tyler Cowen about onion prices and what they teach us about oil prices.
Onions have no futures market, yet their recent price volatility makes the swings in oil and corn look tame.
A couple other articles on relevant topics for the day but which I understand nothing about. (Why do I even blog about these topics when I won't even read the articles in their entirety and try to educate myself?)

Oil speculation: Why we don't have answers. There's a lot we don't know about how the oil futures markets now work. Congress should find out. (Also read about the "Destroyer of all worlds" and the man who lost $6 billion, Brian Hunter.)

The inflation showdown

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