Author Archives: wciecon
Human capital: literal truth, fairy tale or myth?
This is from my Carleton colleague Frances Woolley: Part I: Education Every undergraduate student in labour economics gets told the story of human capital. Education and experience make people more productive. The skills so acquired are called “human capital.” This explains why some people earn more than others, and why some countries are […]
Do we need a bubble?
There is something economists have known since 1958 that we don't talk about much, except in private, like in economics journals that nobody else reads. It's a bit too weird. There are two sorts of world. In a normal world, the equilibrium rate of interest is above the growth rate of the economy. In a […]
Live-blogging the Liberals’ “Canada at 150” conference
Never underestimate the power of twitter. A few weeks ago, Canwest journalist David Akin tweeted that in addition to regular media, Canada 150 would be accrediting some bloggers as well. It turned out that the deadline had past, but I sent in my information anyway. The other day, I received an e-mail to the effect […]
In which I say something nice about the NDP
It occurs to me that I am often critical of the NDP. This is due to a combination of factors: They comment frequently on economic issues, and They get things wrong. Other parties avoid these scoldings not so much by getting things right as by not commenting on economic issues. So I should congratulate the […]
Why the LM curve is (usually) vertical, and the AD curve (usually) horizontal
Short version: because the Bank of Canada (or any inflation-targeting central bank) makes the LM curve vertical and the AD curve horizontal. Long version below the fold:
A bad argument against lower corporate income tax rates
Here it is: The case for corporate tax cuts is that they supposedly prompt businesses to invest more in Canada. Critics have countered that an unconditional gift to those corporations which are already profitable will not necessarily increase investment. A third possibility that has received little attention helps explain why corporate tax cuts are so […]
The Bank of Canada and the exchange rate: the facts have changed, and so has its views
You will remember that the dollar went from 0.86 USD to 0.97 between July and October of last year, and that the question of what to do about the appreciating CAD took up a lot of our attention in the fall. (Sadly, much of my attention was diverted to how badly the issue was covered […]
Putting the foreign-ownership cart ahead of the innovation horse
David Olive gets things wrong in his column today. Foreign ownership is not to blame for low levels of productivity and innovation in Canada. A 2005 StatsCan study (pdf) found that "foreign-controlled plants are more productive than domestic-controlled plants" and "are also more innovative, more R&D intensive and use more advanced technologies." Protecting domestic managers […]
Taxation in Canada – Part II: Constraints Faced When Designing a Tax System
In Part I we saw that the goals of taxation were two-fold: to collect revenue for the government and to discourage certain activities. However, the government hoarding Jacques Plante as an Edmonton Oiler hockey cards in an attempt to reduce the after-tax income of rich-people is not aligned with our goals. If there were no […]
The Division of Labour between interest rate and exchange rate
Stephen's graphs show quite clearly that Canadian monetary policy must tighten before US monetary policy. I'm convinced. But what does monetary policy mean? In this context, I'm going to ignore other interpretations, and just focus on interest rates and exchange rates. What is the division of labour between increasing interest rates and appreciating exchange rates? […]
Worthwhile Canadian Initiative 
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