Category Finance
International finance with no international trade
Sometimes I like to make assumptions I know are totally false. Not (or not always) for simplicity, but just to see what happens. It helps me understand the world better. For example, sometimes I like to assume a barter economy; it helps me understand monetary exchange better to see what would happen if we didn't […]
Who is More Fiscally Sustainable: Ottawa or Queen’s Park?
Both the Federal and Ontario budgets are nearly upon us and the key watchword for both is going to be the sustainability of the public finances.
Inflation targeting, American put options, and the liability of central banks
My last post was about whether money was a liability of the issuer. Lee Kelly, in a comment, summed up my thoughts: "Base money isn't really a liability of the central bank, but good monetary policy usually involves pretending that it is, e.g. by instituting a nominal GDP or inflation target." The Bank of Canada […]
Is money a liability?
I waved a $20 note in front of my macro class this morning. I said: "Is this a liability of the Bank of Canada?". They all answered "Yes". That's what we teach them. We draw a balance sheet for the Bank of Canada. We put the government bonds it owns on the asset side, and […]
Why Dalton McGuinty Desperately Needs a U.S. Economic Recovery
Recent reports suggest that the federal government may be seeing some improvements on the deficit front due to increases in revenue. However, no such luck seems to be gracing Ontario. Indeed, the Drummond’s report forecast of continued lackluster revenue growth for Ontario due to its weak economy has placed Ontario’s government in a bind.
When D-Day Comes, Then What?
On Wednesday, we shall see the unveiling of Don Drummond’s recommendations for the repairing of Ontario’s finances. Quite frankly, I was a little surprised that Drummond Day was not set for February 14th and advertised as a set of tough love policies to highlight the uncompromising bond between Ontario’s leaders and its people but I […]
The Balance of the Federation
The Canadian Federation is an institutional arrangement whereby the constituent units are able to both cooperate and compete with jurisdictions that are both separate and coordinate. The debate over the respective roles of the federal and provincial governments has taken various forms over time with views that emphasize the centrality of the federal government along […]
Are Panic and Posturing Good Ways to Reduce the Deficit?
The Ontario government’s final approach to deficit reduction has begun with selected leaks of economist Don Drummond’s “first draft” of his review via media interviews designed to combine deficit reduction with high drama. A column by Martin Regg Cohn of the Toronto Star titled “Brace for a firestorm across Ontario” outlines cuts as high as […]
The 30 years non-war over the debt burden. Plus Samuelsonian NGDP bonds.
I thought we all had this debt burden stuff sorted out 30 years ago. Obviously we didn't. We should have had a bigger argument about it 30 years ago, which would have sorted it all out. But we didn't. Maybe because we spent all our time arguing about other stuff 30 years ago, and didn't […]
Italian Public Finance
It is odd how ideas, thought and reading evolve over the course of a day. I started off early this morning reading Nick Rowe’s post on structural deficits in the Eurozone and assorted news stories on the European crisis. I then began working in my office and while shuffling a few books on my desk […]
Worthwhile Canadian Initiative 
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