Author Archives: wciecon
The political economy of nominal wage targeting
WARNING: if you are not a macroeconomist you may not understand this post, even if you think you do. This is especially true if you are not a macroeconomist but think you know something about "political economy". (When I hear the words "political economy" I usually reach for my shovel.*) This post is an experiment. […]
What is actuarially fair insurance?
Actuarially fair insurance has an expected net pay-off of zero. From a consumer's point of view, an insurance contract is actuarially fair if the premiums paid are equal to the expected value of the compensation received. This expected value is, in turn, defined as the probability of the insured-against event occurring multiplied by the compensation […]
Blue sky money one – the dual mandate
Leland Yeager's (ed.) "In search of a monetary constitution" was the book that most excited my thinking about monetary economics as a PhD student. He asked the contributors to the volume to design a monetary system from scratch. He told them to think "blue sky". I can't remember all the contents. The answers given were […]
Darwin Awards, and other random thoughts on the Euro
1. Is the European Central Bank, or maybe the whole EU, a good candidate for a Darwin Award? There doesn't seem to be a category for institutions that bring about their own demise through their own self-destructive behaviour, but perhaps there should be. In the very long run we should perhaps be thankful for dysfunctional […]
Could the failed German bond sale be good news for the Euro?
File this one under "desperately looking for a silver lining in the unfolding disaster". Suppose, just suppose, that all 17 Eurozone countries were identical. Suppose they were all at the Eurozone average. Suppose they all faced the same default risk and moderately high interest rates on their government bonds. What would the European Central Bank […]
Provincial Government Health Spending: The Equity Dimension
The meeting of the federal and provincial/territorial health ministers in Halifax on Thursday will be preoccupied with the sustainability of health expenditures and the coming negotiations over the renewal of the health care accord. Naturally, the provinces want to ensure that federal transfers continue to rise to meet their needs while the federal government will […]
The inflation fallacy
Sometimes I despair. Sometimes I wonder if the inflation fallacy is at the root of all the US and Eurozone troubles. It's so easy to get popular support for the idea that printing money will cause inflation, and inflation means a fall in our real income. So it's much better to have high unemployment, low […]
Tightening money and widening Eurozone spreads
How do we know the Eurozone crisis has been getting worse over the last few days? The indicator that I watch most closely, and I think others watch most closely, is the yield spread between German government bonds and the bonds of other Eurozone governments. If those spreads widen, it means the crisis is getting […]
On ‘first-order’ and ‘top-end’ inequality, and why the distinction is important
The debate about income inequality seems to be happening at two levels, which I'm going to label "first-order" and "top-end" inequality. First-order inequality is visible in standard measures such the gini coefficient, and shows up as an increase in the gap between average and median incomes. Top-end inequality refers to the share of income that […]
What could we do better?
We're sending the blog in for a tune-up. We're planning to tidy up the side-bar, make the "search" function easier to find, and do a few other small tweaks. What changes (if any) would you like to see?
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