Category Nick Rowe
What next for the Bank of Canada?
The Bank of Canada currently sets the overnight rate at 1%. Markets expect it to cut by about 50bp on Tuesday. I think it should cut to zero (or 0.25%, which is effectively zero, given the traditional spreads). I thought it should cut to zero back in December. But if it does cut to zero, […]
Can Canada recover alone? Why not, exactly?
If Canada gets its macroeconomic policies right, is it possible for Canada to recover from the recession, even if the rest of the world does not? The same question could be asked for any individual country. And if not, why not?
The silence of the keynesian econ-bloggers
OK. I'm trying to attract your attention. But I'm not knocking Keynesians. I'm more or less a Keynesian myself, especially under current circumstances. And I'm coming at this question from a Keynesian perspective. Is it good economic policy for Hillary Clinton to try to persuade China to continue to buy US Treasuries? Why have economics […]
I hope Hillary fails
Nothing personal, but I just do not understand why she is asking China to buy more US treasuries. This just doesn't make any sense to me. She ought to be doing the exact opposite. Can someone explain it? Regardless of the ultimate cause of the crisis (and China and perhaps Japan saving too much and […]
A very simple macro model of the last few years
Here is a very simple model of interest rates, debt, asset prices, and recession. It seems to fit the facts of the last few years reasonably well. There are two types of people: the A's and the B's. The A's have normal interest-elastic savings and investment functions. They save less and invest more if the […]
Demand-constrained and supply-constrained economies
I have said that economies are normally "supply-constrained", but that right now many economies are "demand-constrained". Other economists make a similar distinction. Whether an economy is supply- or demand-constrained makes a very big difference to the sorts of policies that work. A policy which increases supply won't work in an economy that is demand-constrained. A […]
Economics blogging and academia
I've been wondering for some months about the role of blogging for an academic. How does it fit into my job as an economics professor? What's it worth? My own views, of course, are coloured by personal experience. But that personal experience is more influenced by the current economic times than by my own biography.
The stable “Anglo Saxon” model of finance
Nouriel Roubini is not alone in declaring the "Anglo Saxon" model to have failed. Chris Dillow disagrees. He shows that, judging from GDP numbers, the "Anglo Saxon" countries are not doing worse than the others, so news of the instability and death of the Anglo Saxon model may be exaggerated. But it all depends on […]
At least we don’t have the Gold Standard to worry about
Will this crisis be as bad as the Great Depression of the 1930's? One important difference is that we don't have the Gold Standard now. That's one good reason for optimism.
Sales taxes, other taxes, expected deflation, and Calvo price-setting
Gauti Eggertsson has an important ("preliminary and incomplete") working paper. It has been discussed by Mark Thoma and Justin Wolfers. The main argument is that tax cuts could cause expected deflation, which would raise real interest rates if nominal rates are stuck at zero, and this would reduce aggregate demand and output. Tax cuts are […]
Worthwhile Canadian Initiative 
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