Suppose Statistics Canada reports the latest inflation data, and I am surprised to learn that inflation is lower than I had expected it to be. Or below the Bank of Canada's 2% target. Is that good news or bad news? For most of my life I would have said that is good news. "So inflation […]
It looks like the respite from falling oil prices for consumers at the pump has finally attracted the attention of government. Ontario Premier Kathleen Wynne has been reported as saying Ontario will unveil a carbon-pricing scheme this spring. While the idea of a carbon tax in Ontario has been on the agenda since at least […]
Tony Yates complains that Market Monetarists don't have a model to justify their support for NGDP targeting. So I decided to build him a little model. It's a cruddy little one-period model, and it's really only a sketch of a model, but any competent grad student should be able to do the math to finish […]
The Calvo Phillips Curve has a very special property: the subset of firms that change their prices in any period is a perfectly representative sample of all firms. That property makes the Calvo Phillips Curve very easy to use, which is why macro modellers like to use it. But that property stacks the modeller's deck […]
Shawn Grover and John Helliwell have just written a paper that claims to say something about marriage and happiness. Just about all the news coverage of this research has featured headlines like "Married People Are Happier People" or "Definitive Proof That Marriage, Especially To Your Best Friend, Makes You Happier." The paper is just one of the latest contributions […]
According to the employment numbers just released, the United States is doing quite well with the preliminary Bureau of Labour Statistics numbers pointing to the addition of 252,000 jobs in December and an unemployment rate now at 5.6 percent. Meanwhile, Canada exhibited a much weaker performance with Statistics Canada reporting that Canada lost 4,300 jobs […]
Here is an entertaining story to ring in the New Year. Apparently, Ontario Premier Kathleen Wynne in an interview in her Queen’s Park office says that Ontario is “ready to shield Canada from the economic tsunami caused by declining oil prices and a sinking dollar.” According to the Premier, Ontario’s manufacturing heartland is gearing up […]
Some simple observations: 1. Economies grow when people buy stuff. 2. Over time, people accumulate more and more stuff. 3. People can only handle so much stuff. Sock drawers get full of socks. Cupboards get full of cups. Bookshelves get full of books. 4. It's hard to get rid of stuff. Economic models typically […]
Paul Krugman says: "Monetary policy at the ZLB requires a perceived regime change to be effective, fiscal policy doesn’t — in fact, fiscal policy works better if people believe that it’s temporary, and will end when the economy recovers." In a New Keynesian model temporarily stuck at the Zero Lower Bound with less than potential […]
1. If the central bank is doing it right, and targeting the right level of Aggregate Demand, there is no case for fiscal policy to try to influence AD. It's not needed. And it won't affect AD anyway, because the central bank will offset any changes to fiscal policy to keep AD on target. Fiscal […]
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