Monthly Archives: December 2009
In which I try to answer Jeffrey Simpson’s question
From today's Globe and Mail: A surfeit of rah-rah, a dearth of serious debate: Take the economics profession. Very few economists in the private sector take on the big-picture national issues – the TD Economics unit being a significant exception – preferring instead to analyze the ups and downs of the stock market and this […]
Why would unions oppose a basic income?
The Berkeley Electronic Press has a new journal: Basic Income Studies. The Basic Income – also known as the Guaranteed Annual Income (GAI) in Canada – is a proposal that I'm very much favourably disposed to, even though I'm not familiar with all of the technical details. I took a look at its inaugural issue, […]
Social choice and optimal inference
One of the highlights of my graduate school years was the lecture where I learned about Arrow's Impossibility Theorem. It's hard to imagine an question more important to the social sciences that the social choice problem: how can we aggregate individual preferences into a coherent social order? Arrow's answer is that we can't, but that […]
Optimal Tax Theorist bleg; can 100% marginal tax rates ever make sense?
This is a bleg. I'm looking for someone who: understands optimal tax theory better than me (shouldn't be too hard); can explain it simply (may be harder). Here's the question: can it ever be part of an optimal tax system to have 100% marginal tax rates on some part of the income distribution?
Even more evidence that people respond to incentives
A few years ago, Human Resources Development Canada (HDRC) ran an experimental project to see how single parents on welfare responded to changes in their budget constraint. It has long been known that single mothers on social assistance are particularly vulnerable to the welfare trap: not only are their payments clawed back as they earn […]
Horizontalism, black holes, and liquidity traps
The same "horizontalist" macroeconomic theories that predict the existence of black holes also predict that standard monetary policy is useless in a liquidity trap, and for the very same reason. But we do not observe any economies ever falling into black holes, so black holes probably don't exist. So if those macroeconomic theories are wrong […]
Economic growth and convergence
One of the main predictions of standard neoclassical growth models is convergence. If there are diminishing returns to capital, countries that have relatively higher levels of capital will have lower rates of return on investment than will countries in which capital is relatively scarce. Since poor countries offer higher rates of return on investment, they […]
My Christmas wish: a not-completely-stupid debate on climate change policy
Here are the ingredients: A recognition that climate change is a real problem that has to be addressed. A recognition that the costs of climate change policy cannot be shuffled off to hate-objects such as oil companies and Albertans. An honest discussion of what the costs of an effective climate change policy are. Is that […]
Why don’t we observe (macroeconomic) black holes?
Like physics, modern macroeconomic theory predicts the possibility of "black holes". The analogy with physics is close, but not exact. Because unlike physics, where it's not easy to see a black hole, there should be no difficulty in macroeconomists seeing a black hole, if one exists. At the very least, we should certainly see any […]
Productivity: The demographic tipping-point
Real, per-capita GDP growth has averaged about 1.7% in Canada over the past 30 years – where has it come from? A less-than-exhaustive but more-than-cursory examination of the data suggests the following breakdown: Source Contribution Technical progress: 0.9% Capital deepening: 0.5% Decrease in hours worked per week: -0.2% Increase in employment rate: 0.25% Increase in […]
Worthwhile Canadian Initiative 
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