In February 2019, the US Federal Reserve stopped worrying about inflation that might come from economic growth (and reduced unemployment) and instead focused on the possibility of stagnant growth. That shift in focus led the Fed to stop talking about raising interest rates to reduce inflation, and instead talk [...]
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. [...]
This 2018 article includes most of what you have learned, or will learn, about monetary policy. See the tags for this post for a list.
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 [...]
Justin Trudeau and the Liberals were elected on an economic platform that included running deficits to finance infrastructure during a period of slow growth and low borrowing costs. In a Globe & Mail column, Jeffrey Simpson reviews the causes of slow growth, and recognizes the legitimate economic argument for federal [...]
The recent discussion by Stephen Poloz of charging negative interest rates to chartered banks on their deposits at the Bank of Canada was preceded earlier in the year by stories about negative interest rates on bonds in Europe. If February 2015, a Globe & Mail story reported on negative [...]
Paul Krugman's column on "Keynes Comes to Canada" is a treasure-chest of Canadian policy issues. His focus is on the Liberal Party's platform position to run budget deficits for a few years to finance infrastructure investment -- “Interest rates are at historic lows, our current infrastructure is aging rapidly, [...]
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 [...]