Monthly Archives: December 2013
More Greek barter evidence for monetary disequilibrium
Just one small snippet of news from Greece (HT MacroDigest), but to my mind a very important extra bit of evidence that confirms the monetary disequilibrium approach to understanding recessions:
Microfoundations we like vs microfoundations we can solve
Take just one example: the Calvo pricing model. In that model, the Calvo fairy visits each firm at random, taps it with her wand, and lets it change its price. The probability of her visiting in any period is 1/n, so she visits each firm on average every n periods. Firms know this and set […]
So we work harder in Canada, eh?
In a recent blog post, Noah Smith points to some graphs posted by my old friend David Andolfatto. David's graphs show a widening gap between Canadian and US labour force participation rates, with the Canadian rate now outstripping the US rate by some margin. David – having learnt the hard way what happens to people who give […]
Canadian Housing Prices: Some More Data to Ponder
Well, given the continuing pronouncements that Canada’s housing market is overvalued, I thought I would follow up my November post with another take on the data. Among the many suggestions received on that post was to extend the data back further and to look at price/rent ratios. This time, I decided to gather CMHC data […]
Microfoundations for people’s sake
There are two simple reasons why I like microfoundations: 1. Because the economy is what people do. Understanding and explaining economies is understanding and explaining why people do what they do.
Natural rate =/= trend or average
Start with the actual unemployment rate in (say) Canada over (say) the last 20 years (the years of targeting 2% inflation). Calculate the average unemployment rate over that 20 years. Call it "Ua". Now imagine a policy counterfactual. Suppose that the Bank of Canada had done exactly what it did do, plus or minus a […]
What happened to the distribution of real earnings during the recession?
[Note: I noticed an error in some of the graphs a few minutes after publishing the original post.] [Update: Everyone should read Kevin Milligan's take using the SLID data. I'll get back to this in another point soon.] I noted on Econowatch at Maclean's a few weeks ago that average and median real earnings increased […]
We know the economy needs a bubble; but how big?
This isn't as clear as I want it to be. Sorry. Mr Ponzi issues a financial asset. Assume that the demand to hold that asset grows at the same rate as GDP. If people are willing to hold that asset at a rate of return less than the growth rate of GDP, Mr Ponzi can […]
Generic Drug Pricing Reforms
Pharmaceutical spending and policy is an important aspect of provincial government health plans. The following is a guest post on generic drug policy by Aidan Hollis, Professor, Department of Economics, at the University of Calgary and Paul Grootendorst, Associate Professor, Faculty of Pharmacy, at theUniversity of Toronto. Enjoy!
I do not understand recovery from recessions. Maybe it’s AD/PSST?
The Canadian economy has been slowly recovering from the recession. So have some other economies. I want to be able to explain what is going on. I understand why economies go into recession. At least I think I do. AD falls, many prices and/or wages are sticky, so real output falls. Done. But what about […]
Worthwhile Canadian Initiative 
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