Monthly Archives: January 2012
A Long Term Employment Picture – Go West for Opportunity
Stephen Gordon’s posts on the recent employment performance in Quebec gave me cause to get the numbers on employment growth over the long term on a provincial basis. I obtained the seasonally adjusted Statistics Canada employment numbers and used them to construct average annual growth rates in employment by province for three periods: 2001-2011, 1991-2000 […]
Burn the mathematics
Paul Krugman thinks that economic discourse on the blogosphere is a good thing. He's right when it comes to economic theory. Economic theory is deductive: assumptions + fancy stuff = conclusions. Ultimately, the path from assumptions and the conclusions doesn't matter, as long as it's logically consistent. As Alfred Marshall said, translate mathematical results into English, […]
Asking the right question about fiscal policy
If you can't get a good answer to a question, it might be because you are asking the wrong question. Good answers need good questions. Before 1975 (roughly), we used to ask questions like: "What is the effect of increasing the money supply today, when unemployment is bigger than normal?" After 1975, economists learned to […]
Quebec employment watch: le mystère persiste
The hunt for data that are consistent with the sharp drop in employment reported by the Labour Force Survey in November and December ([1],[2]) continues. Today's release of initial Employment Insurance claims for November don't look like what we'd see in an economy that was seeing a sharp jump in unemployment:
A very simple derivation of the balanced budget multiplier in a very monetarist model
This is mainly a brain-teaser. But I hope you find it useful, as well as fun. 1. Assume initially there is no government. So G=T=0, and Y=C+I. (You can add in net exports too if you want, or delete I if you want to make the model simpler still.) 2. Assume MV=P(C+I), where V is […]
The Bank of Canada revises up its forecast
There's not been a lot of drama in the Bank of Canada's recent announcements for its overnight rate target, nor does it look as though there will be for several months. As long as there's a non-negligible risk that the eurozone will produce a financial crisis, the Bank of Canada won't be in any hurry […]
Where (I think) Mike Woodford’s model of the multiplier is wrong
Paul Krugman asks a fair question. If anyone disagrees with what Mike Woodford says about the New Keynesian government expenditure multiplier, can they point to where exactly they disagree with Mike Woodford's model (pdf). I am going to do just that. I'm not 100% sure I'm right (we never should be). But I think Mike […]
Consumption smoothing and the Keynesian multiplier
This is the simple short version, but it covers quite a lot of ground. Nothing much new here. Maybe the bit towards the end is newish.
The cruel consequences of moral hazard in health care
Our health care system devotes too many resources to prolonging life, and too few to improving its quality. A case described by Lisa Sanders vividly illustrates what I have in mind: A couple of years earlier she started “walking like a drunk,” [the patient] told the slender, middle-aged doctor. Her legs were weak and her […]
If S weren’t I
There is something very strange about a counterfactual conditional in which the counterfactual is logically impossible. There are no possible worlds in which something logically impossible happens, so we can't ask which of the possible worlds in that subset is most plausible. The subset is empty. "If saving were bigger than investment, what would happen […]
Worthwhile Canadian Initiative 
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