Monthly Archives: April 2009
Interest rate control: maybe theory was right after all?
There used to be a debate over interest rate control vs. base control of monetary policy. We always knew (at least some of us always knew) that interest rate control couldn't work in theory, but it seemed to work in practice, so eventually even the die-hard defenders of base control quietened down, or were ignored, […]
Fiscal policy after the recession
Eventually, the recession will be over, and we will have to deal with the question of what should be done to recover from the recession-induced deficit. Ideally, the answer should be "Nothing": as the economy recovers, the deficit would go back to zero as tax revenues went back up and recession-induced expenditures went back down. […]
Say’s Law, Walras’ Law, and monetary policy
"Deficiencies of aggregate demand are always and everywhere a monetary phenomenon". There's an excess supply of newly-produced goods, and an excess demand for money. But what exactly does an excess demand for money mean? And what does it mean for the effectiveness of monetary policy?
Highway 61 visited – some random thoughts on a US road trip
Two weeks and 8,000 km (5,000 miles) later, I'm back home from a US road trip. Here are some random thoughts FWIW. Nothing very important, insightful, or authoritative here.
Does fiscal stimulus make sense in a supply-shock recession?
David Andolfatto is somewhat concerned at the lack of thought that's been put into justifying a Canadian fiscal stimulus program. This is a theme that both Nick and I have touched on over the past few months, and the analysis is complicated by the fact that too many commentators make the assumption that Canada and […]
In which Rick Salutin doesn’t do his homework
Only part of his column today discusses the Ontario government's decision to remove information about school performance from its Ministry of Education's website, but Rick Salutin still manages to make two fundamental mistakes: "Competition makes for better schools," said a Globe and Mail editorial, without a shred of evidence, since there is none. The U.S. […]
The evolution of the Bank of Canada’s balance sheet
Jim Hamilton has a couple of recent posts ([1], [2]) at Econbrowser documenting the remarkable changes in the Fed's balance sheet during the financial crisis, so I decided to take take a closer look at the effects of the Bank of Canada's activities on its balance sheet. The asset side seems straightforward enough, and is […]
Is a US recovery a necessary condition for a Canadian recovery?
If you squint and hold your head at just the right angle, it is possible to persuade yourself that the US economy has reached at least a point of inflection: the most recent news about housing, auto sales and initial unemployment claims are less bad than what we've become used to seeing. But even if […]
Worthwhile Canadian Initiative 
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