Author Archives: wciecon
Canada is no longer a net debtor country
Given our history of wringing our hands about Foreigners Owning Canadian Assets, I'm a bit surprised that this story hasn't yet been picked up on the news sites I watch: Canada's net international investment position: Following a trend to reduced net foreign debt since the mid-1990s, Canada recorded a net asset position of $13.5 billion in the […]
The Parliamentary Budget Office is asking for public support. It should get it
This is bad news (h/t to Shock Minus Control): Budget watchdog pleads for help: The watchdog created by the Harper government to scrutinize the state of Canada's finances has just issued a public plea for help, asking the Prime Minister and opposition parties to rescue his office as it confronts a funding crunch and pressures […]
Temporary vs. permanent quantitative easing
A permanent increase in the money supply (or one that is expected to be permanent) will have a different, and bigger, effect today than a temporary increase in the money supply (or one that is expected to be temporary). To say the same thing a different way, an increase in the expected future money supply […]
GDP, GDI, terms of trade and why Canada is in a recession: It’s all about the beer and pizza
The Parliamentary Budget Office has released a report (pdf – h/t to Kady O'Malley) that makes note of the distinction between Gross Domestic Product (GDP) and Gross Domestic Income (GDI), and shows that by the latter measure, the fourth quarter of 2008 was even more dreadful than the GDP numbers that made all the headlines. […]
Liquidity and aggregate demand
Money is perfectly liquid. Other assets are not as liquid as money, but some are more liquid than others. One of the main features of the financial crisis is that some assets became less liquid than they had previously been. I want to look at the channels through which a fall in the liquidity of […]
Altruistic individual responses to the financial crisis
We don't rely solely on government to alleviate poverty. We don't rely solely on government to provide public goods. Altruistic individual responses can help too. Perhaps we shouldn't rely solely on government policies to help solve the financial crisis either. At the very least, asking what individuals could do to help alleviate the problem might […]
A model of wealth distribution, falling interest rates, ZIRP, unemployment, and quantitative easing
I will sketch a simple model in which the distribution of wealth gets more unequal over time, how the equilibrium real interest rate falls over time, eventually leading to a zero nominal interest rate, and unemployment. I will then show that an increase in the money supply can increase employment, despite zero nominal interest rates.
What are the odds of deflation in Canada?
For the better part of a generation, the Bank of Canada has followed this rule: If core CPI is around 2% and if there are neither inflationary or disinflationary pressures, do nothing. If core CPI inflation is above 2% and if there are disinflationary pressures, do nothing. If core CPI inflation is above 2% and […]
(Im)perfect financial markets and quantitative easing
If financial markets were perfect, quantitative easing would have no effect on aggregate demand. But if financial markets were perfect, we wouldn't have the financial crisis, and so wouldn't need quantitative easing.
The return of Monetarism vs. Keynesianism?
Maybe it isn't the return of Monetarism. Or rather, it isn't the return of only Monetarism. Maybe it's the return of Monetarism vs. Keynesianism, 1960's style, applied to unorthodox monetary policy.
Worthwhile Canadian Initiative 
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