Author Archives: wciecon
Negative interest rates, hot potatoes, and banks
Let's start out very simple. The central bank issues banknotes, and those banknotes are the only type of money that people use, to buy and sell everything else. It really doesn't matter if people keep those banknotes in their pockets or if they keep them in a shoebox at the central bank with their name […]
Targeting, Tautologies, and Double Divine Coincidence
For Tyler Cowen. I think I see his point, and I've been trying to get my own head around this question. 1. Suppose I live in a world where the central bank targets the price level, as measured by the GDP deflator. And suppose I believe the central bank should target Nominal GDP instead. Given […]
Anti Urban Economics
I'm just throwing this out there. Read at your own risk. I don't know what I'm talking about (even more than usual). I'm just thinking out loud, and being ornery. I will explain where I'm coming from after I've made my point. There's a difference between "strategic complementarity" and "positive externalities". Strategic complementarity is what […]
Importing people is not like importing apples
Remember all the old Canadian nationalists? The ones who said that the (Canada-US) Free Trade Agreement would destroy Canadian culture? The ones we economists defeated back in the 1988 election? I'm beginning to wish we hadn't defeated them quite so thoroughly. They were wrong. But they sorta, kinda, did have a point. Social/economic institutions are […]
Can universities persuade professors to act like employees? Should they even try?
As university employees, professors have a fiduciary obligation to act in their employer's best interests. The number one interest of a university is financial survival, and the key to survival is reputation, because reputation attracts students, faculty, and donors. A university's reputation, to the extent that it is at all malleable, can be enhanced by serving students […]
Resources, Investment and the Current Canadian Slowdown
Real GDP growth in Canada slowed down during 2015 with the drop in the price of oil and the crash in the resource sector. The economic contribution of the main resource producing provinces to Canada’s economic performance is particularly important when it comes to recent capital formation as an economic driver.
Musical chairs with heterogeneity
There are two problems with musical chairs: The obvious problem: there aren't enough chairs for the kids that want to sit on them. The less obvious problem: chairs and kids are heterogeneous, so if kids grab any chair they can get, some tall kids will be sitting on short chairs and some short kids will […]
External validity, fallacies of composition, and the Wawa multiplier
The Canadian government decides to run an experiment to see if fiscal policy works. It throws 100 darts at a map of Canada. One dart lands on Wawa Ontario, so it spends an extra $1 million in Wawa. Local GDP in Wawa, and local GDP in all the other 99 places where the darts land, […]
Is alcohol as harmful as tobacco?
In "Phishing for Phools", George Akerlof and Robert Shiller suggest that: …the harms of alcohol could be comparable to the harms of cigarettes, affecting not just 3 or 4 percent of the population, as a chronic life-downer, but, rather, affecting 15 to 30 percent; the higher number especially if we also include the alcoholics' most […]
Place for comments on “Keynesian Parables of Thrift and Hoarding”
This is not really a blog post; it's an experiment. I have no idea if it will work, but the downside costs seem trivial. If you subscribe to Review of Keynesian Economics, or if your university has a subscription, you can read my article "Keynesian Parables of Thrift and Hoarding". (Anyone can read the abstract […]
Worthwhile Canadian Initiative 
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