Monthly Archives: January 2013
Why Is Manufacturing Special?
Andrew Coyne has an excellent piece in the National Post dealing with why there are no good reasons for corporate handouts in the wake of yet another round of assistance to the automobile sector. He asks what the economic rationale for this assistance is – that is, what is the economic value? He argues that […]
Do sofas refute monetarism?
Start with a very monetarist model of the monetary system. Whatever that means to you. Now let's add sofas to the model. Suppose that every year1% (say) of the monetary base disappeared down the back of the sofa, never to be seen again. Would that refute monetarism?
Harmless remedy or dangerous pharmaceutical?
In Canada, melatonin is deemed to be a "nutritional supplement." It's sold in most pharmacies and health food stores as a natural and healthy way of overcoming jetlag or ensuring a good night's sleep. In the UK, melatonin is a harder to come by. In 1995, its designation was changed from nutritional supplement to "medicinal product", which meant that […]
What should a central bank do when producer and consumer prices diverge?
In this post, Nick looked at this graph and made the following comment: In a counterfactual world, where the Bank of Canada was supposed to be targeting the level path of NGDP to follow that 5% trend line, what would we say? We would say that monetary policy was a little too loose in the years […]
Did inflation targeting make inflation stickier?
I think my last post was very clear. Inflation targeting failed. I know this post won't be clear. But this post tries to answer the question that my last post begs to be answered. Why did inflation targeting fail? I used to think that if the Bank of Canada succeeded in keeping inflation on target, […]
Leviathan, Exit, Voice and Ontario Teachers
The last few weeks has seen the death of two economists – James Buchanan and Albert O. Hirschman – whose work has influenced my intellectual development and thinking over the years. Their thoughts combined with tomorrow’s “political action” by Ontario teachers against the soon to expire McGuinty government has caused me to think about what […]
The Bank of Canada’s success and failure
The Bank of Canada has been very successful in keeping inflation on target. Which is what the Bank of Canada was supposed to do. But keeping inflation on target has failed to prevent recessions caused by deficient aggregate demand. Which is what keeping inflation on target was supposed to do. The problem is not the […]
Are there “Peso Problem” recessions?
Suppose monetary policy never changed for 99 years. Suppose nothing ever changed for 99 years. Would it be possible for there to be a deficient Aggregate Demand recession for 99 years? Why wouldn't prices adjust? Wouldn't 99 years be long enough for prices to adjust?
Ideology, Business Cycles and Macroeconomics
Being more of an empirical bent, I do not generally indulge in the analysis of macroeconomic theory as thinking about it often causes me to recall what I think was a quote by John Kenneth Galbraith something to the effect that “Macroeconomics is like a religion, nobody truly knows what comes in the hereafter.” More […]
The Year Ahead
The New Year is when we try to look ahead and project what we think the economy will be like. There is no shortage of forecasts from banks, international economic agencies and independent forecasters as to how the Canadian, US and world economies will fare over the next year.
Worthwhile Canadian Initiative 
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