Statistics Canada has released provisional estimates of the Canadian Government Finance Statistics (CGFS) for financial flows and the balance sheets of general government and government business enterprises for the period 2007 to 2012. The net liabilities per capita picture for provincial and territorial governments has changed since the 2008 global financial crisis.
[Nothing great or original here, except maybe the metaphor. It's supposed to be a simple teaching post.] Zimbabwe is only the most extreme recent example of this general rule; the central bank threatened to grow extremely large, and this caused it to shrink extremely small. The Swiss National Bank is another recent example, at the […]
Should inflation targeting central banks hold a portfolio of assets that consists only of foreign lottery tickets? No, because if its portfolio of foreign lottery tickets became worthless, and the central bank were unable to get a bailout from the government, it would be unable to buy back the currency it has issued. So if […]
Like Greek bonds. Dumb question of the day. "Because risky assets are risky!" is not the answer. Other things equal, I would prefer to hold a safe asset than a risky asset, because I don't like risk. But other things are not equal, precisely because other people don't like holding risky assets either. So risky […]
Last week the Bank of Canada cut the overnight rate of interest from 1.00% to 0.75%. The exchange rate dropped 2 cents (about 2.5%) on the news. [Update: I forgot to add (because I figured Canadians already knew it, but then remembered others probably wouldn't) that the Bank of Canada has "done nothing" (with interest […]
Here's a question for you: Suppose there is a permanent increase in monopoly power across the economy (either firms having more monopoly power in output markets, or unions having more monopoly power in labour markets). Would that permanent increase in monopoly power cause a permanent increase in the inflation rate? Most economists today would answer […]
As Ontario moves into budget season, it is instructive to take a quick look at the finances to date as revealed in the most recent Ontario Economic Outlook and Fiscal Review which was presented November 2014. Ontario’s aim then as no doubt now was to have the budget balanced by 2017-18. According to the Review, […]
Take a very standard New Keynesian macroeconomic model. The two key ingredients (the only ones that matter for this post) are: monopolistically competitive firms; the Calvo Phillips Curve. In that model, if there are no macroeconomic shocks, the equilibrium level of output and employment is below the efficient level of output and employment. Because it […]
Samuelson 1958 (pdf) built an overlapping generations model in which intrinsically worthless green bits of paper have positive value. It is possible to build a mirror-image of Samuelson's model in which intrinsically worthless red bits of paper have negative value. My model actually makes more sense. Because any infinitely-lived productive asset, like land [or Frances' […]
How come no economist on the right is asking "Where are the Galbraiths of yesteryear?"? It's because Milton Friedman won the debate, and John Kenneth Galbraith lost. Both Friedman (on the right) and Galbraith (on the left) were once leading public intellectuals and economists. I used to read them both. I wonder how many young […]
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