Category Nick Rowe
The house price bounce is (mostly) real – for now
I have been checking almost daily for the Teranet-National Bank May house price data, and now it's out. Their national composite price index increased 0.72% from April to May. This confirms the less accurate and more anecdotal data we've been hearing about the Canadian housing market improving this Summer.
Income = Expenditure, and debt
Nothing new here. Just another kick at the debt can. And basic national income accounting.
Risks to Canadian recovery
The Bank of Canada says it believes the recession has ended. Maybe they are right; I haven't checked, but I get the impression that their forecasting has been better than most over the last year. This doesn't mean that output and employment will immediately return to normal, of course. But it does mean, if they […]
We are born with a short position in housing
Felix Salmon has a lovely metaphor that helps me articulate something I've been wanting to say about the risk of buying a house: "In that sense buying a house isn’t an investment, so much as it’s a way of permanently covering your built-in short position when it comes to the shelter market."
Why the Bank of Canada should ‘rise’ interest rates
I don't want tighter monetary policy; I want looser. I don't want the Bank of Canada to raise interest rates, but I do want the Bank to do something that would cause it to want interest rates to rise. I want it to buy real assets. We have become so accustomed to thinking about monetary […]
Weird Fiscal multipliers in New Keynesian models under ZIRP
Paul Krugman has bravely and commendably been trying to understand intuitively the underlying reasons for the big differences between fiscal policy multipliers in a couple of New Keynesian models. Someone needs to do this job. (Take as read a general rant against economists who write down fancy mathematical models without understanding or explaining the results […]
The State(s) Theory of Money: California and Canadian Tire
I learn via Mark Thoma that there is a distinct chance that California will allow taxes to be paid in the new scrip it issued when it ran out of funds. I have no idea whether this will happen, or whether the Federal government will stop it. Let me just assume that it does happen, […]
Too big a percentage to fail?
Suppose one big bank makes a mistake, and that big bank is 50% of the market? You have a problem. Suppose lots of little banks make the same mistake, and those little banks are 50% of the market? You have a problem. The same problem.
Rambling thoughts on Canadian house prices and global savings gluts
This isn't a very focused post. There are two sets of thoughts bubbling through my mind this morning. The first is about Canadian house prices; the second is about global savings gluts. But the two topics are very definitely related. There is a lot of anecdotal evidence of a pick-up in at least some Canadian […]
Asset price bubbles, monetary policy, and the Lucas Critique
"Tight money causes unemployment to rise, and loose money causes unemployment to fall. Therefore, if monetary policy had a 20% inflation target rather than a 2% inflation target, monetary policy would be looser, and unemployment would be lower". Wrong, and now obviously wrong. But 40 years ago most economists thought it was right. "Tight money […]
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