Sunday, July 27, 2008


And today, the head of the econ department, running in the 60-69 age category, beat me at the Tely 10 by five minutes.

Wednesday, July 23, 2008

Bank Failures

I just found out that the FDIC (federal deposit insurance corporation [of America]) maintains an official list of failed banks. Here it is.

By my count, the credit crunch - August 2007 to present, almost a full year - has caused one more bank failure (8) than the first quarter of 2002 (7), a period of only three months.

I have no idea what happened in the first quarter of 2002. Does anyone remember? I don't. My priors expected more failures; colour me underwhelmed. Guess I don't have to worry too much in choosing a financial institution two weeks from now.

Confessions, Redux

I am sufficiently emotionally involved in the continued practice of the Newfoundland seal hunt that I would be unable to condemn trade sanctions against the EU were they to ban the sale of seal products, despite such a trade skirmish being almost certainly welfare-reducing.

Now you know.

Also, I'm fairly sure I caught the EnvEcon people out on a mistake, claiming that the very inelastic nature of gasoline meant that dropping a gas tax would mean the price would rise by most of the amount of the tax. But the inelastic nature of gas means little additional consumption is spurred by the price drop, so most of the tax cut would actually be passed along to consumers, right?

Tuesday, July 22, 2008

5000 (almost!)

Well, close enough. Jumping the gun a little bit. Anyway, time to clearly elucidate what's going on with this space, given my newfound blogging territory over at Macleans.

What I plan to keep here is basically in three categories.
1. Really technical stuff, not that I do much of this anyway - but you'll likely see some as classes start on August 18.
2. 'Blogging the program' - textbooks, material covered in lectures, and anything that specifically deals with Rochester.
3. Newfoundland-centric material.

Anything else you'll probably find over at Macleans. Or just read both spaces for a bit until you figure out if you want to keep tabs on either of them. Of course, subject to change without notice, but I find it reassuring to have a plan. Either way, blogging will be light in the future as I keep packing up - leaving bring and early August 1. As always, thanks for reading.

Saturday, July 19, 2008

Many People Who Could Use Econ 101

This is admittedly picking the low-hanging fruit. Sue me.

Here is a facebook group that claims gas prices can be lowered substantially if everyone refuses to purchase gas from ExxonMobil. Not buy less overall, just buy it from different companies. 545,000+ people who need introductory economics.

Here is another group which supports a legislated price cap of 79.9 cents/litre. 131,000+ people, and the group is exclusively targeted at Canadians. These people really, really need introductory economics.

I could keep going like this for some time. Kinda depressing, really.

Friday, July 18, 2008


Sorry about the lack of blogging, but the weather here has been wonderful, the Tour de France is on most every day, and a friend of a friend (through several friends) won $1.67m at a poker tournament. Oh, and I'm still trying to do some math in preparation for August.

Tidbit: St. John's housing prices are up 23% in the last year, bucking the North American trend.

Tuesday, July 15, 2008

A Bit of Mathematics

Okay, this shouldn't be nearly as bad as my old post on Baire Category. The Globe is running a story about how Saskatchewan is "making hay" with a $1.6bn sale of a fertilizer plant.

Now, a fair bit of money in the bank, right? But the plant cost $453m in the late 1980's. Let's say 1988, since it's not specified. Now, adjusting for inflation, that's about $753m in today's dollars. That's still a substantial profit, right?

Now, 753(1.04)^20 =~ 1600. Or, in real terms, the rate of return on the investment was 4%. Which isn't great.

But, even worse! Over the 1981-2000 period, the average interest rate the Government of Saskatchewan paid on provincial debt was 9.12% (page 25).

And 9.12 > 4. Admittedly, 9.12% is an overestimate of the interest rate over the 1988-2008 period, but it's still a safe bet that the government could've saved a considerable amount of cash by not buying this fertilizer plant and issuing fewer bonds instead.

Provincial Entrepreneurship

Interesting statistics from the Telegram. I'm shocked moreso that they have an interesting story, as opposed to the nature of the statistics:
Newfoundland and Labrador also ranked last in patents granted, with 0.004 awarded per 1,000 people in 2005. By contrast, No. 1 ranking Idaho had 1,086 patents granted per 1,000 people.

Admittedly, there is some difference between the American and Canadian patent systems. Still. That's a truly massive differential. The ranking involves all Canadian provinces and American states - the rest of the world doesn't show up here. Further:
In the per-capita capital venture investment category, based on 2005 numbers, the province was listed close to the bottom of the pack, and lowest among the provinces, with an average investment of 39 cents per person. Meanwhile, the Massachusetts rate was $379.39 per person, while Quebec - the highest ranking province - has a per-capita investment of $93.43.

The study costs five bucks, if you're so inclined.

Monday, July 14, 2008


As some of you may be aware, a blog entitled Creative Capitalism started up recently, built upon Bill Gates' use of that phrase, featuring an all-star list of preeminent economists as contributors.

I haven't been able to read a single one of the posts. Every time I make an effort, my eyes just gloss over halfway down the page and I close the tab. I'm still waiting to find a post that's either interesting or worthwhile.

