Author Archives: wciecon
The Lucasian map is not the Hayekian territory
In defence of Lucas '72. Take any macroeconomic model of a market economy with inefficient aggregate fluctuations. In fact, take any economic model where something bad might happen. Assume that model is literally true. The people in that model are idiots.
How to take apart the Eurozone, without sovereign “default”
1. Canada prints up 17 batches of banknotes. The first batch is called "New Drachmas"; the second batch is called "New Liras"; etc.; and holds them till D-day. 2. Canada prints up one batch of very good counterfeits of Euro banknotes, and holds them till D-day+365.
Is and ought for the Eurozone
In a correctly specified economic model, the number of equations equals the number of unknowns, and the model tells you what will happen. If you think that the model is telling you something bad will happen, and you want something better to happen, you have to remove (at least) one of the equations, and replace […]
The history of economic research in pictures
When Adam Smith wrote the Wealth of Nations, the universe of ideas looked something like this:
Affirmative action for policy-relevant research?
The Social Sciences and Humanities Research Council of Canada (SSHRC) has replaced its old "standard research grants" with new "insight grants." Both the old and new grants fund "investigator framed" research – that is, ideas and topics generated by researchers themselves. (SSHRC has other programs that target specific research areas, for example, the automotive industry) Investigator […]
All money is helicopter money. Against the Law of Reflux.
Milton Friedman said (somewhere) that money is like a refrigerator. Both are consumer durables that yield a flow of services to their possessor. But in one important way that is a very bad analogy. Money is a medium of exchange, and refrigerators aren't. The stock of money, and the stock of refrigerators, are determined in […]
Where’s the put?
People used to talk about a Greenspan put. It was a put on stocks. Now there's a Bernanke put, but it's a put on bonds. More precisely, it's a put on US government bonds, not on all bonds. Greece doesn't have its own central bank, and there isn't much of a Trichet put on Greek […]
A Lament for Public Policy
In New Directions for Intelligent Government in Canada: Papers in Honour of Ian Stewart, Don Drummond reflects on the state of public policy analysis in Canada and whether the rigour of policy analysis that existed in the past still exists today though he wisely cautions that “tales of the good old days are often the […]
Why the Gini?
Stephen Gordon recently posted an excellent analysis of trends in income inequality in Canada and elsewhere. Stephen, like almost all of the other authors cited in his post and the subsequent discussion, measured inequality using the Gini coefficient. The very next day, I saw a paper by Francesca Greselin arguing that the Gini is inferior to […]
Does Canada’s Electoral System Under-Represent Minorities?
It is erroneously believed by some that the original U.S. constitution had a clause decreeing that a black man was "worth" only 60% of a white man. The three-fifths compromise, rather, was a mechanism for determining how slaves (not blacks, though in the 1770s only 8% of the black population were 'free', so there was […]
Worthwhile Canadian Initiative 
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