Blog Profile / Worthwhile Canadian Initiative


URL :http://worthwhile.typepad.com/worthwhile_canadian_initi/
Filed Under:Business & Finance / Economics
Posts on Regator:1516
Posts / Week:4.2
Archived Since:April 1, 2011

Blog Post Archive

The Balance of the Federation: Canada 1870 to 2016

My contribution to Maclean’s 2018 Chartapalooza was a plot of the federal government’s share of total government expenditure in Canada since 1870. The chart showed that until World War I, with the exception of period marked by the building of...

Price Level Targeting targets the Stickiest Prices; Inflation Targeting targets the more Flexible Prices

And it's good to target the stickiest prices; and bad to target the more flexible prices. It means that recessions under inflation targeting can last as long as it takes for the stickiest prices to change. Which is bad. And...

The best and worst paid names on the Ontario sunshine list

The Ontario government publishes an annual "Sunshine List". This is a dataset containing detailed salary information on every Ontario government employee earning over $100,000 per year. The list includes the salaries of public servants, also salaries of people who work...

The Tale of the Two Cobblers (collusive price cuts)

Mostly for fun, and teaching. But I think it might matter. A village had two cobblers. The right-handed cobbler was best at making right shoes. The left-handed cobbler was best at making left shoes. So the villagers would buy one...

"Profits = Investment - Saving"

Or, "Profits = Expenditure - Income". Those are just alternative ways of saying the same thing, for a closed economy, if investment and saving include government investment and saving. Most economists will say that's wrong. And it is wrong by...

"Monetary Policy Accommodation" and Upward-sloping IS curves

If you believe that the IS curve slopes up, then what the Bank of Canada says about "monetary policy accommodation" makes sense. If you believe the IS curve slopes down, like in the textbooks, then it doesn't make sense. This...

Theory does not say that equilibrium interest rates cannot be below growth rates (Part 1)

First I need to tell you why I am writing this post. I got two emails from Canadian economists saying they agreed with my post against "normalising" interest rates. The first email was from an academic macroeconomist. He asked me...

Donald Trump is a Mercantilist

A lot of ink is being spilled on Donald Trump and his America First approach to trade negotiations which has generated considerable trepidation and angst in both Ottawa and Mexico City as NAFTA appears headed for termination. Donald Trump is...

The (In)efficiency of Perfect Price Discrimination

I have always thought, and taught, that Perfect Price Discrimination leads to an efficient allocation of resources. I now think that is wrong. It only seems to work if we use partial equilibrium reasoning, for a single monopolist that practices...

A Balassa Samuelson theory of negative real interest rates despite productive investment and impatient representative agent

I think this is right (but I can't do the math to work out an example to be sure, though any competent grad student could). The idea is that you can get negative interest rates, despite productive investment and impatient...

Don't even try to "Normalise" interest rates

If you think that the rest of the economy is normalised, so it is time to normalise interest rates too, you are wrong. If the rest of the economy is normalised, then interest rates must already be normalised. Wicksell said...

The Long Restructuring of Ontario's Health Spending

Ontario’s hospital sector has made a submission to the provincial finance committee making the case that overcrowding has become so serious that there is a need for more funding. They are seeking a 4.55 percent increase in operating funds for...

The Sustainable Bond-Finance Laffer Curve

Imagine an economy growing at rate g, with an interest rate on government bonds r, and a constant debt/GDP ratio D/Y. The government gains revenue from issuing new bonds gD each year, and loses revenue from paying interest rD each.....

Seeing through Sovereign Wealth Funds?

In the first country, the government imposes a 50% flat tax on each individual's income, and uses the proceeds from that tax to finance an annual $10,000 transfer payment to each individual. The government has zero debt. In an otherwise...

Negative Average Cost but Positive Marginal Cost of Debt-Finance

If the rate of interest on government bonds is less than the growth rate of the economy (r

Monetary tightening can lower real interest rates

It's the investment accelerator. Monetary tightening means lower expected NGDP; real interest rates can go either way. Think of this as a teaching post, to explain the intuition. Or look at Miles Kimball's great post. Here's a thought-experiment. Do not...

The Bank of Canada's "Hot Hand" experiment and Price-level Targeting

This (pdf) might be the most important controlled experiment economists have ever run. The results of this experiment have been influential in the Bank of Canada's decision (so far) to stick with targeting inflation rather than a price-level path. And...

So What Happens in the Next Recession?

I’m not a macro economist by any stretch of the imagination and yet I cannot help wondering what is going to happen in terms of policy response the next time Canada goes into a downturn. It is not a question...

Rip van Winkle on Price Level vs Inflation Targets

Rip van Winkle is put in charge of a New Keynesian central bank. He sets a nominal interest rate that he believes will keep inflation at 0% and the price level constant. (It doesn't matter if I change this to...

Provincial Government Health Spending: The Force Awakens?

The Canadian Institute for Health Information (CIHI) recently released its 2017 edition of its National Health Expenditure Trends and its worth a trip to its website for the downloadable data on all things related to health spending. I've been on...

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