Friday, July 11, 2008

Statistics Canada Review

Okay, our favourite agency has dished up some tidbits today, so a quick gander at the data beyond what you'll get from the Globe headlines.

Canada's trade surplus rose to $5.5bn for the month of May, compared to $4.8bn in April, even as imports rose. Both imports and exports are up significantly for the year. However, had energy exports (coal and crude) been flat, the trade surplus would have shrunk to $4.6bn. Expect further increases in this statistic, as May recorded substantial one-time declines in automobile exports.

The labour force numbers weren't bad. Wages continue to increase at double the CPI. Unemployment was up marginally to 6.2%. Employment was steady as teenagers picked up part-time jobs and the government kicked out 5,300 members, but public hiring continues to outpace private by a substantial degree over the last year.

And the import and export price indices were also released, but not to the general public, and the pain of accessing them through CANSIM would be enough to totally ruin my day, so no idea what happened there.

Thursday, July 10, 2008

Rash of Gas Station Closings

I rarely watch the local news, but happened to catch a story about how the city (of St. John's) is "suffering" from numerous closures of gas stations. Is this a function of declining demand for gas? Decreased profit margins from the provincial regulation of gas prices? With the large increase in labour income here over the last couple of years, I'm hesitant to blame decreased demand for gas station products besides gas.

If we had data on gas station closings for say the top 30 metropolitan centres in Canada, this could be a paper.

Wednesday, July 9, 2008


So, I've accepted a gracious offer from Maclean's to use their website to ramble on. I can be found here.

No intention of shutting down this space - their oncampus section, where I am located, deals exclusively with educational issues, and until that changes, it doesn't seem proper to fill that space with discussions concerning monetary policy and inflation.

...because, you know, with grad school starting in six weeks, the first thing I should be thinking about is taking on more commitments.

Tuesday, July 8, 2008

ECON 4999

I'm really unsure why I didn't do this before, but I've uploaded my honours thesis for anyone who cares to laugh at me. Available here, unfortunately I don't have any space on the web where I can actually host it. Apologies.

It's at best an applied development exercise. And it was written entirely by me - I never actually met/conversed/exchanged emails with my putative advisor while it was being written. At worst, well, let's just say I beat myself up regularly for not taking the chance to write a rigourous piece.

EDIT: I forgot to mention one thing I did learn: how to use LaTeX. Here are the .tex files.

It's Over!

The Bank of Canada is terminating its special facility for providing liquidity to banks. I think this is some sort of official sign that we can start referring to the "credit crunch" as a historical event, as opposed to an ongoing one.

It seems only natural that this financial peace coincides with the wonderful weather here, which I'm enjoying much more than Sundaram.

Saturday, July 5, 2008


Today, Greg Mankiw takes heavy weaponry to my self-esteem by providing this link:

I would maim babies (well, not really, but insert a suitably extreme action) to attend his safety school.


From today's local paper:
"...the city's gross domestic product is expected to decline by 4.1% this year. Employment is forecast[sic] to increase by 2.5%, and personal income is expected to increase by 5.5%."

That's a pretty good illustration of how individual statistics can be misleading when the oil patch is involved - GDP is on the decrease because of falling oil production, but things are still doing pretty well.

Wednesday, July 2, 2008


Paul Krugman quotes the Dow close today. I'd like to take this opportunity to remind everyone that the Dow is an ancient index - 114 years old - and the methodology reflects this.

For example, if 3M increases by $1 and IBM decreases by $1, the index is flat - neglecting the fact that to 3M, $1 represents an increase of $704m in the paper worth of the company, but the same one dollar decline in IBM represents a paper loss of $1370m.

Those numbers are not the same, and that fact should be reflected in the index. Utilize more appropriate and modern measures.

Tuesday, July 1, 2008

Carbon Taxes For The Long Run

I don't want to be an environmental economist, I really don't, I swear. It's just that writing these sort of posts is about fifty million times easier than trying to be Econbrowser.

So, motivated by the fact that the Green Party's green plan is delusional (somehow, everyone has more money at the end of the day after the new tax and some government spending), I feel compelled to review the whole point of carbon taxes: burn less carbon.

So, we tax carbon. Check. Collect tax revenue. Check. Cut other taxes and increase social spending to achieve 'revenue neutrality'. Check. Watch people adopt more environmentally-friendly alternatives. Check. Uh...collect less tax revenue than before? Uh-oh.

If the carbon tax succeeds at cutting CO2 (and related) emissions 10%, then we collect 10% less carbon tax revenue. This is certainly one of the benefits of cap-and-trade: politicians don't have to return to voters in ten years and say "Remember how we taxed you back then? Well, it worked, so now we need to raise other taxes."

Either way, if as the Green Party suggests, everyone dodges the tax by switching to environmentally-friendly options, that leaves a big red mess on the balance sheet. The tax is probably welfare-improving, but you still can't tax the populace and have everyone end up with more money than we started with.

POSTSCRIPT: I often get very frustrated at how long it would take to construct graphs to illustrate these points in Paint/Illustrator/whatever. Pencil and chalk are still unparalleled instruments.