Author Archives: wciecon
Can rent controls cause a recession? A response to Scott Sumner and Bill Woolsey
There is a perfectly sensible theory that says that rent controls reduce labour mobility and can therefore worsen structural unemployment. I'm going to ignore that sensible theory and put forward a silly theory — one I believe is wrong. But I'm putting forward a silly theory to make (what I think is) a sensible point, […]
The hub and spoke model of money — a rejoinder to Arnold Kling
The textbooks say that money serves as: store of value; medium of account; and medium of exchange. Arnold Kling seems to miss the importance of the fact that money is a medium of exchange. Worse, he misunderstands me, thinking that I am one of those economists who makes a big deal of money's role as […]
Mackerels and Money
Arnold Kling asks: why are mackerels different from money? Why should the M in MV=PY stand for money, and not mackerels? Why can't an excess demand for mackerel cause a recession? Why can't an excess supply of other goods be matched by an excess demand for mackerel? Keynesians don't know the answer to this question […]
Does CMHC have big enough reserves?
This post is more of a bleg; because I'm sure someone reading this knows more about the answer than I do. An insurance company doesn't need reserves if it is insuring a large number of short term uncorrelated risks. The Law of Large Numbers ensures that its annual claims will equal its annual premiums, if […]
So where’s the market failure (in macroeconomics)?
Mike Moffatt asks the right question; and it's the economist's question. In economics, if we think the price of x is too high, we don't just say "we should lower the price of x". We look for the underlying causes of the price of x being too high. "Where's the market failure?"
Dark Age in Macroeconomics? A History of Taught approach
(Or maybe the title should be: "Notes from the Phelps/Lucas Administration"; or "Notes to supplement our fading memories of the late 1970's".) Is this a Dark Age in macroeconomics? In other words, have we collectively forgotten some (important) stuff that we used to understand? I want to approach this question by looking at what was […]
On the form of the Canadian recovery
There's a certain amount of speculation about the form of the US recovery, based on scenarios of how its economy will work its way out of a balance sheet recession. As I understand it, the main candidates are (in alphabetical order): U: The US economy grinds along as households deleverage themselves, and the economy picks […]
Sandra Peart is blogging again. Please adjust your feeds accordingly
Adam Smith Lives! (A history of economic thought blog) is back from an administratively-induced hiatus. From her latest post: David Levy and I are working on the role of experts and expertise in social science. We're much concerned of late — in the light of the financial meltdown and various successful ponzi schemes — with […]
When the going gets weird, the weird turn pro
It is a season in which even the most jaded observers of federal politics can only look on in slack-jawed, googly-eyed wonder. Here is a press release from the NDP web site: Liberals on board with Conservative tax hikes: Despite publicly opposing the Conservatives’ HST plan, Michael Ignatieff is now endorsing it. Ontario Premier Dalton […]
My own memories of the Phelps/Lucas administration
My own memories are similar to Paul Krugman's, but with one important difference. This is the bit I remember differently: "The Lucas view took the economics profession by storm – not because there was any solid evidence for it, but because it was so clever, because it led to nice math, because it let macroeconomists […]
Worthwhile Canadian Initiative 
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