Author Archives: wciecon
The usefulness of AS-AD, an example
Here is a model I saw recently. Except I am the one who has used the AS-AD framework to illustrate that model. The AD curve is drawn under the assumption that the central bank holds the nominal interest rate fixed. According to that model: If wages are sticky (so we are on the SRAS) a […]
On the percentage of Canada covered by water (totally off topic)
Sorry. This is about maths and stats, with a possible application to physical geography. Nothing to do with economics (well, it might have an application to business cycles, but I'm not ready to go there yet). Maybe the geographers have already figured this one out long ago (I couldn't find it on Google, but I […]
In defence of the AS-AD framework
I disagree with Peter Dorman (HT Mark Thoma). I have used the AS-AD framework many times in my blog posts (and I don't remember anyone ever snickering at me for doing so) because I find it useful. Paul Krugman offers a partial defence of AS-AD, with the following caveat: "So there is a place for […]
Fiscal Equity, Taxes and GTHA Transit
Federal Finance Minister Jim Flaherty has shot down Ontario Premier Kathleen Wynne’s proposal that the 34 billion dollar Metrolinx Greater Toronto and Hamilton Area (GTHA) transit expansion plan could be funded by a special regional increase in the provincial portion of the HST. For this to happen, Ottawa would have to agree to Ontario’s request […]
Friends for Myles: Social networks and tax compliance
One reason why people pay their taxes is that they’re afraid of being caught, and fined, if they cheat. In the simplest possible model of tax evasion, people only comply with the tax code if the benefits of evasion – the savings in taxes paid - are less than the costs – the probability of […]
Monopolistic Competition vs the Plucking Model
I like macroeconomics with monopolistic competition rather than perfect competition. It helps me make sense of the world. (Most modern macro models assume monopolistic competition.) I like Milton Friedman's "Plucking Model". It seems to work well empirically. But the two seem to me to be in conflict. I can't consistently believe both.
How can we spot a boom?
Suppose I had perfect knowledge about the economy. So I knew exactly what the right monetary policy would be to keep the economy growing along some sustainable path. And I knew exactly what that sustainable path would look like. I would then be able to tell the difference between: 1. Monetary policy is too loose, […]
Bike share programs: good feelings, bad economics?
My local mall does not provide short-term bicycle rentals. It also does not sell roast-lamb-and-mint flavour potato chips, or jeans in a size 32 inch waist/36 inch leg. I would like to be able to purchase all three of these goods and services. For the last two items on the list, the intuition of the […]
Visible minorities: Distinctly Canadian
As far as I know, Canada is the only country that divides its population into "visible minorities" and "non-visible minorities." In this post, I describe how, and why, Canada counts people this way. A person's visible minority status is ascertained by asking: "Is this person….White, South Asian (e.g., East Indian, Pakistani, Sri Lankan, etc.), Chinese, Black, […]
Monetary policy is not interest rate policy – Japanese version
Suppose I announced I would be buying an asset, both now and in future. And suppose people believed my announcement. It would be paradoxical if my announcement caused the price of that asset to fall. It would be even more paradoxical if I had said I was buying the asset because I was trying to […]
Worthwhile Canadian Initiative 
Recent Comments