Category The 2008-9 recession
A preliminary estimate for Canadian 2009Q1 GDP growth
All statistical agencies have to trade off timeliness against accuracy, and Statistics Canada seems to put more weight on accuracy. For example, it doesn't publish advance GDP estimates the way the Bureau of Economic Analysis does, presumably because they don't want to live with the large revisions that the BEA is invariably forced to make. […]
Why an excess demand for money matters so much
Suppose there were an excess demand for antique furniture. Antique furniture is not part of GDP. By Walras Law, if there were an excess demand for antique furniture, there must be an equal and offsetting excess supply of something else, like newly-produced goods for example. Could an excess demand for antique furniture cause a general […]
Bad banks, and the effectiveness of fiscal and monetary policies
I'm going to take another crack at this topic. Do bad banks (and a bad financial system) reduce the effectiveness of fiscal and monetary policies in shifting the Aggregate Demand curve to the right? The answer matters, because if they do reduce the effectiveness of fiscal and monetary policy (a lot), then we need to […]
What happened in 2001:1 ?
What happened in the first quarter of 2001 that would cause BOTH: 1. A US house price bubble? AND 2. A structural change in relative prices between high-end and low-end US houses?
Short run “Speed Limits” on recovery
Mark Carney, Governor of the Bank of Canada, spoke yesterday about short run "speed limits" to economic recovery. This is a concept you don't hear very often, so I thought I would briefly discuss it. It's easily confused with the much more familiar long run "speed limits" to economic growth. And those long run "speed […]
Banks, Aggregate Demand, and Aggregate Supply
What is the relation between banks, aggregate demand, and aggregate supply? Do bad banks shift the AD curve or the AS curve? Do bad banks make it harder for fiscal or monetary policy to shift the AD curve? Some economists argue that you need to fix the banks (and the financial system) to get an […]
Mechanical metaphors for monetary policy
This is a post for people who find mechanical metaphors useful. And remember, any theory that can be translated into math and put on a computer (even if it doesn't need to be) has a mechanical counterpart, because a computer is a machine. I am going to use mechanical metaphors to think about different monetary […]
The Bank of Canada says: “Quantitative easing if necessary, but not necessarily quantitative easing”
The Bank of Canada released its eagerly-anticipated Monetary Policy Report (pdf) today, in which it laid out its contingency plans for quantitative easing. But it seems pretty clear that – notwithstanding its jaw-dropping estimate of annualised 2008Q1 GDP of growth of -7.3% – it doesn't intend to be implementing those plans anytime soon. Here's why:
Panic as fiscal stimulus
I guess this is what happens when people start building survival shelters and stocking up on canned goods: Retail sales edge higher in February: Canadian retail sales rose unexpectedly in February, led by home supplies, and food and beverage stores.
Zero (effectively, finally); What Next for the Bank of Canada?
So, the Bank of Canada has finally cut the overnight rate target to 0.25%, which is as low as it feels technically able to go, so is effectively zero, by its reckoning. I'm not going to discuss those technical issues on the problems with 0.00% vs. 0.25%, because it's not my comparative advantage. But this […]
Worthwhile Canadian Initiative 
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