Author Archives: wciecon
The curious economics of university faculty unions
I was on strike a couple of weeks ago, for the span of three days. Not just me, of course; the faculty at l'Université Laval is unionised. The whole notion of faculty unions seems a bit odd to me, and it's not just the incongruous image of seeing tenured professors whose salaries put them in […]
The turning point is now about four months late
Once again, two very separate pieces of economic news in yesterday's employment releases for October: US employment declined by 2.5% at annual rates from September (which was not a good month for US employment), and Canadian employment rose by 0.7% at annual rates from September (which saw record employment gains). We're moving into uncharted territory […]
That can’t be right…
Maclean's interviews TD Bank's Don Drummond to get some perspective on recent developments. The first question is on the exchange rate, and the response is, well, here it is: [O]n average, Canadian business is about 85 per cent as productive as U.S. business, so if nothing else happened, we should see a dollar averaging about […]
“Canada is not the United States” – Auto sales edition
Yet another horrible month for auto sales in the US: US auto sales 'unsustainably weak': General Motors Corp.'s October U.S. sales plunged 45 per cent, and Ford Motor Co.'s and Chrysler LLC's weren't far behind, as low consumer confidence and tight credit combined to bring the industry's sales to an “unsustainably weak level” that is […]
The Canadian business cycle mesa of 2008
The August 2008 GDP numbers are out, and real output continued its path sideways. As in these posts, all variables in the graphs that follow are logged and re-scaled to zero at the peaks of the expansions: 1981:04, 1990:03, 2000:12 and (provisionally) 2007:11. They are then multiplied by 100, so that they can be interpreted […]
Life in the time of six sigma
Standard deviation of daily per cent changes in the CAD-USD exchange rate since the CAD was allowed to float in June, 1970: 0.33. Number of days in which daily per cent changes exceeded six standard deviations since June 1970: 6. Number of days in which daily per cent changes exceeded six standard deviations since September […]
What if increased government spending is contractionary?
Suppose that Canada does go into recession, either this month or in the months to come. What policy instruments are in the arsenal? The automatic stabilisers: Taxes will fall with revenues, and expenditures will rise as unemployed workers start drawing on employment insurance benefits. (There are of course other mechanisms at work here.) Monetary policy: […]
Commodity prices and the Canadian economy
The story of the Canadian economy since 2002 is one of an improvement in the terms of trade created by a surge in commodity prices. As commodity prices rose, the CAD appreciated and the real buying power of Canadian incomes increased. But in the past few weeks, much of this has been reversed. The possibility […]
What should Canadian governments be doing right now?
My answer would be: nothing. Right now, the Bank of Canada is doing the grunt work of trying to keep financial markets from drying up, and there's not a lot that governments can do to help. And if the Bank were trying to provide monetary stimulus on top of all that, it could hardly do […]
Automatic monetary stabilisers and destabilisers
Since the Lehman Brothers bankruptcy on September 15, the Canadian dollar has depreciated by 12.5% against the USD, and the US trade-weighted exchange rate has appreciated by 6.7%. This may be a partial explanation for the high priority that US policy makers are giving to a fiscal stimulus package. The forex markets are working to […]
Worthwhile Canadian Initiative 
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