Category Fiscal policy
So What Happens in the Next Recession?
I’m not a macro economist by any stretch of the imagination and yet I cannot help wondering what is going to happen in terms of policy response the next time Canada goes into a downturn. It is not a question of whether there will be another recession, only when. By policy response, I am of […]
How much more can governments spend by switching to a debt ratio target?
In my recent National Post column, I make reference to some back-of-envelope calculations to the effect that replacing the fiscal anchor of balanced budgets to one of a fixed debt-GDP ratio allows the federal government to increase spending by 1.2 percentage points of GDP, or by about $25 billion. I'm going to work through the […]
If r < g, bond-finance is like currency-finance
A world where the interest rate on government bonds is (permanently) less than the growth rate of GDP ("r<g") is a weird world. The government can run a Ponzi scheme, where it borrows (sells more bonds) to pay for the interest on the existing bonds, so the stocks of bonds grows at the rate of […]
So, what *are* the differences between a Government’s Budget and a Household’s Budget?
You've probably seen examples. Some poor non-economist says something like: "Governments, like households, must live within their means". And economists all point their fingers and laugh and say that's a fallacy. So, what are the differences between a government's budget and a household's budget? And do those differences matter? This is just a simple "teaching" […]
Balancing Ontario’s Budget…In 1875
We often long for simpler times and search for them in our not so distant past. As an economist that does public finance and economic history, the public accounts of the past can offer me an interesting diversion. Governments, at any time in history always take in revenues and make payments and the budgets and […]
150 Years of Canadian National Defence Spending
Canada’s federal government is going to deliver a new defence policy that is expected to guide Canada’s military for the next generation. While in the works for months, it comes in the wake of President Donald Trump’s recent exhortation at the NATO meetings that NATO members are not spending enough and Tuesday’s speech by Minister […]
A Very Brief History of Federal Cash Transfers: Canada 1867 to 2017
This is a post in celebration of Canada’s 150th and similar in time span to my previous one on housing supply and dwelling starts. Canada is a federation and a key feature of its operation is a system of intergovernmental transfers between its fiscal tiers. Indeed, transfers and regional equity are enshrined in Section 36 […]
Federal Budgetary Comparisons: Canada and the United States
It is federal government budget season in both Canada and the United States and I thought it might be useful to provide a few visual comparisons on federal government finance for the two countries. While the expenditure responsibilities and composition of the two federal governments as well as the relationships and responsibilities with lower tier […]
From ISLM to NK Macro
Let me try it this way. This is written for macro students, and their teachers. But it's aimed at researchers too. It's about the role of money in macro models. Ignore what New Keynesian macroeconomists say about their own models. Listen to me instead. Start with the second-year textbook ISLM model. The price level P […]
Assignment of targets to instruments, stability, and Functional Finance
J.W. Mason and Arjun Jayadev have a paper making a new (to me) point about the assignment of targets to instruments. First I'm going to present an (over-?) simplified version of their model, to explain the gist of it. [I think I've got the gist of it, but I'm not 100% sure, and I know […]
Worthwhile Canadian Initiative 
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