Monthly Archives: January 2014
One Million Jobs
Ontario Conservative Leader Tim Hudak has promised to create one million jobs over eight years and plans to introduce his Million Jobs Act Bill in the Ontario Legislature when it resumes sitting on February 18th. Tim Hudak is presenting a five-point plan in his private member’s bill to create jobs that includes among other things […]
Land and the liquidity trap
Bill Woolsey has a very good post, written in response to my previous post. In this post I steal Bill's thought-experiment, but change "corporate bonds" into "land". There is an alternate universe, just like our own, with one exception. For historical reasons*, central banks do not own government bonds. They own land instead. They buy […]
Fleet, GDP and 1914
This year will mark the 100th anniversary of the start of World War I and my attention this week was drawn to a copy of J. Griffin and Company’s The Naval Annual 1913. It is a sweeping 520-page review of the state of the world’s navies with details on individual ships. The naval arms race […]
Monetary policy, fiscal policy, the target, and the size of the central bank
Glen Hodgson asks whether the Bank of Canada's 2% inflation target is too low. He is right to ask that question. I want to explore the trade-offs. Suppose you are a macroeconomist (like Simon Wren-Lewis) who believes that the Zero Lower Bound on nominal interest rates will be a binding constraint in some circumstances, and […]
Disaster Compensation
In the wake of the recent ice storm that hit southern Ontario and Toronto particularly hard, the Ontario government decided to provide compensation to those who saw their food spoiled because of the prolonged power outage. Provincial money along with donations from the private sector was used to provide grocery gift cards in Toronto at […]
Media of exchange and the clearing house
What makes our chequable demand deposits at banks media of exchange? The answer is: the clearing house, where circles of offsetting IOUs are cancelled out. It is clearing houses that create money. Unless there is only one bank, where everybody banks, because it doesn't need a clearing house. Nothing revolutionary here (except maybe a little […]
When Will Low Interest Rates End?
A recent piece in the Financial Post titled “How many times can economists cry wolf about interest rates” caught my interest because I – like many economists in Canada – have been expecting interest rates to eventually start to rise and yet they do not. So when will Canadian interest rates start to go up? […]
Nominal-loss-aversion and its consequences
I understand risk-aversion. The assumption of diminishing marginal utility of consumption makes sense. And if you have diminishing marginal utility of consumption, you will prefer an investment with a certain return over an investment with the same expected return but a positive variance. Loss-aversion is harder to understand. You need to assume the utility function […]
Worthwhile Canadian Initiative 
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