Monthly Archives: January 2010
Don’t bubbles burst when pricked?
This is an inchoate post. That's not really an apology. Economists' ideas about bubbles aren't very clear. We can define a bubble theoretically, but we can't explain why they sometimes exist, sometimes don't exist, or why they sometimes start and stop existing. And we are not very good at identifying bubbles, even perhaps in hindsight. […]
Can ALL assets be overvalued?
I was going to make the title: "Can ALL assets be overvalued? The Economist (mag) vs. Cambridge(US) vs Cambridge(UK) vs. the Austrians", but it was be too long. I saw the cover of the Economist this morning. The usual lovely picture, plus the headline "Bubble Warning; Why Assets are overvalued". I think there's a theoretical […]
The value of unfunded pension liabilities, and interest rates
The C.D. Howe Institute has released a study (pdf) on Federal government pensions, written by Alexandre Laurin and Bill Robson. The bottom line (and what hit the headlines) is that the value of the unfunded liabilities is $58 billion higher than recorded in the public accounts. So the national debt is $58 billion higher than […]
What is a “structural” deficit?
Macroeconomists like to divide an actual deficit into two components: a cyclical deficit and a structural deficit. It reflects their distinction between automatic stabilisers and discretionary fiscal policy. I don't think that distinction is as clear and useful as macroeconomists think it is. And in ordinary language a "structural" deficit is one that is hard […]
How Jim Flaherty can stop the structural deficit meme: Show us the numbers
From the Globe and Mail: Flaherty dismisses deficit 'speculation': “I see speculation. I don't see a lot of evidence. I see editorial comment without numbers, without analysis,” Mr. Flaherty said. Of course, that's exactly what we see coming from the Department of Finance. If Finance is so sure of its numbers, it should be publishing […]
The Canadian dollar, the euro and political agendas
Paul Krugman points out that the existence of an independent Canadian dollar – and the fact that Canadians aren't in any hurry to adopt the USD – is something to think about when one ponders the euro project: [I]t suggests that Europeans made too much of the need for the euro. The euro project had […]
Finance as Magic
I can't get over the feeling that Finance is magic. We shouldn't be surprised if sometimes the rabbit doesn't come out of the hat, or comes out missing an ear or two. We should be surprised that the rabbit ever comes out of the hat at all.
Statistics Canada needs JOLTS
Here is a graph – stolen from the Wall Street Journal – for which I very much wish I were able to make a Canadian version: These numbers come from the BLS Job Openings and Labor Turnover Survey; there is no Canadian counterpart to this data source.
Forecasting the Federal Deficit
I wanted to figure out what the federal budget deficit would look like when Canada eventually recovers from the recession. So I did a very crude back-of-the-envelope calculation. Then I looked at the Parliamentary Budget Office's own forecast (pdf). The PBO forecast is more pessimistic than mine. I'm still trying to figure out why.
A policy agenda for every horizon
I think we've seen enough of retrospectives on the past year and decade; it's time to reflect upon the future. So here are some things that we're going to have to think about, organised by time horizon.
Worthwhile Canadian Initiative 
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