Monthly Archives: May 2009
The IS curve
You might think you understand the IS curve. You probably don't. And your failure to understand it properly means you don't understand how an excess demand for money is an integral part of the theory of the IS curve, underlying any state of deficient-demand unemployment. And you don't understand the monetary transmission mechanism properly. I […]
Oil prices in currencies other than the USD
Once again, we're seeing an increase in USD-denominated oil prices accompanied by a depreciating USD, so it was only a matter of time before someone put 1 and 1 together and got 11: Crude awakening: It's oil about the US dollar: Some people would have you believe that oil's surge above $60 (U.S.) a barrel […]
The federal opposition parties are dimwits, or they really don’t want an election
I cannot understand why the federal opposition parties have decided to make reducing the number of hours worked before becoming eligible for Employment Insurance the reason for provoking a squabble with the Harper government. As I asked over here, just what problem is this supposed to solve? How many people are there who were hired […]
A “Why Fiscal Policy Won’t Work” Contest
I am opening a contest. Let's see who can come up with the most plausible (or least implausible) model in which fiscal policy would not work in present circumstances. This is not an entirely frivolous exercise. David Andolfatto (who runs another excellent Canadian economics blog) has made a number of posts recently questioning the empirical […]
Deflation: a less clear and less present danger
It would appear from the April CPI release that the Bank of Canada won't be obliged to figure out how to implement policy quantitative easing after all.
Imagine there’s no money….
Would the current financial crisis matter as much in a world without money? Let me be more specific. Imagine we lived in a world where we still had money as a medium of account, so prices were measured in money. But people did not use any medium of exchange; they used barter instead. Would your […]
Has the Bank of Canada shifted from credit easing to quantitative easing?
Five weeks ago, I posted on the evolution of the Bank of Canada's balance sheet during the financial and economic crisis. Since then, several things have happened:
An overlooked anti-poverty strategy: giving money to poor people
Kevin Milligan of the University of British Columbia and Mark Stabile of the University of Toronto asked themselves "Can income transfers to poor families help children?" Here's a summary of the answer they got: Since the 1990s, many countries have reformed their systems of transfers to low income families with an eye toward improving work […]
Could the natural rate of interest really be negative?
{Update: Preface: Is it possible that an economy could find itself in an absolute liquidity trap because the natural rate of interest went negative? Or is it only possible if mistakes in monetary policy caused expected inflation to go negative?] We argue that the nominal rate of interest cannot be negative. If it were, people […]
Good News! Interest rates rise.
This Bloomberg story reports the Fed saying that rising bond yields are a good sign. They don't precisely say that monetary easing is what caused the rise in interest rates; they are perhaps too modest to claim credit? But I will say it for them: by buying bonds, and easing monetary policy, the Fed has […]
Worthwhile Canadian Initiative 
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