Category International
International coordination with ZIRP, and Functional Finance
"Deficits and debt don't matter, we owe it to ourselves; we should run as big a deficit as needed to get our country out of recession." "International coordination of fiscal policy is needed to make sure each country runs a big enough deficit to get the world out of recession." Your choice. One or the […]
Life in the time of six sigma
Standard deviation of daily per cent changes in the CAD-USD exchange rate since the CAD was allowed to float in June, 1970: 0.33. Number of days in which daily per cent changes exceeded six standard deviations since June 1970: 6. Number of days in which daily per cent changes exceeded six standard deviations since September […]
Canadian banks: The prodigal sons’ older brothers
Okay, so we're not supposed to be worrying about moral hazard any more. But that doesn't mean it's less annoying to watch your competitors screw up, get bailed out and scoop your business. Ottawa weighs new measures for banks: Ottawa is facing pressure to introduce further backstops for the Canadian banking system, following a series […]
Why is buying US Treasuries considered a ‘flight to security’?
Let's consider: The adjective that best describes the US banking system is 'insolvent'. The government balance is horrible, and is about to become unspeakably horrible. The current account deficit is not quite as horrible as it once was, but it is still outside any normal country's comfort zone. So why would anyone seeking a safe […]
Why the US GDP numbers aren’t so good, and why the Canadian GDP numbers aren’t so bad
The recent GDP numbers from both sides of the border are somewhat puzzling: How can strong US GDP growth be reconciled with all the other bad news about the US economy? How can weak Canadian GDP growth be reconciled with all the other really-not-all-that-bad news about the Canadian economy? Here are a couple of graphs […]
Statutory and effective corporate tax rates across countries
I'm not spending a lot of time following the US election, but I've noticed quite a few posts in the economics blogosphere about John McCain's proposal to reduce corporate tax rates. The issue of whether or not to cut corporate tax rates has been hashed out pretty thoroughly in Canada over the past few years, […]
On the GDP-employment disconnect
In both the US and Canada, employment and GDP numbers are going in different directions. Employment rates are at all-time highs in Canada, and they’ve been falling (from a not-particularly high starting point) in the US. OTOH, US GDP numbers have been outperforming those in Canada. Why? I suppose one place to look is the […]
The Global Effects of U.S. Fiscal Policy
That's the title of a discussion paper (pdf) by Kimberly Flood at the Bank of Canada. This is from the conclusion: The results of our U.S. fiscal policy simulations show that the expiration of the tax relief from the AMT and the expiration of the tax cuts enacted in 2001 and 2003 can impose short-run […]
Comparing central banks’ responses to the credit crunch
Here’s an interesting graph from the Bank of Canada’s Monetary Policy Report: Yes, yes, I know; it’s almost impossible to tell the difference between the UK and Canada in that graph, but if you look at the original document and zoom in to 200% of the original size, you can (just barely) conclude that the […]
Canada and Argentina in the 20th century
Whenever I teach growth theory, I like to compare the Canadian experience with that of Argentina. Up until the 1930’s, the two countries followed very similar paths: foreign investment financing the development of resource-based economies. But then the 1930’s happened, and Canada and Argentina parted ways. This is the best graphical demonstration that starting points […]
Worthwhile Canadian Initiative 
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