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Bank of Canada Cuts Rates as Coronavirus Delivers ‘Negative Shock’

The Bank of Canada cut interest rates dramatically in March 2020 in attempting to counter the depressing effects of COVID-19 on economic activity. But the Bank makes clear that monetary policy will not be enough and the government must respond with aggressive fiscal policy spending. [...]

Bank of Canada Cuts Rates as Coronavirus Delivers ‘Negative Shock’2020-05-09T16:49:06-04:00

Women’s Unpaid Labor is Worth $10,900,000,000,000

This article, which appeared around International Women's Day, estimates what women would have earned if paid the minimum wage for unpaid labour cooking, cleaning, childcare, caring for relatives, ....  The almost US$11 trillion globally is missed by GDP measures. There is also a table showing, for each county, [...]

Women’s Unpaid Labor is Worth $10,900,000,000,0002020-05-09T12:36:17-04:00

Why Toronto Is Not Building Rentals

Why don't more apartments get built when markets rents rise? Even without rent controls, there are powerful financial incentives that favour building condominiums (where presales generate returns on investments immediately) over rental apartments (where rental income tickles in slowly over decades). Condos have other advantages -- property taxes [...]

Why Toronto Is Not Building Rentals2020-05-09T12:36:17-04:00

Why a Medical Chief Opposes Universal Flu Shot

Although this story goes back to 2004, I am including it because it is one of the best illustrations of the importance of opportunity cost, as opposed to money cost, for making smart choices. A universal flu-shot for all Canadians would cost about $125 million per year and improve [...]

Why a Medical Chief Opposes Universal Flu Shot2020-05-11T08:08:51-04:00

Secret Reason for Airline Basic Economy Fares

Basic economy fares in the air travel industry and not primarily intended to compete with low-cost carriers or attract price-conscious consumers with elastic demands. The many restrictions on travel, luggage, cancellation fees are designed to make corporate travel agencies not even consider basic economy fares, and instead spend for [...]

Secret Reason for Airline Basic Economy Fares2020-05-09T16:56:34-04:00

Big Business Is Overcharging You $5000 a Year

Many argue that globalization requires large companies with economies of scale. The result can be market concentration, and reduced competition, leading to higher prices. By comparing prices in Europe and the US, this article argues that higher prices are not the inevitable result of concentration but are a function [...]

Big Business Is Overcharging You $5000 a Year2020-05-10T09:15:58-04:00

Next Capitalist Revolution

The pro-market, Economist Magazine is concerned about increasing concentration of production among a few businesses in many industries, reducing competition and incentives to innovate. The Economist argues for increased government regulation (!) in the form or relaxing intellectual property laws (patents) from providing too much protection to existing businesses [...]

Next Capitalist Revolution2020-05-09T16:32:48-04:00

Removing Rent Controls Won’t Ease Toronto’s Housing Crisis

The Ontario government changed rent controls with the aim of protecting existing tenants. But the policy change allows landlords to raise rents for new tenants. The unintended consequence provides landlords with incentives to try and get existing tenants to move. This may lead to reduced maintenance, ignoring tenant rights, [...]

Removing Rent Controls Won’t Ease Toronto’s Housing Crisis2020-05-10T09:42:05-04:00

Changes to Ontario Tuition Are Unfair

In 2020, Ontario announced a 10 per cent cut in tuition fees for domestic students, while eliminating many OSAP tuition grants. While most students favour tuition cuts, this article points out that the changed policies most benefit higher-income families who never qualified for grants, while low income families who [...]

Changes to Ontario Tuition Are Unfair2020-05-10T09:25:50-04:00

Benefits to Raising Ontario Minimum Wages

While simple demand-and-supply economic models predict that an increase in the minimum wage increases unemployment, this story looks at what happens to those predictions when you take into account how the increased incomes of minimum wage workers leads to increased demand for business products and services. [...]

Benefits to Raising Ontario Minimum Wages2020-05-10T09:04:50-04:00

Taxing Housing Negative Externalities?

Many cities, including Seattle, have rising housing and rental prices because of demand from hi-tech workers who earn good salaries and want to live in downtown neighbourhoods. This op-ed suggests that we look at the higher housing prices as a negative externality caused by the tech businesses. Accordingly, the [...]

Taxing Housing Negative Externalities?2020-05-10T08:50:34-04:00

Unintended Consequences in Mortgage Regulations

While the topic of the article is mortgage regulations, the main economic lesson is the importance of identifying unintended consequences of economic policies. Incentives are key to understanding unintended consequences. Examples of unintended consequences include how seat belt laws initially increased injuries, reasons for deductibles on insurance policies, and [...]

Unintended Consequences in Mortgage Regulations2020-05-10T08:31:09-04:00

Why Surge Pricing Makes Us So Mad

This article addresses tradeoffs between efficiency and equity by examining what gives when prices don't. There are examples of concert tickets, essential supply prices following natural disasters, Uber surge pricing,  and more. Richard Thaler, Nobel Prize Winner in Economics for work in behavioural economics, is quoted extensively. [...]

Why Surge Pricing Makes Us So Mad2020-05-10T08:18:58-04:00

Bank of Canada Models as Art and Science

The Bank of Canada is changing the sophisticated models it uses to forecast the economy because those models failed to predict "the deep and persistent aftershocks of the global financial crisis" of 2007-2009. This is a perfect example of the quote from Keynes that "Economics is a science of [...]

Bank of Canada Models as Art and Science2020-05-10T07:55:12-04:00

Planned Rentals Turned to Condos after New Rent Controls

In 2017, the Liberal Government in Ontario decided to expand rent controls beyond apartments built before 1993 to cover all apartment buildings. The housing industry objected, and argued that expanded rent controls would discourage new apartment construction by reducing profitability.  All other things equal, that is a [...]

Planned Rentals Turned to Condos after New Rent Controls2020-05-10T07:28:53-04:00

A Balance Sheet Recession

Richard Koo (Chief Economist, Nomura Research Institute) did a 10 minute video in 2010 for the Institute for New Economic Thinking (INET) that is the clearest and most succinct, yet comprehensive, explanation of balance sheet recession.  I have shown this video 10 times in different courses, and students are spellbound [...]

A Balance Sheet Recession2020-05-09T11:22:09-04:00

Robot Chefs Taking Over China’s Noodle Bars

There is an engaging video about the noodle-shaving robots described in the Economics Out There on p. 66 of Economics for Life: Smart Choices for You? Besides being fun, it has some interviews in Chinese (with English subtitles) which have been popular with my Chinese-speaking students. Play the video and [...]

Robot Chefs Taking Over China’s Noodle Bars2020-05-08T17:34:31-04:00

Game Theory

The best way to engage students with the abstract, mathematical techniques of game theory is to show the clip of the bar scene from A Beautiful Mind. This film about John Nash (based on the book by Sylvia Nasser) won the 2001 Oscar for Best Picture. Many students have [...]

Game Theory2020-05-07T16:21:21-04:00

The Five Minute University

As economists and teachers, what do we want our lasting “economic footprint” to be? There is a wonderful old Saturday Night Live skit by Father Guido Sarducci called “The Five Minute University.” His premise is to teach in five minutes what an average college or university graduate remembers five years after graduating. For economics, [...]

The Five Minute University2020-05-07T16:24:53-04:00