Author Archives: wciecon
Weird Fiscal multipliers in New Keynesian models under ZIRP
Paul Krugman has bravely and commendably been trying to understand intuitively the underlying reasons for the big differences between fiscal policy multipliers in a couple of New Keynesian models. Someone needs to do this job. (Take as read a general rant against economists who write down fancy mathematical models without understanding or explaining the results […]
More on the open letter supporting the OPBO
Kevin Milligan's open letter has received some attention ([1], [2]), and that's all to the good. Kevin has been doing a good job of making the case for a strengthened and a more independent Office of the Parliamentary Budget Officer (do mosey on over to his blog for more), so the following points are largely […]
The June CPI release: Deflation isn’t here, and the chances that it will arrive are receding
The June CPI numbers played out according to form. Happily, the good people at Statistics Canada went to great lengths to point out exactly how and why the y/y headline number was negative, so – with the notable exception of the Globe and Mail – journalists were able to put together stories that weren't teeth-grindingly […]
An open letter in support of the Office of the Parliamentary Budget Officer
UBC's Kevin Milligan is to be congratulated for taking the initiative of organising an open letter signed by 130 people (so far), almost all of whom are economics professors, and whose political allegiances span – as far as I can tell – pretty much the entire spectrum of the Canadian mainstream: The Office of the […]
Tomorrow’s CPI release will say that headline inflation is negative. But that’s not the same thing as deflation.
I'm not looking forward to tomorrow's CPI release. Not because I'm expecting bad economic news, but because I'm expecting bad economics journalism. (You may want to check out this post before continuing.) Tomorrow's headline inflation number will be calculated as follows: take the June 2009 number, divide by the June 2008 number, subtract 1 and […]
The State(s) Theory of Money: California and Canadian Tire
I learn via Mark Thoma that there is a distinct chance that California will allow taxes to be paid in the new scrip it issued when it ran out of funds. I have no idea whether this will happen, or whether the Federal government will stop it. Let me just assume that it does happen, […]
Spam attack!
A virulent strain of spam has hit WCI, so I'm going to have to hold comments for approval before they're published. This is especially inconvenient, since I'm out of town and unable to check the site all that often for the next few days. Hopefully, things will return to normal in the not-too-distant future. Sorry.
Too big a percentage to fail?
Suppose one big bank makes a mistake, and that big bank is 50% of the market? You have a problem. Suppose lots of little banks make the same mistake, and those little banks are 50% of the market? You have a problem. The same problem.
Rambling thoughts on Canadian house prices and global savings gluts
This isn't a very focused post. There are two sets of thoughts bubbling through my mind this morning. The first is about Canadian house prices; the second is about global savings gluts. But the two topics are very definitely related. There is a lot of anecdotal evidence of a pick-up in at least some Canadian […]
Asset price bubbles, monetary policy, and the Lucas Critique
"Tight money causes unemployment to rise, and loose money causes unemployment to fall. Therefore, if monetary policy had a 20% inflation target rather than a 2% inflation target, monetary policy would be looser, and unemployment would be lower". Wrong, and now obviously wrong. But 40 years ago most economists thought it was right. "Tight money […]
Worthwhile Canadian Initiative 
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