Author Archives: wciecon
Say’s Law, Walras’ Law, and monetary policy
"Deficiencies of aggregate demand are always and everywhere a monetary phenomenon". There's an excess supply of newly-produced goods, and an excess demand for money. But what exactly does an excess demand for money mean? And what does it mean for the effectiveness of monetary policy?
Highway 61 visited – some random thoughts on a US road trip
Two weeks and 8,000 km (5,000 miles) later, I'm back home from a US road trip. Here are some random thoughts FWIW. Nothing very important, insightful, or authoritative here.
Does fiscal stimulus make sense in a supply-shock recession?
David Andolfatto is somewhat concerned at the lack of thought that's been put into justifying a Canadian fiscal stimulus program. This is a theme that both Nick and I have touched on over the past few months, and the analysis is complicated by the fact that too many commentators make the assumption that Canada and […]
In which Rick Salutin doesn’t do his homework
Only part of his column today discusses the Ontario government's decision to remove information about school performance from its Ministry of Education's website, but Rick Salutin still manages to make two fundamental mistakes: "Competition makes for better schools," said a Globe and Mail editorial, without a shred of evidence, since there is none. The U.S. […]
The evolution of the Bank of Canada’s balance sheet
Jim Hamilton has a couple of recent posts ([1], [2]) at Econbrowser documenting the remarkable changes in the Fed's balance sheet during the financial crisis, so I decided to take take a closer look at the effects of the Bank of Canada's activities on its balance sheet. The asset side seems straightforward enough, and is […]
Is a US recovery a necessary condition for a Canadian recovery?
If you squint and hold your head at just the right angle, it is possible to persuade yourself that the US economy has reached at least a point of inflection: the most recent news about housing, auto sales and initial unemployment claims are less bad than what we've become used to seeing. But even if […]
Why the GST is a good idea
It occurs to me that although most of the media coverage on the cuts to the Goods and Services Tax – and the various proposals to reverse those cuts to the GST – makes note of of the fact that there is a broad consensus among economists about the merits of consumption taxes, I haven't […]
In which sentient Canadians can only goggle in slack-jawed horror at the people who govern us
This is simply frightening: Ian Brodie, Prime Minister Stephen Harper’s former chief of staff, delivered an astonishingly frank explanation today for why the Conservative government cut the Goods and Services Tax, and why he’s glad they did, even though just about every economist and tax expert said it was a terrible bit of public policy.“Despite […]
US road trip!
This will be my last post for a couple of weeks. I'm off on a US road trip! My last big US road trip was Summer 1976. Berkeley to New York, by a very circuitous route. This one will be shorter, down the Atlantic coast, across to the Gulf of Mexico and back up along […]
Why failed bond auctions are good news
Suppose an increased supply of government bonds to finance deficit spending were met with an increased demand for government bonds from the private sector, so that interest rates stayed the same, and the bond issue were fully subscribed. That is exactly what would happen for a bond-financed tax cut under full Ricardian Equivalence, for example. […]
Worthwhile Canadian Initiative 
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