Dsquared posits,
I think we can all agree that things will go better if all currently working monetary economists stop teaching their models to undergraduates and instead adopt my modelling approach:
A bank is a box, with “BANK” written on itA central bank is a box with a pitched roof and lines on the front representing the fascia of the Bank of England
The household sector is a stick man
The industrial sector is a box with a sawtooth roof
Long term savings are a stick figure with a top hat
With these basic concepts, plus sufficient scribbled arrows, more or less any problem in monetary economics can be solved, up to the level of accuracy of any other model. You can even do international monetary economics by drawing circles round one monetary system and scribbling somewhat larger arrows in and out of the circle.
Update! Lots and lots of consensus building on this one and I may yet win that Nobel Prize after all. Two big points of controversy – 1) does the box representing a bank really need “BANK” written on it? and 2) shouldn’t the industrial sector also have a chimney? I think that’s enough of a debate to keep the journal publishers in business.
On the critical question of how to portray the industrial sector, I submit the below historical document, which I borrowed from Lizabeth Cohen’s Consumers’ Republic.
Clearly the chimney is canonical. I suppose whether there’s smoke coming out of it depends on whether you’re depicting the boom or bust part of the cycle.
Oh, and here’s DeLong’s actual illustration.
5 comments
June 28, 2010 at 10:07 am
kevin
On second thought, let’s not go to the bank. It is a silly place.
June 28, 2010 at 2:05 pm
ben
Dsquared has (in his comments) his own suggestion regarding the significance of smoke coming out the chimney: “The presence or absence of smoke coming out the chimney is how you represent excess capacity, but that’s more getting into general equilibrium modelling.”
June 28, 2010 at 2:12 pm
eric
I’ve just been able to look at the source; it’s on p. 115 of Cohen’s book and comes from Mobilizing for Abundance by Robert Nathan (1944).
June 28, 2010 at 8:00 pm
ac
My ideal econ illustration would be a banker on a golf course, preferably with a martini in hand, for we would all have been better off had the entire sector regularly quit work at 3 and headed off to the links.
Or you could have an econ text where the answer to every problem was, Ask a Canadian.
June 29, 2010 at 2:07 pm
Sam-I-am
The most enlightening monetary model I ever studied featured an ATM and a consumer. Where’s the ATM?