plodders tell clearer tales

"in Old fashion economic models expectations were modeled in a way that did not allow people to move out of the way of a thrown  brick

 policies that stimulated the economy by lowering real wages could not be offset and undermined by workers demanding wage increases. Because of this, policy was maximally effective. "

"In modern macroeconomic models agents are able to take action to avoid the harmful byproducts of macroeconomic policy."


" In present day Classical models, agents are sufficiently nimble to avoid harm as they dance effortlessly out of the way when the brick is tossed. In these models, policy doesn’t matter at all. "

   "In New Keynesian models agents fully anticipate policies, but frictions prevent them from fully avoiding harm. It’s similar to one of those bad dreams where you know the monster is coming, but your feet just won’t move fast enough to get out of the way."


" In New Keynesian models, sluggishness allows the brick to deliver a glancing, but not fatal blow – that is, policy is effective, but not as effective as when agents do not move at all."


mark thomatosio

new keynesian policy is old keynesian policy at reduced horsepower


well at least MT realizes New Kynesianism is like a bad dream