Monthly Archives: September 2012
Three different ways expectations can matter. And the ZLB.
Nothing new here. Think of this as a teaching post. Partly for the people of the concrete steppes, but for others too. I'm just going to talk about different ways that expectations can affect what happens. The main distinction is between multiple equilibria and unique equilibrium.
Too much stuff: the deadweight loss from overconsumption
In a simple supply and demand world there are two sources of waste. Underconsumption is the first. It occurs when taxes, price ceilings, price floors or other interventions prevent the economy from reaching the free market equilibrium. Consumers would like to buy, suppliers would like to sell, but they cannot make a mutually beneficial exchange […]
Forecasting Deficits Ontario Style
One of my most piercing electoral memories is the 1993 federal election debate that featured then Prime Minister Kim Campbell, Jean Chretien, Audrey McLaughlin, Preston Manning and Lucien Bouchard. The part that always sticks in my mind is Lucien Bouchard’s persistent questioning of Campbell with respect to the size of the deficit in the 1993 […]
My trip to see the oil sands
Last month, the Canadian Association of Petroleum Producers organised a field trip for a group of economics professors to see a couple of the oil sands installations. I once wrote somewhere that the oil sands are the most important Canadian economic fact of our time, and I jumped at the offer to join the tour. […]
Some notes on horizontal supply curves
This post is mostly for my students.
A case for ZLB denial
This post is in response to two posts by Simon Wren-Lewis on "Zero Lower Bound Denial". First post here and second post here. I'm just collecting my thoughts from my comments on Simon's posts and from my previous posts. This is what I think: 1. The ZLB is a real wall. Bad stuff happens if […]
The orthodox recovery of faith?
In May 2010 I wrote a post with the title "the orthodox loss of faith". Please read it (or re-read it). It's a short post, and it would take me as long to repeat what I said there. And I can't recapture today how pessimistic I felt just over two years ago. If "orthodox" means […]
Who will be first against the wall when the revolution comes?
In other universities the teacher is prohibited from receiving any honorary or fee from his pupils, and his salary constitutes the whole of the revenue which he derives from his office. His interest is, in this case, set as directly in opposition to his duty as it is possible to set it. It is the interest of […]
Why indifference curves are so hard to understand
Look at these curves. I see boobs like this all the time Every year, come exam time, students make mistakes that reveal a fundamental lack of understanding of indifference curves. They write "price" and "quantity" on the axes of their indifference curve diagrams, instead of "apples" and "oranges." They shade in the area below […]
Is Ontario Breaking the “Golden Rule”?
Ontario’s government is now engaged in public sector restraint and reform tackling its doctors and teachers in an effort to wrestle down its 15 billion dollar deficit. Soon it will be turning its attention to universities. Indeed, work is already underway on an ambitious plan to reform the university sector which according to reports on […]
Worthwhile Canadian Initiative 
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