Category Canadian economy
Fencing In Canada
Wisconsin Governor and potential presidential candidate Scott Walker apparently thinks it is not an unreasonable idea to consider building a wall between Canada and the United States in order to secure his country’s borders from security threats. Now, to be fair, he did not say that a wall should be built along the 5,525 mile […]
“King of deficits”??
I normally stay out of politics on this blog. But with the upcoming election, the political conversation on fiscal policy is starting to get stupid. In particular, for Paul Martin to accuse Stephen Harper of being the "King of deficits" was really stupid. Is there anything Stephen Harper could have done to have prevented a […]
Good shocks, bad shocks, and shocks that cause a monetary coordination failure
Just because a shock is a bad shock doesn't mean it should cause a recession. A recession is a monetary coordination failure. Monetary coordination failures are caused by monetary policy. Start with a Robinson Crusoe economy. By assumption, Robinson Crusoe always allocates his resources perfectly to maximise his expected utility given his information about the […]
Why did (Canadian) inflation-targeting work in 1996 but fail in 2008?
In both 1996 and 2008 the Canadian economy was hit with a big shock. The 1996 shock was the change in fiscal policy, turning a large deficit into a large surplus. The 2008 shock was the global financial crisis. (Canada didn't really have much of a financial crisis; no banks failed, as usual.) In both […]
On defining “recession”
The precise definition of "recession" seems to be topical in Canada right now. (I know this because my daughter phoned to ask me the definition.) It's a mug's game. I won't play. (Do geographers waste their time arguing about the precise definition of "mountain"?) I hear that the "technical" definition of "recession" is two consecutive […]
Ottawa as Robin Hood
As the eurozone bumps along from major crisis to minor crisis to existential crisis, the point is often made that a key feature of successful monetary unions that is missing in the eurozone is a system of transfers. These transfers act a sort of compensation for renouncing the option of pursuing an independent monetary policy.
The Great Convergence: Federal Transfer Revenue Shares 1980/81 to 2013/14
Well the Council of the Federation began meeting in St. John’s yesterday and given we are on the cusp of a federal election, there will no doubt be a targeting of Ottawa’s role in provincial finances. Naturally, there will be some lamentations about the Prime Minister’s absence – once again – from this annual meeting. […]
Bad news on GDP vs good news on employment
Here is a macro exam question: Q. You are the New Keynesian governor of an inflation targeting central bank. Two bits of information arrive simultaneously: GDP is lower than you expected; employment is higher than you expected. Relative to what you had otherwise planned to do, how do you respond to the news? Do you […]
Bank of Canada Governors and Economic Performance: A Canada Day Celebration
Another Canada Day, another year of Confederation – we are now 148 years old– and another opportunity for taking a historical look at some economic aspects of Canada. For your Canada Day musings, I decided to take a look at economic indicators according to the tenure of Bank of Canada Governors since 1934 (the legislation […]
The Bank of Canada’s “stitch in time”
Steve Poloz is good at economics, but not always so good at finding the best metaphor. Greg Quinn says "Bank of Canada Governor Stephen Poloz said his “controversial” decision to cut interest rates in January could be compared to life-saving surgery for the economy and any resulting increase in household debt should be viewed as […]
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