Category Fiscal policy
The Department of Finance has changed its accounting rules. Again.
The Department of Finance's Fiscal Monitor has been a useful tool in keeping track of the federal government's spending and revenues is a timely fashion. I've been using 12-month moving sums to account for seasonal patterns in revenues and spending, and they've been useful check to see if federal finances are consistent with budget projection. […]
A Brief Retrospective on the Public Sector
What better way to mark the eve of the Canadian Civic Holiday weekend than with a quick civically engaged overview of the growth of the public sector from a historical perspective. In his 2011 Governments versus Markets: The Changing Economic Role of the State, Vito Tanzi provides a table on general government expenditures as a […]
Feminist triumph or impending disaster?
Right now almost 90 percent of Canadians live in provinces or territories with female premiers. This is a sure indication that Canada's provincial governments are in for a rough ride. It's sometimes called the glass cliff: men are chosen to lead in prosperous times; women are selected to be leaders in times of crisis. Iceland […]
Money, bonds, and the price level
I want to try to answer Simon Wren-Lewis' good question. Let me first restate his question in my own words. (Always a good way to begin, to see if I've understood him properly.) Take a very simply model of an economy, in which a government issues a nominal stock of (high-powered) money M, and a […]
Keynes’ question and the “Keynesian” answer
How did "fiscal policy" get to be the answer to a question about time and money? Sophisticated Keynesians will object if I treat "Keynesian" as synonymous with "having a predilection for fiscal policy". But I think they would recognise that the two are correlated. And that correlation is puzzling. The correlation seemed to disappear during […]
We should not teach the Keynesian Cross in Intro Macro
I have taught Intro Economics maybe 30 times in total. (I started very young). Forget about the A students, because there aren't many of them. (We don't all have massive grade inflation.) Think about the C students. And forget about the Economics majors, because other people will teach them after you. Think about the students […]
New Keynesian countercyclical fiscal policy isn’t what you probably think it is
If it weren't for the Zero Lower Bound on nominal interest rates, there would be no macroeconomic role for fiscal policy in New Keynesian models. Monetary policy alone could and therefore should be used to hit the macroeconomic target, because this leaves fiscal policy free to try to hit its many microeconomic targets as best […]
Words and wartime austerity
Words matter. You can't have an intelligent discussion about fiscal policy if you use loaded and misleading words to describe fiscal policy. Cancelling or postponing a government investment project might be a wise decision. Or it might be a foolish decision. But it is not "austerity". Implementing or preponing a government investment project might be […]
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 […]
Is Japan already dead?
No, I don't think it is. But I think "Is Japan already dead?" is a much better question to ask than "Will the increased interest rates from economic recovery kill Japan?" This is just a supplement to three posts: by me; by Noah Smith; and by Paul Krugman. (This also harks back to Livio's post […]
Worthwhile Canadian Initiative 
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