Category Productivity
What explains the weak growth in total factor productivity in non-renewable resource extraction industries?
McMaster University’s Oliver Loertscher and Pau Pujolas have a recent article in the Canadian Journal of Economics entitled “Canadian productivity growth: Stuck in the oil sands”. Here is the abstract: We study the behaviour of Canadian Total Factor Productivity (TFP) growth over the past 60 years. We find that the observed stagnation during the last 20 years […]
Australian Economic Growth in Longer Term Perspective
A recent issue of The Economist highlighted the stellar economic performance of Australia – or as it was termed, “The Wonder Down Under” – arguing its economy is most arguably the most successful in the rich world. Australia has apparently not seen a recession for 27 years, seen its median income has grown four times […]
“Trickle Down”, “Magic Dirt”, memes and deep parameters
"Trickle Down Theory" is a meme used (mostly by non-economists) to ridicule certain economic policies and the theories on which those policies are supposedly based. My first year students sometimes ask me to explain it to them, not understanding that it's a meme and not a theory. "Magic Dirt Theory" is a similar meme, of […]
A Balassa Samuelson theory of negative real interest rates despite productive investment and impatient representative agent
I think this is right (but I can't do the math to work out an example to be sure, though any competent grad student could). The idea is that you can get negative interest rates, despite productive investment and impatient consumers, because the prices of the goods you can invest to produce more of will […]
Upward-sloping Demand curves for Labour and Housing
I have a simple thought-experiment ("model") that helps me think about the relationship between: migration; planning restrictions; wages; and house prices (or rents). Assume all workers are identical, all houses are identical, and it's strictly one worker lives in one house. The government of a small city/state controls both immigration and the number of houses […]
High Wages encourage Innovation?
High wages increase the benefits of an innovation that increases labour productivity. The higher the wage, the bigger the benefits of saving an hour of labour to produce the same quantity of goods. But if that innovation itself requires labour to think up the new idea, test it, and implement it, then high wages increase […]
Long Run Growth and the end of The End of (Monetary Policy) History
Suppose everyone believes that we have reached The End of History, as far as monetary policy is concerned. The new inflation-targeting regime adopted by central banks has finally solved the age-old problem of the business cycle. There will be no more booms and busts. Maybe not yet solved perfectly, but the broad outlines of the […]
Path-dependence of measuring real GDP?
I normally try to avoid index number theory. Don't trust me on this. It is well understood that real GDP is a very imperfect measure of welfare. We teach that in first year macro. That is not what this post is about. What I'm worried about is whether real GDP is an imperfect measure of […]
Variety and Growth
A closed economy produces only apples, using fixed amounts of labour and land. Suppose there is an exogenous increase in the number of varieties of apples produced. With a constant returns to scale technology, GDP stays the same. But if people have a taste for variety, or a variety of different tastes, people are better […]
Staghunt and (the) IRS
"IRS" stands for "Increasing Returns to Scale". It means if you double all the inputs, you more than double the output. I first worried that US readers might think "IRS" stands for Internal Revenue Service (the US tax people). Then I realised that I want it to stand for that too. Staghunt is a simple […]
Worthwhile Canadian Initiative 
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