Author Archives: wciecon
Canada and Argentina in the 20th century
Whenever I teach growth theory, I like to compare the Canadian experience with that of Argentina. Up until the 1930’s, the two countries followed very similar paths: foreign investment financing the development of resource-based economies. But then the 1930’s happened, and Canada and Argentina parted ways. This is the best graphical demonstration that starting points […]
Why the Bank of Canada should stop cutting interest rates
Today’s CPI release has generated certain expectations (documented here, here, and I expect in pretty much every story covering the March inflation numbers) that a 50 bps cut in the overnight rate target is in the offing next Tuesday. Those expectations may very well be fulfilled – Mark Carney has been dropping broad hints ever […]
High taxes doesn’t mean big government. And low taxes doesn’t mean small government.
I’ve never, ever understood the assertion that high taxes = big government: It is possible to imagine an economy with high taxes that are used to redistribute income with only a minimal distortion of markets. It is possible to imagine an economy with low taxes that are used to pay the salaries of a small […]
Canada’s Goldilocks housing market and the Bank of Canada
Everyone knows that housing markets are crashing and burning all over the place: the US, the UK, Spain, and many more besides. But that’s not happening here: Although housing starts in the US are about half of what they were two years ago, they are more or less holding up in Canada. And new house […]
The forex market is dumber than a sack of hammers
Or maybe it’s just the people who comment on its gyrations. A Reuters piece from today is a case in point: Loonie slips on US economic outlook: The Canadian dollar slid lower against the U.S. dollar as investors were loath to bet on the currency, given Canada’s heavy dependency on the waning U.S. economy… Huh? […]
Oil prices in currencies other than the USD revisited
Time up update my irregular series of graphs of oil price movements in currencies other than the USD: The story of the first couple of months is pretty straightforward: oil prices fell in January and came back up in February, and there wasn’t much in the way of significant exchange rate movements. By the end […]
Mark Carney announces his presence with authority
The Bank of Canada lowered its overnight rate target by 1/2 of a percentage point to 3 1/2 per cent: [T]here are clear signs that the U.S. economy is likely to experience a deeper and more prolonged slowdown than had been projected in January. This stems from further weakening in the residential housing market, which […]
The 2007Q4 GDP release: A cold December
This was a nasty surprise: Economic growth slowed considerably in the fourth quarter as real gross domestic product (GDP) grew 0.2%, down from 0.7% in the third quarter. Economic output contracted 0.7% in December. The driving factor here is the fall in exports: Exports recorded a significant 2.2% decline in the fourth quarter, in the […]
A current account imbalance finally unwinds
I’ve been unavoidably delayed in responding to a wave of recent events, so it’s catch-up time. The 2007Q4 current account went negative for the first time this century. Although imports and investment income payments held steady, the CAD appreciation led to declines in both the value of exports and in the value of investment income […]
On the political economy of a basic income
The idea of a basic income – it’s generally referred to as a Guaranteed Annual Income in Canada – has been floated again. My initial reaction was that this is such a good idea that it’s hard to figure out why we don’t have it already. For some reason, there doesn’t seem to much in […]
Worthwhile Canadian Initiative 
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