Author Archives: wciecon
“Drop your shovels NOW!” On ending fiscal policy in NK models
I've been trying to get my head around this over the last few days. Still not sure I'm there yet. But anyway: It seems to me that the effect of fiscal policy at the Zero Lower Bound in New Keynesian models is extremely sensitive to timing the exit. This isn't about finding "shovel ready" projects […]
Business cycle theory vs growth theory
Macroeconomics is divided into (short run) business cycle theory and (long run) growth theory. Those of us who do business cycle theory have a bit of an inferiority complex (though you might not know it from listening to us argue). Because growth theory seems to be so much more important. Where would you rather live: […]
Secular stagnation and Mutual Fund Marxism
Suppose the government issued a financial asset that, adjusted for risk and liquidity, promised a higher rate of return than any alternative asset. The government can do this, because it has the power to tax. Everybody prefers holding that government-issued financial asset to any other asset. There would be an excess demand for that government-issued […]
Toasted Pumpkin Seeds or, Waste is a Value Judgement
Today, hundreds of thousands of pumpkin carvers will simply discard their pumpkin's seeds. I believe tossing out pumpkin seeds is a terrible waste. Pumpkin seeds, roasted with salt and butter, are a delicious and nutritious snack. And they aren't difficult to make: separate out the pumpkin seeds, wash them well with water, dry on paper […]
Health Spending: A Much Longer Term View
The Canadian Institute for Health Information (CIHI) has just released their 2015 report on health expenditure trends and they show that total nominal health expenditure in Canada continues to grow (1.6 percent in 2015) but at a slower rate. Health spending (public and private) has reached $219.1 billion dollars or $6,105 dollars per capita. As […]
Old Keynesian vs New Keynesian fiscal policy
Mostly for non-macroeconomists. I first learned macroeconomics in the very early 1970's in the UK. I learned that the macroeconomy was not automatically self-equilibrating, and that the government should use fiscal policy to target "full employment" (aka "potential output"). The government should loosen fiscal policy when the economy was below potential and tighten fiscal policy […]
One awkward question about Stephen Poloz’s speech (on Integrating Financial Stability into Monetary Policy)
Suppose the Bank of Canada were following a 5% NGDP level-path target. And suppose that actual NGDP was on target, and was expected to remain on target in future. And suppose you were Governor, and one of your advisors gives you some important news. Financial markets are in a bubble, so the prices of financial […]
Keynes just left Canada
Paul Kugman's post title is "Keynes comes to Canada". Paul is wrong. Keynes was in Canada, but he just left. Look at this graph from Matthew Klein (a very good article, by the way): The other bit of information you need to know is that the Bank of Canada hit the Zero Lower Bound in […]
Negative interest vacuum-cleaner Gesellian money for broke central banks
[I can't decide whether this thought-experiment has any policy relevance. I hope not, but who knows what the future will bring? It came to my mind after reading a (more policy-relevant) post by Simon Wren-Lewis.] 1. Helicopter money is when the central bank prints money and puts it in people's pockets. Vacuum-cleaner money is the […]
How much revenue will the Liberals generate with a new tax bracket on high earners?
[I started writing this post in May, but I stopped when it looked like the Liberals were not going to be in a position to implement this measure. Happily, I didn't actually delete it.] [An earlier version made a stupid mistake; I did everything under tha assumption that the increase was 3 percentage points, and […]
Worthwhile Canadian Initiative 
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