Category Finance
What’s Up with Carney & Flaherty?
Well, I’m still sifting through my thoughts trying to exactly understand what was behind the corporate “dead money” debate last week. After a speech to the Canadian Auto Workers, Bank of Canada Governor Mark Carney drew attention to the rising amounts of cash in the bank accounts of Canadian firms and commented to the effect […]
Dutch Capital Theory
Very few economists are aware of Dutch Capital Theory (DCT to us insiders). It was invented by my ancestor Nick van Rowe, over a century ago, but has been suppressed by a conspiracy of silence and ignorance ever since. Think of this as a teaching post.
The New Gold Rush
This post was written by HEC-Montréal professor Simon van Norden With changes to environmental review processes, I get the feeling that the Harper government is keen to speed up development of the Oilsands. That’s not particularly odd. Oil prices tripled and Canada is sitting on the second largest reserves in the world; the Canadian dollar […]
Reswitching and the term structure of interest rates
Treat this as a rough draft, on a topic I haven't thought much about for over three decades. The punch line is at the end. I may be wrong (of course). A farmer considers whether to switch to a new technique for growing food. Compared to the old technique, the new technique would produce less […]
Bureaucratic Entropy?
The Association of Ontario Municipalities is having its annual conference August 19-22 in Ottawa, the mother city of all governments in Canada. Among the items on the agenda are the keynote address on: “new secrets to leadership with five powerful tools to improve negotiation effectiveness”, a speech by Ontario’s premier (followed by the opposition leaders […]
The Loanable Funds and other theories
This is a long and boring post. (Though some will no doubt find it highly controversial, and a very few might even get over-excited). It might be useful for economics students who want to put the Loanable Funds theory into perspective. They are my main intended audience. And maybe for those who teach them too. […]
As the Federation Turns: Quetarian Public Finances
Quebec and Ontario, the twin pillars of the Canadian federation, have much in common given that they share the economic space of the Windsor-Quebec axis – an economic region nestled around the Great Lakes-St. Lawrence waterway. Once upon a time, they were even one province but that fiery marriage had its ups and downs and […]
Why does repo exist?
Today's dumb question from the back of the Finance class. (But I would guess some other students might not know the answer either, and some maybe hadn't even thought of the question). [Update: just to be explicit, I am not asking why lenders want security for loans. I am asking why I don't sell my […]
Worrying about the Canadian housing market, Part 3: Risks of default
Concerns about the housing market are not really about what happens to the market for houses per se; its role as a driving force for the recovery was done long ago. The real concern is the risk is a US-style financial crisis. I think it's a valid concern, but I don't think it's very likely. UWO's […]
Worrying about the Canadian housing market, Part 2: The effects of higher leverage
In a previous post on the housing market, I noted that we were unlikely to see the sorts of interest rate increases that would generate increases in mortgage payments of the size we saw in the early 1980s (up to 60%). And it's a good thing too, because most new homeowners are not as able […]
Worthwhile Canadian Initiative 
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