Monthly Archives: May 2009
A rambling post on Joseph Heath’s “Filthy Lucre”
This was supposed to be a review of Joseph Heath's new book "Filthy Lucre: Economics for People who hate Capitalism". But I'm not used to doing book reviews, so it's going to turn into a ramble on the teaching of economics, and economics in the political spectrum. I got the call to act as "host" […]
The April Labour Force Survey numbers weren’t all that good
Last Friday, the LFS release for April showed an increase in employment, which was a bit of a surprise. If you add that to the increasingly good news out of the US, then you might be tempted to think that we got out of this one pretty easily: If March 2009 turns out to be […]
Scott Sumner’s Plan for monetary policy
Thanks to Scott's recent post here, (and the last paragraph of his post here), I think I now have a better understanding of his proposal for how monetary policy should be conducted. The purpose of this post is to explain Scott's plan in my own words, and compare it to the Bank of Canada's current […]
Do wage and price cuts increase (real) aggregate demand?
It all depends on what you hold constant when you draw the AD curve in {price level,real output} space. See Paul Krugman, Bryan Caplan (h/t), and David Henderson.
Quantitative Easing circumvents banks’ capital constraints to increase M1
I'm still not sure I fully understand this, but I'm going to post it anyway. That's what blogs are for. [Updated, see halfway down the post.] The basic idea is that one of the ways quantitative easing may work (there are others) is that it allows the central bank to buy stuff directly from the […]
A modest proposal for paying negative interest on currency (or something)
Willem Buiter considers various ways to make interest rates negative. The problem is how to pay negative interest rates on currency. His most interesting proposal is to separate the unit of account from the currency. The dollar would remain the unit of account (at least, he hopes it will). But he would replace dollar notes […]
Is Ignatieff playing with the right Employment Insurance instrument?
Apparently we're going to have yet another political psychodrama, this time over Employment Insurance (EI). Michael Ignatieff is threatening to force an election if the government doesn't go along with the Liberal proposal to make everyone eligible for EI after 360 hours of work. (I should explain to our non-Canadian readers that we've set the […]
Five reasons to be optimistic
Chinese manufacturing is rebounding. News out of the US is not entirely discouraging. As a result, oil prices are starting to drift up. And since production costs have fallen from their boom-induced levels, investment in the oil sands might start to come back. Credit markets are working their way back to normal. The last patch […]
A preliminary estimate for Canadian 2009Q1 GDP growth
All statistical agencies have to trade off timeliness against accuracy, and Statistics Canada seems to put more weight on accuracy. For example, it doesn't publish advance GDP estimates the way the Bureau of Economic Analysis does, presumably because they don't want to live with the large revisions that the BEA is invariably forced to make. […]
Why an excess demand for money matters so much
Suppose there were an excess demand for antique furniture. Antique furniture is not part of GDP. By Walras Law, if there were an excess demand for antique furniture, there must be an equal and offsetting excess supply of something else, like newly-produced goods for example. Could an excess demand for antique furniture cause a general […]
Worthwhile Canadian Initiative 
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