Monthly Archives: July 2013
The trade cycle: debt is trade
GDP is high in booms and low in recessions (relative to trend). That is (roughly) how we currently define "booms" and "recessions". GDP (roughly) measures the volume of trade in newly-produced final goods. But that is a narrow measure of trade. A lot of goods get traded that are not newly-produced. People buy and sell […]
The inflationistas are our friends; and inside and outside inflationistas
Noah Smith is doing something very wrong. The whole point of monetary policy at the ZLB is to create inflationistas. We need more inflationistas, not less, and so Noah should stop dumping on them, and saying their fears of inflation are groundless. For every inflationista destroyed by us laughing at their fears, central banks have […]
Promoting Consumption Taxation in Canada
Consumption taxation is making the news again in Canada. Manitoba’s PST hike to 8 percent that was announced in April’s provincial budget kicked in on July 1st. At the public hearings into the increases and in the media, the increase has received a lot of criticism despite the claim the increase will be temporary and […]
Money, bonds, and the price level
I want to try to answer Simon Wren-Lewis' good question. Let me first restate his question in my own words. (Always a good way to begin, to see if I've understood him properly.) Take a very simply model of an economy, in which a government issues a nominal stock of (high-powered) money M, and a […]
Selling carbon taxes in the exurbs
At a family party in the Toronto exurbs, right on the outer edge of the 905 zone, one of my favourite cousins cornered me. "You're an economist," he said, "tell me why you think carbon taxes are a good idea." My first thought was to sidestep the issue. "They're only a good idea," I said, […]
Money and the greater fool
[Update: this post wasn't as clear as I wanted it to be. Because my head wasn't as clear as I wanted it to be. Reading and responding to comments has helped me get clearer, I think. Let me try this: There are two reasons why people buy an asset: 1. Because owning the asset earns […]
Keynes’ question and the “Keynesian” answer
How did "fiscal policy" get to be the answer to a question about time and money? Sophisticated Keynesians will object if I treat "Keynesian" as synonymous with "having a predilection for fiscal policy". But I think they would recognise that the two are correlated. And that correlation is puzzling. The correlation seemed to disappear during […]
Economics is better (in some ways) than it used to be
The discipline of economics is in better shape today than it was in the 1970s, 80s and 90s. Here are five reasons why: 1. Now, economists test their theories. In the 1960s, the majority of published economics papers were entirely theoretical. Even in the 1980s, the typical top-10 journal published mostly theoretical work (reference here). Today, top journals like […]
The National Dream’s Economic Legacy
The completion of the Canadian Pacific Railway (CPR) in 1885 was more than an impressive engineering achievement; it was also a significant joint economic undertaking by the public and the private sectors and a key ingredient in Canadian nation building as it provided the east-west transport corridor that made the Canadian west an investment frontier. […]
Worthwhile Canadian Initiative 
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