Peter:
1) I am glad to hear that you are free of sin, my brother, in
your (past) teaching of micro. However in your remarks about
"microland is faster than macroland" I would say it ain't necessarily
so, especially when prices are a signaling device. We have seen
plenty sudden speculative frenzies, including for commodities such
as when Japanese housewives rioted over toilet paper out of fear of an
impending shortage after a price increase, in very short times after
a price increase. Also, new information, somebody is sticking syringes
in something, can change preferences very rapidly.
2) (or is this more of 1)?) I would suggest that the endogeneity of
MS is an empirical issue rather than a logical one. I fully agree that
in most modern financially sophisticated economies with most money
being "bank money" (deposits or accounts of one sort or another) money
has a significant endogenous component. But this may not hold in a
simple commodity money world (Yap Island rocks, Dahomey cowrie shells,
gold in Hume-era Britain). In principle it can be exogenous. The real
problem here (which is empirical) is what Mike Meeropol and others,
along with myself (and I think you as well) have mentioned which is the
lack of independence of AD and AS.
3) no comment
4) On international sub. effect, this is the point I made in my JPKE
article. On the other hand foreign exchange markets are perhaps the
most notoriously unpredictable and irrational of them all.
Cheers.
Barkley Rosser
JMU to JMC
