Monthly Archives: March 2009
The US may need a financial hegemon. But the US is not the world.
Canadians are federalists by instinct, so my reaction to Dani Rodrik's recommendation to resist the imposition of a global financial regulator with a Procrustean mandate is to nod my head in approval. In the current context, the proper Canadian reaction to such a proposal would be to wonder why on earth ceding authority to a […]
The unit-root zombie: Dead, but still wreaking havoc
If there's one thing that is guaranteed to drive the still-too-small community of Bayesian macroeconometricians up the wall, it's the debate about whether or not GDP – or any other variable – has a unit root. If you don't know what a unit root is or why it has anything to do with GDP, then […]
Is quantitative easing trying to raise or lower interest rates?
The Bank of England has switched to quantitative easing. It is buying long bonds (gilts). What would count as a signal of success? We could argue that falling yields would signal success, because it is trying to reduce long interest rates to stimulate investment. But we could equally argue that rising yields would signal success, […]
The Globe and Mail’s subprime envy
Today's G&M has what purports to be an exposé on subprime mortgages in Canada: Canada's dirty subprime secret: Since the subprime mortgage meltdown in the United States, Canadian leaders have assured the public that a similar tidal wave of foreclosures can't hit here. They have cited the prudence and market dominance of Canada's five most […]
Canada is no longer a net debtor country
Given our history of wringing our hands about Foreigners Owning Canadian Assets, I'm a bit surprised that this story hasn't yet been picked up on the news sites I watch: Canada's net international investment position: Following a trend to reduced net foreign debt since the mid-1990s, Canada recorded a net asset position of $13.5 billion in the […]
The Parliamentary Budget Office is asking for public support. It should get it
This is bad news (h/t to Shock Minus Control): Budget watchdog pleads for help: The watchdog created by the Harper government to scrutinize the state of Canada's finances has just issued a public plea for help, asking the Prime Minister and opposition parties to rescue his office as it confronts a funding crunch and pressures […]
Temporary vs. permanent quantitative easing
A permanent increase in the money supply (or one that is expected to be permanent) will have a different, and bigger, effect today than a temporary increase in the money supply (or one that is expected to be temporary). To say the same thing a different way, an increase in the expected future money supply […]
GDP, GDI, terms of trade and why Canada is in a recession: It’s all about the beer and pizza
The Parliamentary Budget Office has released a report (pdf – h/t to Kady O'Malley) that makes note of the distinction between Gross Domestic Product (GDP) and Gross Domestic Income (GDI), and shows that by the latter measure, the fourth quarter of 2008 was even more dreadful than the GDP numbers that made all the headlines. […]
Liquidity and aggregate demand
Money is perfectly liquid. Other assets are not as liquid as money, but some are more liquid than others. One of the main features of the financial crisis is that some assets became less liquid than they had previously been. I want to look at the channels through which a fall in the liquidity of […]
Altruistic individual responses to the financial crisis
We don't rely solely on government to alleviate poverty. We don't rely solely on government to provide public goods. Altruistic individual responses can help too. Perhaps we shouldn't rely solely on government policies to help solve the financial crisis either. At the very least, asking what individuals could do to help alleviate the problem might […]
Worthwhile Canadian Initiative 
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