Category Macro
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".
Sellers and buyers
I must have met thousands of people whose job is to sell things. Right now, I can only think of one person I have met whose job is to buy things. Why that massive asymmetry? Three possible explanations, off the top of my head:
Is core inflation an artefact?
Headline inflation (total CPI inflation) has been above core inflation since last June. That's for Canada, but it's roughly the same in most other countries too. Most central banks, and most economists, pay more attention to core inflation than total inflation as an indicator of underlying inflationary pressures. Core inflation has inertia, and so is […]
Is Toronto Leading Canada’s Economic Recovery?
Statistics Canada has just released the most recent building permit numbers and they show that municipalities issued building permits worth $6.8 billion in March 2011, a 17.2% increase from February and a level not seen since June 2007. Moreover, the gain was mostly the result of advances in the residential and non-residential sectors in Ontario.
Money, interest, employment, and luck
Monetary disequilibrium theorists must face this question: "If this recession was caused by an excess demand for money, how come interest rates are so low? Doesn't an excess demand for money mean an excess supply of bonds and rise in interest rates?" [Warning: this post is long, rambling, and unclear. I ought to tear it […]
Walras’ Law vs Monetary Disequilibrium Theory
Walras' Law says that a general glut (excess supply) of newly-produced goods (and services) has to be matched by an excess demand for some other good. But it could be matched by an excess demand of anything that is not a newly-produced good. It could be an excess demand for money. Or it could be […]
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. […]
Real wages, the recession that was, and the recession that wasn’t
After the tech bubble burst, the United States went into recession, but Canada did not. This isn't to say that we escaped entirely unscathed; there were some nervous moments, and the Bank of Canada saw fit to reduce its overnight rate target from 5.75% to 2.25% between January and November 2001. But if you look […]
Excess supply, excess demand, and search
Take a simple supply and demand model of a competitive market. Look at the blue lines in my picture below:
Worthwhile Canadian Initiative 
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