Category Macro
Canada’s Evolving Investment-Output Ratio
A phone discussion with a reporter this week on trends in Canadian investment and capital formation piqued my curiosity as to what the long-term trends in Canadian gross fixed capital formation have been. Apparently, despite the global financial crisis and associated economic uncertainty, business investment and capital formation is still relatively strong at the moment […]
Why has (private) debt increased?
I'm not talking about government debt. I'm talking about the debt of households and firms. And I'm talking long run, not just the last few years. Over the last several decades, the ratio of debt to GDP has increased a lot. Not just in Canada, but in most rich countries, as far as I know. […]
The political economy of nominal wage targeting
WARNING: if you are not a macroeconomist you may not understand this post, even if you think you do. This is especially true if you are not a macroeconomist but think you know something about "political economy". (When I hear the words "political economy" I usually reach for my shovel.*) This post is an experiment. […]
Darwin Awards, and other random thoughts on the Euro
1. Is the European Central Bank, or maybe the whole EU, a good candidate for a Darwin Award? There doesn't seem to be a category for institutions that bring about their own demise through their own self-destructive behaviour, but perhaps there should be. In the very long run we should perhaps be thankful for dysfunctional […]
Could the failed German bond sale be good news for the Euro?
File this one under "desperately looking for a silver lining in the unfolding disaster". Suppose, just suppose, that all 17 Eurozone countries were identical. Suppose they were all at the Eurozone average. Suppose they all faced the same default risk and moderately high interest rates on their government bonds. What would the European Central Bank […]
The inflation fallacy
Sometimes I despair. Sometimes I wonder if the inflation fallacy is at the root of all the US and Eurozone troubles. It's so easy to get popular support for the idea that printing money will cause inflation, and inflation means a fall in our real income. So it's much better to have high unemployment, low […]
Tightening money and widening Eurozone spreads
How do we know the Eurozone crisis has been getting worse over the last few days? The indicator that I watch most closely, and I think others watch most closely, is the yield spread between German government bonds and the bonds of other Eurozone governments. If those spreads widen, it means the crisis is getting […]
The ECB’s internal contradictions
The Eurozone news is really depressing. I think things are going to be very bad very soon. I don't have much to say that I haven't already said in previous posts. But thought I would add this anyway, FWIW. The ECB doesn't like inflation uncertainty; it wants to keep inflation predictable and just below 2%. […]
Why isn’t NGDP targeting a lefty thing?
I don't have an answer to that question. The politics of NGDP targeting doesn't make any sense to me. I don't understand it at all.
Could the ECB become the central fiscal authority?
There is only one way to save the Euro now. The ECB acts as lender of last resort to the 17 Eurozone governments. But nobody would want to act as lender of last resort to a deadbeat, and the ECB wouldn't want to act as lender of last resort to a fiscal deadbeat. With the […]
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