Author Archives: wciecon
Is simultaneity necessary in economics?
I think it almost always is. In a previous post I said that economics is a "non-linear" discipline, in the "Artsie" sense of that word. Most (all?) economic models involve simultaneous causation. They don't say that A causes B causes C causes D in a "linear" (Artsie sense) sequence like billiard balls. Instead they say […]
A response to David Andolfatto – monetary policy as insurance policy.
David has two posts in which he presents a model in which price level targeting is optimal and NGDP targeting isn't. (It's best to start with his second post). His model has an interesting feature (the bit about imperfect news being IS shocks but the shocks themselves being AS shocks is really neat), but to […]
Rat choice theory
The magnificent edifice of modern microeconomics is built on a simple model of human behaviour: rational choice theory. The rational person has goals; things she wants and values. She makes choices; she acts to achieve her goals. Saints can be rational, and so can sinners. What matters is having preferences and making choices, whatever those choices […]
A Debt Interpretation of Canadian Confederation
The apparent success of Europe's leaders in dealing with the European economic crisis at their recent summit may mark the beginnings of a stronger fiscal union but exactly how this might be enforced is still a big question. The long term goal is to tie budgets, currencies and governments even more tightly together. However, without […]
The Canadian fiscal union: lessons for the eurozone?
Paul Krugman noted a few days ago that [A]s far as underlying economic inequalities are concerned, the EZ is no worse than the US. The difference, mainly, is that we think of ourselves as a nation, and blithely accept fiscal measures that routinely transfer large sums to the poorer states S.C. at The Economist's Free […]
Multiple own rates of interest don’t matter, but the monetary policy target does matter
There are lots of problems with thinking about monetary policy as setting a nominal rate of interest, and trying to keep the actual real rate of interest equal to the natural real rate of interest. But multiple own rates of interest (the "Sraffa problem") isn't one of them.
Where’s the deflation? The supply side of banks
If banks go bust and firms can't get bank loans to finance their operations, that has supply side effects too. A firm that has plenty of customers, but can't get financing to produce enough goods to meet the demand, may raise prices. And if a firm closes down because it can't get financing, its competitors […]
Information and Empire
The case of the Parliamentary Budget Officer again locking horns with the federal government because of a request for information is symptomatic of a broader problem. The PBO is giving the government until the fall to release additional details of planned budget cuts or will take them to court. Naturally, in Ottawa’s current budgetary siege […]
“The Invisible Hand” on CBC radio
CBC radio is running a new program this summer on economics; it's called "The Invisible Hand". The first episode is scheduled to be broadcast Wednesday morning (this Wednesday – June 27) at 9:30 am and will be re-broadcast the following Saturday morning at 11:00 am. (Half an hour later in Newfoundland, of course.) I am […]
How to prepare a tenure file
An academic preparing a tenure file is like a lawyer arguing the case that will make or break her career. The first, vital step is to know the law. What are the requirements for tenure, as set out in the university's collective agreement with faculty? As communicated by the department chair? As established by past […]
Worthwhile Canadian Initiative 
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