Paul Krugman

@paulkrugman ↗

Deleted No

Hibernated No

Last Checked May 15, 2022

Created

Thu Mar 17 18:09:14 +0000 2022

Likes

Retweets

Source

Twitter Web App

View Raw Data

JSON Data

View on Twitter

Likely Available

Paul Krugman @paulkrugman

Suppose you have point-input point-output investment — say, you can plant a tree and sell it 10 years later. Suppose planting costs $100, and in a world of stable prices you'd expect to sell it a decade from now for $110. Then the investment is worth it if you can borrow @<1% 9/ — PolitiTweet.org

Posted March 17, 2022

Preceded By

Paul Krugman @paulkrugman

Why do we talk about real, not nominal, interest rates as determinants of investment? Let me start with an Austrian-style example — deliberately silly and unrealistic, plus I'm going to ignore compound interest for simplicity. Bear with me 8/ — PolitiTweet.org

Posted March 17, 2022

Followed By

Paul Krugman @paulkrugman

(I said I was going to ignore compounding). Now suppose you expect 1% inflation, so the tree can be sold for $120. Then it's worth doing if interest rate <2%; it's the real interest rate, nominal minus expected inflation, that matters 10/ — PolitiTweet.org

Posted March 17, 2022