Arnold Kling says it's W/P. "4. When it comes to aggregate supply and demand, the regulating mechanism is what is called the real wage rate, which means the wage rate adjusted for the general level of prices (or the cost of living). When prices go up, the real wage rate falls, and vice-versa. When the […]
When playing around with some data the other day, I noticed something odd. I was trying to figure out where my respondents lived, so I typed "tab PROV" and was surprised to see that about four percent lived in Newfoundland. That's the number in the distribution of respondents column in the table below. Distribution of […]
The optimal size of a university is always a little bit bigger than its actual size. More precisely, the size of a university doesn't really matter. What does matter is whether it's growing or shrinking. A growing university is easy to manage. If you need to grow one department relative to another, you hire people […]
Paul Krugman thinks the War on Demand is strange. I think it's weird. But I've got a different take on what's happening. [Update: Paul Krugman responds. "Nick Rowe makes a good point: most of the time, in market economies, sellers feel constrained while buyers don’t. I’m somewhat surprised that he doesn’t mention why: it’s because […]
Saving for retirement is a gamble. You live, you win, because you reap the benefits of your thrift; you die, you lose, because you sacrificed enjoyment for no good reason. Historically, retirement saving was even more of a gamble than it is today. In 1810, world life expectancy was less than 40 years (see this […]
"The poor don't have enough income to save, and can't help going into debt to the rich. Debt is caused by inequality". That statement is wrong on many levels. It's wrong theoretically. It's wrong empirically. But most of all, it's wrong because it might make inequality worse. It's the soft bigotry of low expectations. Providence […]
Globe and Mail journalist Jeremy Torobin called me a while back to talk about Bank of Canada forecasts for this article, and that call prompted me to go back and look at how the Bank's forecasts evolved during the recession.
"ZMP" stands for "Zero Marginal Product". It should really stand for "Zero Value Marginal Product". Can an additional worker produce no additional goods of any value? Is that why they are unemployed? Yes, but. There are three types of ZMP. Two of them are based on two different types of coordination failure. The disagreement between […]
This is a post I've been meaning to write for months, but I couldn't find the words to do so. Instead I've decided to create a very simple microeconomic model to illustrate my basic point – that since prices are sticky, an unexpectedly rising Canadian dollar can do more damage to an exporter's bottom line […]
In 1991, two thirds of the articles in Econlit, a comprehensive index of academic economic research, were written by people based in North America. By 2006, that share had dropped by one third to 45 percent. These numbers are taken from a recent working paper by Cardoso, Guimaraes and Zimmermann. Their evidence suggests that the […]
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