Monthly Archives: September 2014
Are stagnant incomes a statistical artifact?
The American middle class hasn't got a raise in 15 years. Median household incomes aren't moving. Canadian numbers tell a similar story. The market income (earnings, private pensions, investment income) of the median Canadian household is lower now, in real terms, than it was in 1976:
Labour market slack in Canada and the US
Paul Krugman says: "My guess is that there’s considerably more slack [in the US labour market] than the unemployment number might lead you to suspect, but the truth is that I don’t know." Timothy Lane, deputy governor Bank of Canada, has an estimate that agrees with Paul's guess. He says (in a talk at Carleton […]
Dumb questions about econometrics and GAI/NIT
I've been meaning to write this post for some time. Scott Sumner's post spurs me to write it now. First let me ask my dumb econometrics question. It's a very simple question, and I really ought to know the answer. But I don't. Q1. If you estimate a linear regression, using Least Squares or whatever, […]
Burney’s Brave New Canada
I had the opportunity to hear Derek Burney speak yesterday. Mr. Burney is originally from Thunder Bay (Fort William to be precise) and went on to a distinguished public service career as a diplomat as well as chief of staff to Prime Minister Mulroney, president and CEO of CAE Inc, chairman and CEO of Bell […]
Retirement, saving, and the rate of interest
I want to sketch out a very simple model of the effect of retirement on saving and on the rate of interest. Because I think that saving for retirement is the biggest motive for saving, and that the increase in the length of time people are retired is having a big effect on the rate […]
The Bank of Canada vs the bond market
Carolyn Wilkins, Senior Deputy Governor at the Bank of Canada, gave a speech yesterday at noon. She said that the Bank of Canada had lowered its estimate of the (cyclically-adjusted) neutral rate of interest. "All told, we think that the neutral rate of interest is lower than it was in the years leading up to […]
Inventories of goods and money (I=S again)
Think waaaay back, to the Keynesian Cross model of the traditional first-year textbook: 1. Desired expenditure Yd is an increasing function of income (aka production) Y. So Yd = a + bY where a > 0 and 0 < b < 1 2. In equilibrium, Yd = Y What is the process that brings the […]
How scared of deflation were you, in 2008?
In normal times, like today, or 2004, my subjective probability distribution for the average annual inflation rate over the next 5 years looks something like this: The Bank of Canada tries to keep inflation between 1% and 3%, and targets the 2% midpoint of that range. In any one year, inflation will rarely fall below […]
The orthodox New Keynesian position on liquidity preference and loanable funds
I am not an orthodox New Keynesian macroeconomist (ONKM), but I can pretend to be one. Q: What determines the rate of interest? ONKM: "The central bank sets the rate of interest." Discussion: the above answer is a pure liquidity preference theory of the rate of interest. By having a perfectly elastic money supply curve, […]
Tax Competition
The Tax Foundation released its 2014 International Tax Competitiveness Index (ITCI) of 34 OECD countries and Canada’s overall rank was 24 out of 34 countries. Despite our recent snagging of Burger King, we are apparently in the bottom third of OECD countries when it comes to tax competitiveness. Interestingly enough, the United States did even […]
Worthwhile Canadian Initiative 
Recent Comments