Category The 2008-9 recession
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 […]
Deflation is on the horizon, but how far away is it?
The Canadian and US CPI numbers were released today. Here's what's been happening with the Canadian core CPI (which excludes energy, food and other volatile prices): And here's the series for US CPI less food and energy: I'm pretty sure that Mark Carney is glad that he doesn't have Ben Bernanke's job. The US is […]
Guest post: Mark to market
Commenter JKH has been doing some thinking about mark-to-market and its role in the current crisis, and WCI is delighted to report that he has been good enough to put those thoughts together and agree to have them posted here: Lurking in the background to the credit crisis and the unfolding policy responses to it […]
Rent-seekers at the gates
The next few months are going to be brutal, and the second week of the next few months is going to be excruciating. StatsCan releases the Labour Force Survey numbers on the first Friday of the month, and those numbers will almost certainly be worse than the month before. Apocalyptic headlines over the weekend will […]
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 […]
Worthless Canadian Reaction?
What else can you call it, when two large Canadian labour unions call for a Buy Canadian provision in government spending? Embarrassing? Shameful? Perhaps "imprudent" might be the best word, given Canada's reliance on foreign trade.
In which a US magazine summarises many points with which Canadians should be more familiar
Newsweek Okay, yes, I found this during a google search for this blog's title.
Why forecasters are predicting a short Canadian recession
As I noted here, pretty much everyone who has had the temerity to publish a forecast for the Canadian economy for 2009 is expecting a turning point in 2009Q2 or 2009Q3. In this post, I'm going to try to piece together the narrative behind this story. I'll be borrowing heavily from Calculated Risk: if you're […]
Worthwhile Canadian Initiative 
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