Author Archives: wciecon
Fiscal vs monetary policy, globally
This does not make sense. Why are so many countries around the world using fiscal policy when they have not yet made full use of orthodox monetary policy? The US makes sense. The Fed has already lowered the policy rate to zero, so it has no more room for orthodox monetary easing, so it's adding […]
A tale of two Depressions
The Ottawa Citizen's Dan Gardner has a mission, one that is almost Quixotic in nature: solitary, noble, and doomed to failure. He has taken it upon himself to chastise lazy pundits who seek to augment their columns with injections of Ersatz GravitasTM (It's deep! It's cheap!) by comparing the present-day Canadian economy with the Great […]
Comparing recessions and recession projections
According to this story, there seems to be some disagreement about how the current recession will play out: The issue is Mr. Carney's prediction last month that the recession will begin to recede by the end of the year, followed by a sharp rebound of growth averaging 3.8 per cent in 2010. While Bay Street […]
Only idiots start wars they can’t win.
So Jack Layton is idiot du jour: Canada should pursue 'Buy Canadian' strategy: Layton: Canada should adopt a "Buy Canadian" strategy in response to the "Buy American" clause included in the proposed U.S. stimulus package, NDP Leader Jack Layton urged Tuesday. During question period in the House of Commons, Layton said that there's a "golden […]
Exchange rate expectations in a liquidity trap
Bottom line: Since we don't know much about how an economy can escape a deflationary spiral by itself, we don't know the counterfactual conditional, and so can't estimate the effect of a fiscal expansion on the future price level and the rational expectation of the future exchange rate under PPP. The assumption of static expectations […]
The political economy of protectionism
Update: Paul Krugman has a very good response to my earlier post. He is NOT endorsing protectionism: "First of all: my piece was NOT an endorsement of protectionism — it was an explanation that there is an economic case for it, but also that there is a strong political economy case (which I consider dominant) […]
Paul Krugman implicitly assumes fixed exchange rates
Update: Paul Krugman has a very good response. He is NOT endorsing protectionism: "First of all: my piece was NOT an endorsement of protectionism — it was an explanation that there is an economic case for it, but also that there is a strong political economy case (which I consider dominant) against acting on that […]
Idiotic economics in the Globe and Mail. Again.
I can understand that the Globe feels obliged to provide points of view from varying points on the political spectrum. Sadly, it carries out this mandate by publishing dumb commentary from varying points on the political spectrum. On the right, it offers Neil Reynolds (typical car wreck here). And on the left, it offers stuff […]
“Buy domestic” policies are individually irrational too
Most (all?) economists agree that in a global recession, when each country wants to boost demand for the goods it produces, policies which steer demand to domestically-produced goods are individually rational (provided other countries don't retaliate), but collectively irrational when all countries do the same. I think most economists are wrong. It's not just collectively […]
In defence of crass materialism (temporarily)
Economists are sometimes accused of crass materialism. Normally I would plead innocent, and accuse the accuser of misunderstanding economics. But right now I am in favour of crass materialism. I want government investments which yield a monetary return. Government investments which make people happy but bring in no cash aren't as good right now. And […]
Worthwhile Canadian Initiative 
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