Macro is hard; here is an attempt to make it easier. I will try to explain as much of macroeconomics as possible with a single graph. Dynamic AS/AD is pretty good, but I think we can do some interesting things by turning to portfolio theory. Macro is and always has been about investment. Keynes noted [...]

Tags: animal spirits, Cowen, fiscal stimulus, irrational exuberance, liquidity trap, macro, monetary stimulus, regime uncertainty, Risk and Business Cycles
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Tyler Cowen offers his non-Keynesian take on the recession, applying the theory he lays out in Risk and Business Cycles (recommended for all economics graduate students, but master Snowdon and Vane first). I agree with his arguments, but I want to add what I think is a missing ingredient in his theory: fat tails. David [...]

Tags: Cauchy distribution, Cowen, fat tails, Levy, macro, Modern Macroeconomics, Risk and Business Cycles, Snowdon, Vane
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