Category Canadian economy
Canada’s housing starts are following the recovery script
The rebound in the sales and prices of houses in Canada has been making quite a few headlines. That's not bad news, but for those of us looking for signs of recovery, what really matters is whether or not it is being translated into real economic activity.
Milking consumers
It's hard to believe that I've managed to run a blog on the Canadian economy for more than four years without having a go at what is Canada's most fragrant example of bad economic policy. Happily, the Conference Board has just published a paper summarising the sorry state of affairs in the market for dairy […]
Promising to keep nominal interest rates low for too long
I was lucky enough to be invited to a Bank of Canada conference on Thursday and Friday. The topic was "New Frontiers in Monetary Policy Design". One recurring theme in particular has stuck in my mind: that a credible promise to keep interest rates low for too long can help an economy escape a liquidity […]
Cheap talk and the exchange rate
Why does the Loonie appreciate when the Bank of Canada tightens monetary policy (relative to what was expected)? And depreciate when the Bank loosens monetary policy (relative to what was expected)? Before you conclude I've lost it, by asking such an easy question, consider the following weird thought-experiment.
Flashbacks to the 1970’s: the Bank of Canada and the deficit
Doug Peters and Arthur Donner (names I remember from the 1970s debate over inflation in Canada) have an opinion piece in the Toronto Star on the role of the Bank of Canada in reducing the budget deficit. It starts out fine, but ends in a non-sequitur.
Does CMHC have big enough reserves?
This post is more of a bleg; because I'm sure someone reading this knows more about the answer than I do. An insurance company doesn't need reserves if it is insuring a large number of short term uncorrelated risks. The Law of Large Numbers ensures that its annual claims will equal its annual premiums, if […]
The house price bounce is (mostly) real – for now
I have been checking almost daily for the Teranet-National Bank May house price data, and now it's out. Their national composite price index increased 0.72% from April to May. This confirms the less accurate and more anecdotal data we've been hearing about the Canadian housing market improving this Summer.
Risks to Canadian recovery
The Bank of Canada says it believes the recession has ended. Maybe they are right; I haven't checked, but I get the impression that their forecasting has been better than most over the last year. This doesn't mean that output and employment will immediately return to normal, of course. But it does mean, if they […]
Why the Bank of Canada should ‘rise’ interest rates
I don't want tighter monetary policy; I want looser. I don't want the Bank of Canada to raise interest rates, but I do want the Bank to do something that would cause it to want interest rates to rise. I want it to buy real assets. We have become so accustomed to thinking about monetary […]
Rambling thoughts on Canadian house prices and global savings gluts
This isn't a very focused post. There are two sets of thoughts bubbling through my mind this morning. The first is about Canadian house prices; the second is about global savings gluts. But the two topics are very definitely related. There is a lot of anecdotal evidence of a pick-up in at least some Canadian […]
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