Angelo Melino points us to this page summarising Bank of Canada note liabilities, and notes that … the Bank of Canada has a lot of archaic notes outstanding. In addition to about $12M of notes issued by other entities that it took on as its own liabilities, there are a few small commemorative issues (for […]
If cows were money, an increased demand for milk would cause a recession. People would stop spending their cows to buy goods and services, because if you spend your cows you don't have as much milk. Was the recession caused by an excess demand for milk, or an excess demand for money?
In a recent article in Policy Options, Professor Tom Kent proposed bewildering variety of tax policy suggestions. Most are, in my opinion, bad ideas. His most radical one is to abolish the corporate income tax and the dividend tax credit.
Robert Frank argues that the US should replace its income tax with a progressive consumption tax: By replacing federal income taxes with a steeply progressive consumption tax, the United States could erase the federal deficit, stimulate additional savings, pay for valuable public services and reduce overseas borrowing — all without requiring difficult sacrifices from taxpayers. […]
Should the Bank of Canada announce what it expects the future overnight rate to be? There are two good articles in the Financial Post: Pierre Siklos argues "yes"; Andrew Spence argues "no". There's more by both authors in this C.D. Howe backgrounder (pdf). I'm against it. I'm going to try to explain why I believe […]
A short answer to both of these questions is "typically not," and an even shorter answer is "no". A longer answer is below the fold.
Imagine the following question on a PhD comprehensive exam: "Using a macroeconomic model with monopolistically competitive firms, explain how an increase in the expected future price level will cause an increase in the current price level. Also explain whether there is an effect on real output.
If a country has a debt/GDP ratio of 100%, and is paying 9% interest, and nominal GDP is not rising, then it's got a solvency problem. It needs to run a budget surplus of 9% of GDP just to stop the debt/GDP ratio rising further. And that is very hard to do. But why would […]
The headline in the Ottawa Citizen proclaimed "Tory ridings won more tourism grants." In ridings currently held by Canada's governing Conservative party, 3/4 of requests for tourism grants were approved. In other ridings, just half of requests were. Now, Conservative ridings tend to be rural and suburban ridings, while non-Conservative ridings are more likely to […]
Suppose you believe in theory X. You want to do research in theory X. But all the interesting ideas in theory X have already been well-researched. You can't think of anything interesting and new to say about theory X. There might be some unresolved problems in theory X that need to be tackled. But you […]
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