Author Archives: wciecon
Confusing good news with bad: Government procurement edition
Today's entry is courtesy of an op-ed in the Toronto Star; the topic is the deal that exempts Canada from the 'Buy American' provisions of the US stimulus package. Canada gives away the store in return for scraps from U.S.: In return for these meagre scraps, the provinces and municipalities have offered up temporary market […]
The simple money supply multiplier model and simple keynesian multiplier model
These two first-year textbook models — the simple money supply multiplier model; and the simple keynesian income-expenditure multiplier model — are formally identical. Translated into math, or game theory, you can't tell the difference between them. They contain exactly the same important insight: that what is true for the individual bank/household is not true for […]
Rethinking Canadian macroeconomic policy
Olivier Blanchard and a couple of colleagues at the IMF have circulated a paper with the title "Rethinking macroeconomic policy". Some of the ideas that are touched upon include Increasing inflation targets to 4% instead of the 2% goal that is more popular among central bankers. The idea is that when inflation and interest rates […]
Creation myths and economic history
Economists have their "creation myths", like Carl Menger's theory of the origins of money. What is the relation between these creation myths and economic history? Was there ever a time at which people used barter, and then monetary exchange evolved in the way Menger said it did? Political philosophers also have their creation myths, like […]
Don’t read too much into the year-over-year inflation numbers
Today's CPI release has core inflation up 1.9% over last January. This is 45 bps higher than December's y/y numbers, renewing speculation that the Bank of Canada may increase interest rates sooner rather than later. But it's important to remember that there's nothing particularly special about the y/y numbers; we could write headlines for core […]
What is going on with Canadian holdings of US Treasuries?
Regular commenter Kosta points us to this release of major foreign holders of US Treasuries, noting that Canadian holdings increased by a factor of six between December 2008 and December 2009 (from USD 7.8b to USD 48.3). That may be from a low base, but even if you scale the numbers by GDP – as […]
The Nigel Tufnel school of tax analysis
This is from a post awhile ago: [P]ersuading Canadian progressives of [the] merits [of the GST] is a never-ending variation on the theme of "but these go to eleven:" Progressive Person: How do we raise the tax revenues we need for the social programs we want to implement without tanking the economy?Economist: Consumption taxes. Theory […]
Fallacies of composition and decomposition: the supply of money and reserves
Does the supply of reserves matter? It certainly matters in the simple textbook ECON 1000 model of the money multiplier. But is that model fatally flawed, especially in the context of zero required reserves, and where central banks target an interest rate, so the quantity of reserves is demand-determined? Some people do argue that the […]
Of horses and men
As a teenager I read Kurt Vonnegut's novel Player Piano. It's stuck in my economist's mind ever since. It describes life in the near-future when technology and machines have destroyed the demand for nearly all human labour, except for the labour of a small, highly-educated minority. The vast majority of the population would be unemployed, […]
“Time to stop fretting over the Canadian dollar”
That's the title of a column I wrote for Canadian Business. Go read it – there'll be doughnuts. http://media.entertonement.com/embed/OpenEntPlayer.swf Mmm Donuts sound bite Homer Simpson sound bites
Worthwhile Canadian Initiative 
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