Monthly Archives: November 2009
Today’s GDI release: both GDP and the terms of trade are improving
There's been a certain amount of commentary on today's GDP release. An annualised growth rate of 0.4% for 2009Q3 is better than zero – and it's at the 80th percentile of the predictive density generated by my toy predictor – but it's not what you'd call a strong recovery. Happily, there's better news about GDI. […]
Money, banks, loans, reserves, capital, and loan officers
Anyone who has taken ECON1000 has probably seen the simple model of how banks create money in a fractional-reserve banking system, and how an increase in reserves creates a multiple expansion of loans and the money supply. An alternative approach, cogently argued in comments here by JKH, says that it is bank capital, not reserves, […]
In praise of (a little bit of) fiscal dominance
Who makes sure the long run consolidated government-central bank budget constraint balances? Is it the government? Or is it the central bank? The former gives us a Ricardian regime; the latter gives us fiscal dominance. Most macroeconomists take a Ricardian regime as their unspoken assumption; and, if pressed, would recommend a Ricardian regime, as is […]
“Presentation of the Liberal position on climate change and the environment” – cont’d
I went. And apparently it's being sold as a Big Deal; here's the speech. Here are the points I was curious about last week: Is this a real policy proposal, or a recital of Conservative failures? A healthy dose of the latter, and some generalities. No details, though. Cap-and-trade, or a carbon tax? Cap-and-trade it […]
Revisiting Robin Hood’s agenda: Be less concerned about taking from the rich and focus on giving to the poor
Ed Broadbent had an op-ed in Tuesday's Globe on a plan to reduce child poverty, and he offers this proposal: In the next budget, let's impose a six-point increase in income tax on those earning more than $250,000 a year (whose average taxable income is $600,000). While leaving them with very high incomes, this would […]
Macroeconomics and Climate Science: compare and contrast
Similarities: S1. Both do general equilibrium analysis, trying to understand the interaction between parts of a whole system, with lots of positive and/or negative feedback loops.
Milking consumers
It's hard to believe that I've managed to run a blog on the Canadian economy for more than four years without having a go at what is Canada's most fragrant example of bad economic policy. Happily, the Conference Board has just published a paper summarising the sorry state of affairs in the market for dairy […]
On some unconvincing arguments against the need for an effective Parliamentary Budget Office
MM Veldhuis and Lammam respond to my post on their op-ed in the National Post last week, and Kevin Milligan summarises a couple of their points: 1. The PBO would not be exactly like the CBO therefore no parallels to the CBO may be drawn.2. Canada's Parliamentary system has the advantage that the executive is […]
Some context for the Parliamentary Budget Office’s funding woes
Some points to consider: The PBO has a budget of $1.8m and 15 employees. (source) The US Congressional Budget Office has a budget of $45.2m and 250 employees. (source) Policy analysis does not scale well; the cost of putting together a model for evaluating a given policy is pretty much the same in both countries. […]
Maybe the Bank of Canada won’t have to intervene in the forex market after all
When we last left this story, inflation was drifting further and further below the Bank of Canada's inflation target, and the CAD was up to 0.97 USD. The case for intervening in the forex market to slow the appreciation of the CAD – and hence slow the drift to deflation – was starting to look […]
Worthwhile Canadian Initiative 
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