Monthly Archives: October 2017
How much more can governments spend by switching to a debt ratio target?
In my recent National Post column, I make reference to some back-of-envelope calculations to the effect that replacing the fiscal anchor of balanced budgets to one of a fixed debt-GDP ratio allows the federal government to increase spending by 1.2 percentage points of GDP, or by about $25 billion. I'm going to work through the […]
If r < g, bond-finance is like currency-finance
A world where the interest rate on government bonds is (permanently) less than the growth rate of GDP ("r<g") is a weird world. The government can run a Ponzi scheme, where it borrows (sells more bonds) to pay for the interest on the existing bonds, so the stocks of bonds grows at the rate of […]
So, what *are* the differences between a Government’s Budget and a Household’s Budget?
You've probably seen examples. Some poor non-economist says something like: "Governments, like households, must live within their means". And economists all point their fingers and laugh and say that's a fallacy. So, what are the differences between a government's budget and a household's budget? And do those differences matter? This is just a simple "teaching" […]
Soldiers of Fortune goes to Hollywood
There are six identical men, who must choose one of them to do an unpleasant job. They could hold an auction and pay one of them to volunteer to do the job. But if they have diminishing marginal utility of consumption, they will prefer instead to roll a die to decide which one of them […]
Regional disparities in Canadian economic growth: Theory and evidence
In its recent release of income data from the 2015 census, Statistics Canada helpfully provided data tables for median incomes in 2005 and 2015 for various regions in Canada. The headline number was the 12.7% increase in median Canadian incomes, and there's been some commentary about how the gains during the last decade were not […]
The Devil You Know vs The Market For Lemons
I told my friend Mike I was thinking of trading my car in for one that used less gas. Nowadays I would talk about the Market for Lemons as a reason against doing what I was thinking of doing. But in 1974 I didn't know about Akerlof's famous paper, and neither did Mike, who was […]
Health Spending and System Characteristics in Canada and Spain
I gave a talk at Memorial University in Newfoundland & Labrador last week sponsored by the Department of Economics and the Collaborative Allied Research in Economics Initiative (CARE). My talk was based on joint research currently underway with David Cantarero Prieto at the University of Cantabria in Spain comparing the determinants of government health spending […]
Worthwhile Canadian Initiative 
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