Category International
Ontario and Its Neighbours
I suppose I have become somewhat obsessed with Ontario’s economy and its performance but here I go again with a few comparisons. Ontario is strategically located on the Great Lakes-St. Lawrence waterway adjacent to the huge population of the US northeast. Its neighbours are trade partners and markets as well as economic competitors. How does […]
When I really learned the David Ricardo idea
[Update: Tim Worstall has a beautiful response to this post, applying the Ricardian idea to trade between humans and robots (or the human owners of robots). Will the robots out-compete us in everything, causing mass unemployment? Nope. Robots will never have a comparative advantage in everything. Once again, Tim's Ricardian point seems totally obvious once […]
Asymmetric home bias and the transfer problem
A random thought on Germany and Greece. If apple producers and banana producers have the same symmetric Cobb-Douglas preferences U = A0.5.B0.5 the competitive equilibrium has half the apple crop being exchanged for half the banana crop. But if the apple producers only like apples, and refuse to eat bananas, the relative price of apples […]
Do the Greeks need Greek banks?
Or could they all use foreign banks? Dumb question. I don't know the answer. Are there some laws that make it hard to use foreign banks? Tourists seem to manage OK without opening a foreign bank account. It ought to be easier still if the foreign country uses the same currency. Could the foreign banks […]
Fixed exchange rates and Blame Thy Neighbour
There is a parallel universe in which the Euro was never invented, and the Eurozone countries kept their own moneys and their own central banks, with flexible exchange rates. I think the economic outcomes would have been better. But let's just suppose they weren't. Suppose that each of those independent central banks had screwed up […]
Is Poloz Pulling down the Loonie?
Bank of Canada Governor Stephen Poloz insists he is not talking down the Canadian dollar and its depreciation relative to the US dollar is the result of economic developments – in particular the fall in oil prices. So is oil driving down the dollar? How about a quick and dirty regression?
Instrument independence vs target independence under flexible exchange rates
Sebastian Edwards (HT Mark Thoma) says that monetary policy independence under flexible exchange rates is an illusion. This conflates instrument independence with target independence. Instrument independence is always an illusion, given the target. Target independence is not an illusion.
Interest rates, exchange rates, and the Bank of Canada
Last week the Bank of Canada cut the overnight rate of interest from 1.00% to 0.75%. The exchange rate dropped 2 cents (about 2.5%) on the news. [Update: I forgot to add (because I figured Canadians already knew it, but then remembered others probably wouldn't) that the Bank of Canada has "done nothing" (with interest […]
Comparing Manufacturing Employment Growth: Canada and the USA
According to the employment numbers just released, the United States is doing quite well with the preliminary Bureau of Labour Statistics numbers pointing to the addition of 252,000 jobs in December and an unemployment rate now at 5.6 percent. Meanwhile, Canada exhibited a much weaker performance with Statistics Canada reporting that Canada lost 4,300 jobs […]
Federations and Health Care Spending
In putting together my material for my fiscal federalism course next term, I decided to take a look at some health spending figures for the OECD countries in order to compare federal with non-federal countries. Federal structures generally try to combine the economic advantages of a more centralized state with some of the welfare and […]
Worthwhile Canadian Initiative 
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