Monthly Archives: April 2014
Money, barter, the clearing house, and balance sheet recessions
I think David Beckworth is onto something important here. What looks like a balance sheet recession can in fact be caused by an excess demand for money. The hairdresser cuts the hair of the manicurist, who does the nails of the masseuse, who massages the hairdresser. We have a Wicksellian triangle, with no double coincidence […]
Teaching Loanable Funds vs Liquidity Preference
This is primarily for teachers of intro macro. Maybe for teachers of intermediate macro too, as a way to interpret ISLM. We have two quite different theories of what determines the rate of interest: Loanable Funds says that the rate of interest is determined by desired saving and desired investment. Liquidity Preference says that the […]
Is The Big Problem r g?
Two different memes about secular stagnation seem to be circulating in the econoblogosphere recently. The first says that r < g, or will be in future, therefore the economy is dynamically inefficient, and we need government to fix this problem. The second says that r > g, or will be in future, therefore inequality is […]
Meritocracy, mobility, and optimal taxation
What would a perfect meritocracy look like? Suppose we could all agree on a definition of "merit" as "ability to contribute to the common good". Suppose that each individual was born with a certain quantity of "merit", and that we could observe and measure each individual's "merit" perfectly. It's indelibly stamped on their foreheads. Suppose […]
Cross Border Shopping Isn’t What it Used to Be
Canadian retailers have recently been concerned that the Canada Border Services Agency has been too lenient with cross-border shoppers in the wake of the increase in duty free limits in 2012. While it is true that cross-border trips have grown substantially over the last decade, I’m not sure they should be that concerned.
Secular stagnation and the end of retirement?
Retirement is weird, when you think about it. We consume small amounts of leisure for most of our lives, then suddenly stop working completely and consume a big bunch of leisure for the rest of our lives. We smooth our consumption of all other goods, but we don't smooth our consumption of leisure. Instead we […]
Exchange Rates and Gasoline Prices?
Well the price of gasoline just spiked upwards across Canada and the usual media analysis has begun. Five key reasons were summarized as follows by Shawn McCarthy in the Globe and Mail: 1) Approach of the summer driving season leading to a switch to summer gas formulations which leads to a reduction in supply. 2) […]
Monetary monarchy
Speculative musings, from an inadequate historical background. We tend to take it for granted that the world looks like this, from a monetary perspective: The world is divided into currency areas. Each currency area has one alpha bank (the king). All the other banks are beta banks (subjects, who follow the king). The beta banks […]
On forgetting land in models of secular stagnation
If I see one more model of secular stagnation and negative equilibrium real interest rates, that does not include land….I'm going to throw a real wobbly. What is it with you townies? Have you never looked out of the window, when you fly (do you ever drive?) from one city to another, and wondered about […]
Health System Efficiency: Saving Money Can Save Lives Too
It turns out that having a more efficient health care system is not just about sustainability or bean counting – it also can save lives.
Worthwhile Canadian Initiative 
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