Category Finance
A Digression on University Finance
Well, you may have caught Alex Usher’s HESA post this week on university finances. He presented data on university operating budgets from the CAUBO/Statistics Canada financial survey for the period 2007-08 to 2011-12 that shows that university budgets went up by 28 percent. This is quite intriguing because while universities maintain they have been having […]
The trade cycle: debt is trade
GDP is high in booms and low in recessions (relative to trend). That is (roughly) how we currently define "booms" and "recessions". GDP (roughly) measures the volume of trade in newly-produced final goods. But that is a narrow measure of trade. A lot of goods get traded that are not newly-produced. People buy and sell […]
Did finance really matter?
If we used cows as money, we would probably teach our students courses on "Money and Milk Yields". If an outbreak of foot and mouth disease had caused a recession, macroeconomists would feel they needed to pay much more attention to veterinarians. Milk yields matter. Foot and mouth disease is a problem. But these are […]
Fiscal Death Watchlist
I found Nick Rowe’s post Is Japan Already Dead quite inspiring so I decided to dig up the most current IMF World Economic Outlook Database for numbers on net debt to GDP ratios. Japan – which may already be dead – has a net debt to GDP ratio in 2012 of 134 percent. An estimate […]
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 […]
The Interest Rate Time Bomb
The recent policy debate over whether its time for interest rates to start to rise after being at the lowest levels since the Great Depression for nearly five years shows just how much of a policy box governments are in when it comes to fiscal and monetary policy. Never mind the debate over whether there […]
If you don’t like low interest rates, you want the Bank of Canada to loosen monetary policy now
Two weeks ago I wrote a post "Monetary stimulus vs financial stability is a false trade-off". My opening lines in that post were: "There's an idea floating around out there that I fear may be influential. And that idea is horribly wrong. Which makes it dangerous. And I want to try to kill it." Today, […]
Monetary stimulus vs financial stability is a false trade-off
There's an idea floating around out there that I fear may be influential. And that idea is horribly wrong. Which makes it dangerous. And I want to try to kill it. But macro is hard. And it's not easy to explain clearly and simply. I can only try. And I can only hope that others […]
What happened in 2008?
1. Did a financial crisis cause a fall in expected and actual aggregate demand? (With central banks being unable or unwilling to do enough to stop it). 2. Or did a fall in expected and actual aggregate demand cause (or worsen) a financial crisis? (With central banks being unable or unwilling to do enough to […]
Debt and Growth
As you probably all know, the Reinhart-Rogoff 2010 study found economic growth slows when the debt to GDP ratio exceeds 90 percent. They used data for 44 countries over a 200-year period and found the relationship between debt and real GDP growth was weak for debt to GDP ratios below 90 percent. However, above 90 […]
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