Category Fiscal policy
A Longer Term View of U.S. Public Debt
With the August 2nd deadline for raising the United States public debt ceiling looming, it might be useful to take a longer-term view on exactly how bad the US debt situation is at least with respect to the past.
The macroeconomics of doing nothing
Suppose there is an increase in desired saving, and the monetary and fiscal authorities do nothing. What happens? That's the most important practical question in macroeconomics over the last few years. And it's also a really stupid question. And understanding why it's a really stupid question, and changing the way that question is asked — […]
Transfer Dependency’s New Friends
Well, I decided to finish off my postings on provincial revenues and go to the Federal Fiscal Reference Tables which provide a federal transfer revenue variable for each province from 1987/87 to 2009/10 as well as provincial revenues. I have a plot of nominal per capita transfer revenues and not surprisingly it shows an upward […]
Y tu natural rate of interest tambien
In the olden days there was a debate between the Old Monetarists and the Old Keynesians. The Old Keynesians said that the Old Monetarists' MV=PY was useless, because (desired) velocity was not constant. Milton Friedman responded with what philosophers call the "Y tu mama tambien" argument. The Old Keynesian multiplier wasn't constant either.
Subsidies on Interest Income to increase Aggregate Demand
File this one under "crazy ideas that might be worth thinking about, even if only to understand our own theories better".
People of Plenty
American historian David Potter’s book People of Plenty argued that resource abundance shaped the American attitude towards possibility and opportunity. Abundant resources set the stage for wealth accumulation and created a society that believes that everyone can become rich through their own work and effort and that initiative and opportunity are the key to social […]
Resolving the U.S. Fiscal Crisis
The current debate in the United States over their budget deficit and debt does not appear to be generating solutions that will solve their problem anytime soon. According to the Congressional Budget Office’s analysis of President Obama’s budget proposals, the deficit under the President’s proposals would at first fall, but after 2015 would begin to […]
Functional Finance vs the Long Run Government Budget Constraint
(I had been planning to write this post before Steven Landsburg started a whole blogosphere argument about what taxes are for. Honest!) Functional Finance says you only use taxes if you want to reduce Aggregate Demand to prevent inflation. The Long Run Government Budget Constraint says you use taxes to pay for past, present or […]
Reverse-engineering the MMT model
I'm trying to keep this as simple as possible, so it's accessible to second-year economics undergraduates. Many theoretical papers I read are full of impenetrable (to me) thickets of math. So I reverse-engineer the model. I try to figure out what the underlying model must be in order for the paper's conclusions to make sense. […]
America’s Dangerous Debt
The budget turmoil in the United States is certainly attracting a lot of attention and of a kind it is unaccustomed to given its global power status. The International Monetary Fund has just urged the United States to outline credible measures to reduce its budget deficit as well as a plan to reduce its massive […]
Worthwhile Canadian Initiative 
Recent Comments