Category Macro
But what would happen to the debt if we didn’t run a deficit now?
If the government runs a deficit now, the debt-burden on future taxpayers will increase. But maybe the debt-burden would increase even more if we didn't run a deficit now? The proper way to handle policy questions (in economics, or anywhere) is to compare what will happen with the proposed policy to what would happen under […]
Why are forecasters predicting a mild recession for Canada?
Shock Minus Control notes that Canadian forecasters in both the public and private sector are predicting a short, mild recession and he provides a good graph that puts these forecasts in historical perspective. In addition, IMF and OECD forecasts for Canada are more optimistic than for most of the other developed countries. But how and why can […]
ZIRP Deficits cause Crowding In of Investment, by reducing Deflation
I am going to make a very simple point, which has (I think) been missed in the current blog debate over whether deficit spending will crowd out or crowd in investment: deficits reduce expected deflation, which crowds in investment.
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 […]
Does Canada need a Fiscal Stimulus? – Discuss
My own view, for what it's worth, is that Canada does not need a fiscal stimulus right now, but there's a possibility it might need one soon, so the government should get everything ready to introduce one as quickly as possible, but not pull the trigger quite yet. My preferred fiscal stimulus would be a […]
Will Deficit Spending in fact be Money-Financed?
It's easy to say that money-financed increases in government spending should be used as a weapon of last resort, if the central bank runs out of ammunition as nominal interest rates fall to zero. But would government deficits in fact be money-financed? If the central bank targets the monetary base, the answer is trivial: if […]
How do we stop it from happening again?
Nick Rowe passes this along: We failed. By “we” I mean economists. Sure, there’s a lot of blame to go round; a lot of people made bad decisions. But we didn’t know how to design a financial system which is robust enough to cope with people making bad decisions. If some people paid too much […]
On the causes of an eventual Canadian recession
I was planning on writing this post a bit later, but since several good points have already been made in the comments over here, I'm going to start a discussion on the mechanics of how the Canadian economy might go into recession in the next few months. The decline in exports to the US. About […]
So where were we?
Now that it's been decided who will form the government, it's time to look at the problems facing it and what it can and should do about them. The next few posts will be data-oriented, trying to provide some background. Today, I'm going to look at the state of the labour market. In the US, […]
Paulson, Brown and Harper
Nick Rowe asks why the Brown plan is better than the Paulson plan: The original Paulson plan was for the US government to buy assets from US banks. The Brown plan is for the UK government to buy equity in UK banks. The consensus among economists seems to be that the Brown plan is better […]
Worthwhile Canadian Initiative 
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