Monthly Archives: June 2008
When will the Canadian dollar start to appreciate again?
Since 2002, we’ve been seeing a pattern in which periods of CAD appreciation alternate with periods where the trade balance increases: The cycle goes something like this: When the trade balance is high, the CAD appreciates. The appreciation brings the trade balance down, and the CAD hits a plateau. While the CAD is plateaued, the […]
More reactions to the Liberals’ carbon tax proposal
The Liberals have provided more detail on their carbon tax proposal (48-page pdf), and it has received generally positive reviews. The basic strategy is to take the existing gasoline tax, re-interpret it as a tax on carbon, and to extend it to other sources of greenhouse gases. As an exercise in electoral politics, introducing a […]
Why did the Bank of Canada stop cutting interest rates?
Here's why: As I noted several weeks ago, the low y/y inflation rates we're seeing now are due to a one-off fall in prices that occurred when the CAD hit parity with the USD. Since then, core CPI has been growing faster than the Bank's 2% target. And this trend was clear even before yesterday's […]
“Canada’s managers are under-achievers”
Dan Trefler gave the Innis Lecture at the meetings of the Canadian Economics Association in Vancouver a couple of weeks ago. The title of his talk was "Policies for Canadian Prosperity"; inevitably, one of the points he spent a lot of time on was the problem of Canada's slow rate of productivity growth. One possible […]
On the ‘correlation is not causality’ dodge
This is something that we're all taught, and it's quite true: there are any number (in principle, an infinity) of unobservable causal relations that can generate an observed correlation. But this phrase most emphatically cannot be used to dismiss evidence that appears to contradict your preferred world view. If your model predicts no correlation and […]
It’s time to start worrying about productivity again
There were a couple of nice papers in the Centre for the Study of Living Standards' spring 2008 issue of their International Productivity Monitor. The reason we keep coming back to this issue is summarised in this chart from Business Sector Productivity in Canada: What Do We Know? (pdf), by Paul Boothe and Richard Roy […]
The Bank of Canada stops and startles
The Bank of Canada held interest rates steady today. Going into the April 22 decision, I thought it was about time to stop the round of interest rates cuts, so I certainly agree with the decision. But I was a bit surprised at the move. Since his arrival at the Bank in February, Mark Carney […]
Was last November a turning point?
Statistics Canada's March GDP release was the fourth consecutive month in which output failed to go above what it had been in November 2007. So are we going into a recession as in 1981-82 or 1990-91? Or will the Canadian economy bounce back with stronger growth as in 2001-2002? Before answering, it might be a […]
Carbon taxes vs cap-and-trade
There are now several plans for reducing greenhouse gas emissions bouncing around the political landscape. The BC Liberals have implemented a carbon tax and the federal Liberals are also floating the idea. For their part, the federal NDP is talking about a cap-and-trade model, as are the premiers of Ontario and Quebec. And a cap-and-trade […]
Worthwhile Canadian Initiative 
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