Monthly Archives: May 2010
The (mis-)coordination of monetary and fiscal policy
Suppose the monetary authority says "We already have interest rates at zero, so monetary policy can do no more to increase aggregate demand. But fiscal policy can do more…" Suppose the fiscal authority says "We already have very high deficits and debt, so we are scared of future insolvency, so fiscal policy can do no […]
Are we hard-wired for capitalism?
When I get back from the Canadian Economics Association meetings this evening, my dog will throw himself on me in a paroxysm of joy. But if, two minutes later, I were to try to take a bone away from him, he would bare his teeth and growl. Animals – including humans – are instinctively possessive. […]
How is model-based macroeconomic forecasting possible?
I can figure out how some things work. I can't figure out how other things work. But there are some things I can't figure out how it's even possible for them to work. Using macroeconomic models to make macroeconomic forecasts falls into that third category of things. I can't see how it's even possible to […]
Trends in OECD corporate income tax rates
From the OECD's Tax Database (Table II.1): The last few decades has seen extensive work documenting the deleterious effects of corporate income taxes – especially for small open economies. These lessons seem to have been taken to heart by policy-makers.
Corporate income taxes: a reading list
Like many Canadians, I am dreading the prospect of a federal election. We all have our own reasons for doing so, and here's mine. Now that the Liberals have announced that they – along with the NDP – will oppose the reduction in the corporate income tax rate that is planned for next year's budget, […]
Ban the penny! And the nickel, while we’re at it
Deputy Governor Pierre Duguay provides us with one of the more interesting trial balloons to come out of the Bank of Canada in a very long while: [T]he Bank views the possible elimination of the penny in terms of the potential impact on inflation, and has conducted some preliminary research on this issue. The findings, […]
The CPI and other asset prices
Returning from a long weekend's canoeing, I remembered one of the main reasons I am a sticky-price macroeconomist. I checked to see if the economy had imploded while I was not worrying about it. April CPI up 0.1% from March; CAD/USD down about 2%; CAD/EUR up about 2%; TSX down around 3%; S&P500 down around […]
An update on the concentration of income in Canada
Yesterday saw an odd coincidence: The Globe and Mail ran a bunch of articles about the 10-figure salaries earned by a small number of people ([1],[2],[3]). McMaster University's Mike Veall passed along updated data (preliminary paper and data files [1], [2], [3]) confirming the trend in which income is increasingly concentrated among a small number […]
How Game Theory Made Me a Better Businessman
Anyone who has taught microeconomics has, at one time, had to deal with the question, That’s all very nice, professor, but how am I supposed to use any of this in the real world? If I’m running a business, I’m not going to know the demand curve for the product and I’m not going to […]
Does internet access promote marriage?
Next week at the Canadian Economics Association meetings I'm discussing a provocative paper by Andriana Bellou on the The Impact of Internet Diffusion on Age at First Marriage. The theory behind the model is straight from the e-harmony ads: "I decided to give eHarmony a try after several frustrating attempts to find someone to love, […]
Worthwhile Canadian Initiative 
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