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Blog Profile / Worthwhile Canadian Initiative


URL :http://worthwhile.typepad.com/worthwhile_canadian_initi/
Filed Under:Business & Finance / Economics
Posts on Regator:1174
Posts / Week:5.9
Archived Since:April 1, 2011

Blog Post Archive

The New Keynesian case for anti-inflation price controls

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...

Negatively-valued (red) money in an OLG model

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....

There are no Friedmans today, except maybe Friedman himself

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...

Is low inflation good news?

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?...

When Tax Opportunity Knocks...

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...

A simple model where NGDP targeting beats inflation targeting

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...

Did inflation targeting destroy its own signal?

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...

Marrying satisfaction with happiness

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...

Comparing Manufacturing Employment Growth: Canada and the USA

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,...

Saving Ontario

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...

The economics of stuff

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...

"Temporary" increases in G at the ZLB in an NK model

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...

The third-best case for fiscal policy, and moral hazard for central banks

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 too. It's not needed. And it won't affect AD anyway, because...

Why does Toronto have better outdoor ice than Ottawa?

Toronto is, on average, warmer than Ottawa. So why does it have better outdoor ice? Some might argue that it doesn't. Every winter, Ottawa's Rideau Canal freezes to form the world's largest skating rink. Just about every city park sports...

Doug Saunders has written a dreadful column about the "resource curse", and I'm going to explain why it's dreadful

This column by Doug Saunders on the "resource curse" in last Saturday's Globe and Mail is quite dreadful: When the price of oil is the foundation of your country’s economy, a sudden plunge to half its value focuses the mind...

A proof of the need for fiscal policy to escape the liquidity trap

For simplicity, ignore government spending and taxes. "Fiscal policy" means lump-sum transfer payments. Suppose the economy is in a permanent liquidity trap. If we ignore the central bank's paper and ink operating costs, another name for the permanent liquidity trap...

Language games and expectations of "doing nothing"

If I make one very trivial change to Paul Krugman's model of a temporary liquidity trap, I can change the results, so that the central bank can use current monetary policy to return the economy to full employment, even if...

Monetary policy is always and everywhere about expectations

Paul Krugman is frustrated because people aren't taking his model of the liquidity trap seriously. OK, let me take it seriously. Suppose Paul's model is 100% true. And suppose that Paul's model economy is humming along nicely, at full employment,...

Helicopter money is normal, or else we're doomed!

With one exception, Tony Yates strikes me as being a very sensible and very good money/macro economist. But at the mention of "helicopter money", he seems to turn into an Old Testament prophet, or maybe Private Frazer from Dad's Army,...

Temporary vs permanent elasticities

This is (supposed to be) a simple "teaching" post. There should be nothing new here. Just a newish way of presenting old stuff. The more interest-elastic the demand for money, the more important is the distinction between temporary vs permanent...

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