Prime Minister Stephen Harper, who prides himself on being an economist, has characterized his government’s fiscal policy as “expansionary.†If he really thinks the simple fact of running a budget deficit is “expansionaryâ€, he should repeat Economics 101. The correct way to look at the question of whether fiscal policy is expansionary or contractionary is not to look at the […]
Read moreIn an earlier post, I noted that falling real wages as indicated by July and August data from the Labour Force Survey which showed increases of just 1.4% in nominal hourly wages over the past year signalled trouble ahead: “If this trend continues, it is likely to further undermine a weak recovery, negatively impacting upon consumer spending and perhaps serving […]
Read moreThe meeting of G20 Labour Ministers in Paris on September 26-27, held in advance of the November G20 Summit in Cannes, reached some conclusions which go some (extremely modest) way toward living up to prior G20 commitments in London and Pittsburgh to promote quality jobs and a more progressive labour market model as part of a long-term solution to the […]
Read moreOver at the Globe and Mail Economy Lab our friend Stephen Gordon argues that there are only limited revenues to be gained by taxing the rich. He plays around with some back of the envelope calculations based on CRA data on the incomes of those making more than $500,000 – accurately enough, I think -Â and concludes that each percentage […]
Read moreThe IMF World Economic Outlook notes that the desired process of rebalancing global demand from countries with large trade deficits (notably the US) to countries with large trade surpluses (notably China) is not going very well. Relatedly, it points out just how difficult it is for increased demand in developing economies to offset stagnant or falling demand in the much […]
Read moreI am attending the G20 labour ministers meeting next week, which is being held against the background of high unemployment in the advanced economies, and the prospect – highlighted by the IMF yesterday – for unemployment to increase even further in the months ahead. A key union demand – that the G20 establish an ongoing working group on employment and […]
Read moreFurther to my earlier post on Recession Ahead?, the IMF have today sharply revised down their forecasts of Canadian growth – from 2.9% to 2.1% in 2001, and from 2.6% to 1.9% in 2o12. The downward revisions for Canada compared to June, 2011 are just about the largest for the advanced economies, second only to the US in 2011. Canada’s […]
Read moreI was sorry to miss a celebration of the life and work of Ian Stewart organized by the Centre for the Study of Living Standards last Friday night. Ian was a former senior economic official back in the now distant days of Keynesian dominance, including a stint as Deputy Minister of Finance which will be forever associated with the introduction […]
Read moreThe Labour Force Survey for August showed that average hourly wages were up by just 1.4% from a year earlier, the same low level of increase as was registered in July. Consumer price inflation was 2.7% in July, a bit down from 3.1% in June and 3.7% in May, but it seems that we have entered a period of falling […]
Read moreThere is a cogent commentary from Martin Wolf in today’s FT. It is scary indeed that averting financial collapse demands structural changes in the euro area which seem to be politically impossible to achieve.
Read moreTD Economics yesterday released a rather gloomy report, putting the odds of a US recession at 40%, and arguing that that Canadian economy is more vulnerable to recession than it was in 2008. It highlights reduced capacity for governments to respond given that interest rates are already very low, and given that household and government debt are significantly higher than […]
Read moreThe federal government has launched consultations on EI premium setting. This provides the opportunity to shift from a very ad hoc system to one that is more fair to workers, and more economically rational. The current worker premium is $1.78 per $100 of insured earnings and the employer premium is $2.49 per $100, adding to a total premium of $4.27 […]
Read moreAllow me to indulge myself just this once. Almost exactly one month ago I wrote a post arguing that the Bank of Canada was being too optimistic about our economic prospects in the July Monetary Policy Report . Today, both the Governor (and Finance Minister Flaherty) conceded to the House of Commons Finance Committee that the outlook is indeed significantly […]
Read moreAndrew Watt has written an especially cogent piece on why the balanced budget rule proposed for the Euro area by Merkel and Sarkozy is a very, very bad idea. It also makes relevant reading for Canadians. Andrew points out (1) that fiscal rules have to take into account overall balances and that the public sector cannot balance if the private […]
Read moreThe wild swings in the North American financial markets this week serve as yet another reminder of the weakness of any linkage between levels and changes in financial asset values and levels and changes in real economic variables. This is apparent for both bonds and equities. In the case of the US and Canada, the rise in government bond prices is […]
