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100% Reserve Banking — The History

So both John Cochrane and Martin Wolf are advocating 100% reserve banking. If these two agree on anything, it’s worth taking seriously! (It’s pretty amazing how advocates for narrow banking come from across the political spectrum.) We have some thoughts on banking and private money creation, but you’ll have to read our book to figure out what they are. Instead, we …

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Inequality in Well-Being

As we mentioned in our post yesterday, economists care much more about inequality in well-being rather than inequality in income or wealth. Data on well-being are more difficult to gather, but we discussed some evidence that inequality in consumption also increased from 1980 to 2010. Consumption directly affects the utility of an individual in most economic models. Income does not. Here is some …

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Why the Income Distribution Matters for Macroeconomics

A central argument we have made on this blog and in our book is that the distribution of income/wealth matters a great deal for thinking about the macro-economy. Convincing some of this fact is not easy — many continue to work within a modeling framework in which all distributional considerations are assumed away, the so-called “representative-agent” framework. Perhaps the …

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