Author Archives: wciecon
Infinite equilibrium asset prices?
Could there ever be conditions under which the equilibrium (real) prices for some assets are infinite? What would happen to an economy as it approached those conditions? Would those prices keep climbing to the skies heavens, then collapsing in waves of fear and panic? I'm trying to figure it out.
A preliminary estimate for Canadian 2009Q4 GDP growth
This is an update to my series of posts (2009Q1, 2009Q2, 2009Q3) that uses Statistics Canada's estimates for monthly GDP estimates (available for the first two months of the previous quarter) and the LFS data for the last month of the quarter to provide an estimate for GDP growth in the previous quarter. Statistics Canada […]
Why does anyone care about the distinction between convergence in probability and almost sure convergence?
I'm teaching two econometrics classes this term (master's and PhD), and I just covered the parts on asymptotic theory. In both lectures, I stumbled badly at explaining the difference between these two forms of convergence: my heart simply isn't in it. I've never heard of empirical study where the distinction between the two forms of […]
Is Barter Countercyclical?
The Wall Street Journal (H/T Peter Gordon) says that barter is countercyclical. Barter increases in recessions, like now, and decreases in booms. Can anyone confirm this? Because that fact (if it is a fact) is really important in understanding the nature of business cycles and recessions. Countercyclical barter is exactly what one would predict from […]
“Dispelling Canadian myths about foreign direct investment”
That's the title of a nice survey for the Institute for Research on Public Policy by Walid Hejazi, available here. After being a hot-button topic for the past half-century or so (note to non-Canadians: yes, really), FDI has accumulated a thick crust of myths that could do with some dispelling: The debate around foreign direct […]
The supply and demand for (belief in) EMH
The extent to which the Efficient Market Hypothesis is true, and the extent to which EMH is believed to be true, are co-determined in simultaneous equilibrium by "supply" and "demand". Here's the picture:
Two perspectives on EMH: Biz Skool vs. Econ Dept
A theory is like a tool: whether it is right or wrong depends on what job you want to use it for. From the Econ Dept perspective, watching the players play, the Efficient Market Hypothesis makes a lot of sense. From the Biz Skool perspective, as one of the players playing, the EMH makes much […]
The tennis ball theory of the Canadian housing market
From Nick's absolutely wonderful post: Real bubbles are unstable; they burst when you prick them. They don't spontaneously revert to their original size. Soap bubbles aren't like tennis balls. If the bubble metaphor means anything, it has to mean that. If asset price bubbles aren't unstable, and don't burst when you prick them, or re-inflate […]
Don’t bubbles burst when pricked?
This is an inchoate post. That's not really an apology. Economists' ideas about bubbles aren't very clear. We can define a bubble theoretically, but we can't explain why they sometimes exist, sometimes don't exist, or why they sometimes start and stop existing. And we are not very good at identifying bubbles, even perhaps in hindsight. […]
Can ALL assets be overvalued?
I was going to make the title: "Can ALL assets be overvalued? The Economist (mag) vs. Cambridge(US) vs Cambridge(UK) vs. the Austrians", but it was be too long. I saw the cover of the Economist this morning. The usual lovely picture, plus the headline "Bubble Warning; Why Assets are overvalued". I think there's a theoretical […]
Worthwhile Canadian Initiative 
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