Category Macro
Spain, Ireland, and the US. All breaking Okun’s Law.
In my last post I noted that the US was abnormal in comparison to the other G7 countries. In all the other countries GDP fell by more than employment, so labour productivity fell. That's what normally happens in a recession. Okun's Law says so. But US GDP fell by less than employment, so labour productivity […]
US Productivity Exceptionalism
Stephen's got standards. So I'm going to steal his graphs from his last post, and write the post he could easily have written. Before you look at Stephen's graphs, ask yourself this question. How well did the US fare in the Great Recession, in terms of GDP and employment, compared to other G7 countries? Now […]
Robots, slaves, horses, and Malthus
I think this is the model that Karl Smith has in mind. Assume robots are the same as humans. Robots can do all the work that humans can do. Robots need the same amount of energy/food to stay functioning as humans do, but robots themselves can produce that energy/food just like humans can. Robots will […]
Canadian Economic Forecasts 2011 – Make Yours Now!
Continuing the now two year old tradition, I invite you all to make forecasts for 2011. Forecasts are for the latest data available on New Year's Day 2012.
The Lender of Last Resort
What Paul Krugman is saying about Ireland and the Eurozone is not wrong. But he keeps missing the most important point. And it's bugging me.
Income Effects don’t really exist
I'm an expert on how non-economists think. That's because every year I try to teach 300 non-economists to think like economists. Non-economists think in terms of income effects. Economists think in terms of substitution effects. That's a stereotype that isn't 100% true, but it still contains a lot of truth. Here's how non-economists think:
Unobtainium and Walras’ Law
Suppose people want to spend 30% of their income on unobtainium. But the supply is zero, because unobtainium is unobtainable. So there's an excess demand for unobtanium equal to 30% of GDP. What does that imply, all you students of economics?
Milton Friedman’s Thermostat
If a house has a good thermostat, we should observe a strong negative correlation between the amount of oil burned in the furnace (M), and the outside temperature (V). But we should observe no correlation between the amount of oil burned in the furnace (M) and the inside temperature (P). And we should observe no […]
Pictures of Ireland?
In countries like Ireland, there is currently an abnormally large Gap between nominal interest rates and the expected growth rate of nominal GDP. That Gap creates a nasty positive feedback loop, through two channels: The Risk Channel. It's hard to pay down debt when the debt is compounding a lot faster than the growth in […]
Worthwhile D.I.Y. Macroeconomics?
The New York Times has just published its 2010 "Year in Ideas" issue. One of the trends it identifies: D.I.Y. Macroeconomics. The financial crisis plus the growing availability of on-line data has given rise to "growing army of knowledgeable 'econo-bloggers'." I agree with one of their conclusions: econo-bloggers "offer sophisticated interpretations of economic data […]
Worthwhile Canadian Initiative 
Recent Comments