Read moreA column by Stiglitz in the Financial Times makes what I think is an important point. The current debate over fiscal policy for the US, Europe and Canada is often characterized in the media as one between advocates of higher deficits from Keynesian style stimulus measures, and advocates of lower deficits through public sector austerity. Within this frame, the advocates […]
Read moreThe Great Recession was followed by an anaemic recovery in the advanced economies, which threatens to be followed by a double dip or worse now that the fiscal stimulus measures of 2009 and 2010 have been succeeded by austerity programs. Now we face a new financial crisis, or at least a stock market correction of major proportions, which may precipitate […]
Read moreFor those of you out there who have not seen it, I recommend Social Europe Journal. There is a lot of good progressive economic commentary by leading European economists and policy types of a social democratic persuasion, as well as frequent commentary from Stiglitz, Reich and other US economists. Some good recent columns and blog posts on the European sovereign […]
Read moreA short addendum to my previous post: I checked the most recent IMF projections in the June, 2011 Update to the Fiscal Monitor. Table 1 provides estimates of changes in the general government government cyclically adjusted balance in percent of potential GDP. Basically changes are the result of discretionary changes in fiscal policy rather than due to improvement or deterioration […]
Read moreAnalysis from my colleague Sylvain Schetagne: A decreasing unemployment rate is not always a sign of a strong labour market. The decrease in the unemployment rate from 7.4% to 7.2% observed between June and July 2011 is mainly due to Canadians leaving the labour market, not to their finding jobs. In July, the number of unemployed Canadians decreased by 35,700 […]
Read moreThe major economic problem faced by Canadians is a very slow recovery and weak job market, not government deficits or rising debt. But public spending cuts at the federal and provincial level will make the real problem even worse. And, government spending cuts in Canada seem set to be even greater than in other advanced industrial countries, even though our […]
Read moreAs the US and Europe turn from stimulus to fiscal austerity, claims are heard that spending cuts actually stimulate economic growth. That is the argument heard, not just from the Republicans in the US Congress, but also from the Obama Administration who have pretty much stopped listening to even mainstream macro-economists. And it is the argument of European finance ministers and […]
Read moreThe case for expanding benefits under the CPP as a needed response to the crisis of private pensions continues to win expert support – even as the financial industry and small business lobbies continue to fight real pension reform tooth and nail. The centre-right Institute for Research on Public Policy (IRPP) have published interesting and useful papers by Michael Wolfson – former […]
Read moreThe release of today’s Monetary Policy Report from the Bank of Canada follows yesterday’s announcement of no change in interest rates, the latest in a long series.  It reminds me of an English County cricket match in which a batsman is politely applauded – “very well not played, sir!” – for doing absolutely nothing other than watch a potentially dangeous pitch […]
Read moreThe new issue of the International Journal of Labour Research (edited by Canada’s own Pierre la Liberte ) entitled “Crisis: Causes, Prospects and Alternatives” is now available. The issue takes a critical look at policies that led to the 2007-08 crisis and considers alternatives to orthodox policies both North and South. It features articles by Robert Wade, Eckhard Hein, and […]
Read moreStatscan have produced interesting and important new estimates of the upper bound size of the “underground” or “non observed” economy, putting it at a seemingly modest 2.2% of GDP in 2008. (Some of this is already included in GDP which is adjusted to take into account some hidden and unreported economic activity.) The 2.2% estimate shows that we are a […]
Read moreAn important paper by Bruce Western and Jake Rosenfeld which is forthcoming in the American Journal of Sociology finds that the decline in private sector union density in the USÂ (from 34% to 8% for men, and from 16% to 6% for women) explains one fifth to one third of the increase in inequality of hourly earnings over the […]
Read moreWith the Summer reading season at hand, here is a short list – in no particular order – of the best books I have read over the last couple of years on the roots and implications of the Great Recession – essential reading for all progressive economists. John Cassidy. How Markets Fail: The Logic of Economic Calamities. (Penguin, 2009.) An […]
Read moreStatscan have released an interesting paper, “The Income Management Strategies of Older Couples in Canada.” It looks at who controls the family finances in couples with one partner aged 45 and over. (They used the age cut off because a special question was added to the General Social Survey which is restricted to that age group.) This is important because […]
Read moreAs is well-known, young people are still bearing the brunt of the recession. The employment rate for youth aged 15-24 last month was 55.6%, well down from 60.3% back before the recession in September, 2008 due to an increase in unemployment and an increase in those not looking for work. And the proportion of youth in part-time jobs has risen. […]
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