"In the basic New Keynesian model, you see, the central bank “sets the nominal interest rate” and that, combined with the inflation rate, produces the real interest rate that people face when they use their Euler equation to decide how much less (or more) than their income they should spend. "
The damn Euler equation !
" When the interest rate high, saving to spend later is expensive and so people do less of it
and spend more now.
When the interest rate is low, saving to spend later is cheap and so people do more of it
And spend less now "
Got that?
I haven' t
Since
there's an equally understandable switch here
(Move cheap where expensive sits and visa versa expensive where cheap sits )
A switch that brad will correct
We have income versus substitution
And what about borrowing ?
( replace saving with borrowing and now for later )
Same switchable gig ...no ?
Brad joins the Lewis Carroll club
The damn Euler equation !
" When the interest rate high, saving to spend later is expensive and so people do less of it
and spend more now.
When the interest rate is low, saving to spend later is cheap and so people do more of it
And spend less now "
Got that?
I haven' t
Since
there's an equally understandable switch here
(Move cheap where expensive sits and visa versa expensive where cheap sits )
A switch that brad will correct
We have income versus substitution
And what about borrowing ?
( replace saving with borrowing and now for later )
Same switchable gig ...no ?
Brad joins the Lewis Carroll club
