Category Canadian economy
Who will buy the bonds? Eurozone edition
This is a followup to my previous post "Who will buy the bonds?". It is also a followup to my January 20th post "Canada and the Eurozone: a comparison". The main theme of that second post is that the Eurozone is like Canada, only without the Federal government of Canada. Eurozone countries are like Canadian […]
What next for the Bank of Canada?
The Bank of Canada currently sets the overnight rate at 1%. Markets expect it to cut by about 50bp on Tuesday. I think it should cut to zero (or 0.25%, which is effectively zero, given the traditional spreads). I thought it should cut to zero back in December. But if it does cut to zero, […]
Can Canada recover alone? Why not, exactly?
If Canada gets its macroeconomic policies right, is it possible for Canada to recover from the recession, even if the rest of the world does not? The same question could be asked for any individual country. And if not, why not?
Why Canadians should be grateful that Joe Clark lost the 1980 election
Ed Glaeser lists five problems with the US policy of letting homeowners deduct mortgage interest payments. Megan McArdle (among others) agrees, but isn't very optimistic about the chances of getting rid of it: Current homeowners bought their homes on the expectation not only that they would enjoy tax deductibility, but that they would be able […]
Worthless Canadian Reaction?
What else can you call it, when two large Canadian labour unions call for a Buy Canadian provision in government spending? Embarrassing? Shameful? Perhaps "imprudent" might be the best word, given Canada's reliance on foreign trade.
Stiglitz on inflation targeting: A Canadian perspective
I don't understand this. Davos Man's Depression: The so-called “efficient markets” model, which holds that prices fully and efficiently reflect all available information, also came in for a trashing. So did inflation targeting: the excessive focus on inflation had diverted attention from the more fundamental question of financial stability. Central bankers’ belief that controlling inflation […]
Canadians should stop beating themselves up: it’s really not our fault
Last week, my colleague Bernard Beaudreau and I were guests on the local Radio-Canada afternoon show to discuss recent events (lots of fun, BTW: if there's anything more riveting than an economist on the radio, it's two economists), and at one point I found it necessary to argue against the notion that the recession that […]
Three reasons to believe the Canadian fiscal multiplier might be bigger than we think it is
1. The Short-Run Aggregate Supply curve is not vertical, otherwise fiscal policy (or any change in Aggregate Demand) would have no effect on real output (except via supply-side effects). But the SRAS curve is probably not linear either. It is plausible to assume that the SRAS curve gets steeper as output increases, because as output […]
Canada and the Eurozone: a comparison
I keep an eye on various European economics blogs (especially VoxEu and Maverecon). We often compare Canada and the US. I want to compare Canada and the Eurozone, just for a change. I want to revisit the Optimal Currency Area question, in the light of the financial crisis. The Eurozone is like Canada would be, […]
The changing game between monetary and fiscal authorities
Who's in charge of aggregate demand? Monetary policy affects aggregate demand; fiscal policy affects aggregate demand. How the monetary authority acts may depend on how it expects the fiscal authority to act, and vice versa. What happens depends on the rules of the game they are playing. The rules of the game have changed in […]
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