Author Archives: wciecon
International reserves and involuntary borrowing
Borrowing is nearly always voluntary. Somebody might want to lend to me, but they can't force me to borrow from them if I don't want to. But there's an exception. A country that issues the reserve currency can be forced to borrow from other countries, if those other countries want to lend to it. This […]
A question for Canadian housing bubble theorists
I suppose that this really should be entitled "A question for Vancouver housing bubble theorists", because pretty much every 'Canadian housing bubble' story I've seen uses anecdotes from Vancouver. Here is the question: How do you get from a fall in Vancouver (or Canadian) house prices to a Canada-wide economic crisis? And no, you cannot […]
Taxation in Canada – Part I: What Are the Purposes of Taxation?
This is the first in a series of posts that will examine the tax system in Canada, from an economist’s point of view. If we better understand how the tax system works, we can find ways to improve it. It turns out that there are a number of ways the Canadian tax system can be […]
Net Import Quotas and Tariffs: China and Paul Krugman
Here's another way to think about what Paul Krugman is saying: it is as if China has a quota on net imports. An ordinary import quota means that the government places a ceiling on the value of imports. In this case, it's not a ceiling on gross imports, but on net imports (imports minus exports). […]
Mike Moffatt joins Worthwhile Canadian Initiative
For several years now, Mike Moffatt has been running the economics page at About.com, as well as writing a blog to which I've linked repeatedly. He has decided to move on to other projects, but he'd like to keep blogging. Nick and I would also like him to keep blogging, so we are very pleased […]
The Bank of Canada and the Fed are facing different problems, and will make different choices
David Rosenberg has been saying ([1], [2]) that the Bank shouldn't and/or won't start increasing interest rates until the Fed does, but I don't understand the reasoning behind this conclusion. Usually, the US and Canadian economies follow similar paths and since their monetary authorities have broadly similar goals, this has resulted in broadly similar decisions. […]
The corporate tax on workers and consumers
One of the NDP's lines on the budget – the very first words spoken by Jack Layton in his reaction during the CBC coverage – is to denounce the continuation of the corporate tax rate reductions that began under Jean Chrétien's government in 2000. (The basic rate was 28% in 2000, is at 18% now […]
Where did the unemployed manufacturing workers go?
I noted a couple of months ago that employment losses in the recession were generally concentrated in the goods-producing sector: some 350,000 jobs were lost there, and there's been little in the way of recovery. On the other hand, job losses in the services sector (about 3 times as large) were on the order of […]
Canada, Australia, and New Zealand; does the Zero Lower Bound matter?
I want to compare the economies of Canada, Australia, and New Zealand over the last couple of years. I know I will get things wrong, and leave important things out. That's what comments are for. Especially comments from Australia and New Zealand. Why these three countries? Apart from any historical, cultural, and political similarities, all […]
A buying opportunity for snowbirds?
Casey Mulligan notes that "US houses during the boom did not look so expensive from a European perspective", although he's not sure to what extent it matters. I suspect that it matters a lot to many Canadians. Here's a graph of the Case-Shiller Phoenix house price index in USD and in CAD, along with the […]
Worthwhile Canadian Initiative 
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