Monthly Archives: July 2014
The Real Minimum Wage
I was a bit surprised that the recent upsurge in unemployment in Ontario in June, which was especially concentrated amongst youth (individuals aged 15 to 24 years), did not generate much discussion about the impact of the minimum wage. Ontario’s adult minimum wage rose 75 cents on June 1st to hit 11 dollars per hour. […]
Why do unions bargain for health benefits?
Unionized workers are more likely to have health insurance and other non-wage benefits than non-union workers (for US evidence see here or here (gated)). Yet it is not clear why. Some obvious explanations do not stand up to scrutiny: 1. Health insurance receives preferential tax treatment. 2. Workplace insurance is efficient, because it avoids the adverse selection problems […]
Unemployment, aggregate demand, and search/matching
For what it's worth, I thought I would lay out my own views, after reading John Quiggin and Noah Smith. This is what I think: 1. Fluctuations in the unemployment rate from year to year are mostly caused by fluctuations in aggregate demand. Very standard, boring, demand-side monetarist/keynesian view of the business cycle, that predates […]
Some simple arithmetic for mistakes with Taylor Rules
[Updated to fix arithmetic errors spotted by Min. A big thank you to Min! (I did not leave my embarrassing original mistakes in, because I wanted to keep it clear). The effects I am talking about are even bigger now.] Sometimes I think that US monetary policy is too important to be left to the […]
Ontario Employment: Yours to Discover
Well, the latest Statistics Canada Labour Force Survey numbers paint a rather bleak picture for Ontario with employment dropping by 34,000 jobs and the unemployment rate rising from 7.3 to 7.5 percent. However, Ontario’s employment picture is much more complicated than that and regional numbers suggest that some parts of Ontario – well the GTA […]
A simple test of simple rules against actual policy in the actual economy
A "simple rule" is a formula that tells a central bank how to set the nominal interest rate as a fixed function of a small number of variables. The Taylor Rule, which sets the nominal rate as a function of the gap between actual and target inflation, and the gap between actual and potential output, […]
Employment and Investment: the great Canadian disconnect
[This is a guest post by Hashmat Khan of Carleton University and Nyamekye Asare of the University of Ottawa.] Can policies stimulating private investment deliver higher employment? Maybe, but investment and employment have become disconnected recently in Canada. John Taylor has noted a strong negative correlation between investment and the unemployment rate, and argued that […]
Visualizing the Economy
I will be teaching first year economics this fall for the first time in quite a number of years and I want to provide a more gripping visual presentation of what an economy is. I have the standard set of graphs illustrating the circular flow and the production possibilities frontier in order to provide the […]
Insufficient Demand vs?? Uncertainty
It's a false dichotomy. Just a quickie, in response to Noah Smith and John Cochrane. John Cochrane says: "John Taylor, Stanford's Nick Bloom and Chicago Booth's Steve Davis see the uncertainty induced by seat-of-the-pants policy at fault. Who wants to hire, lend or invest when the next stroke of the presidential pen or Justice Department […]
Neofiscalist delusions?
It seems I need to respond to Paul Krugman. "The neomonetarist movement starts from an acknowledgement of reality: shortfalls of aggregate demand do happen, and they do matter, and we need an answer. Like the original monetarists, however, they reject any government role in the form of discretionary fiscal policy. Instead, they argue that the […]
Worthwhile Canadian Initiative 
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