Recent Posts

Sunday, May 21, 2017

Two Paper Trolling

I am tied up with Victoria Day Weekend gardening and outdoor maintenance activities, and was planning on skipping writing a blog article. (Happy Victoria Day to my readers who celebrate it.)  However, I saw an attempt at trolling MMT that was such an intellectual horror show that I decided to take the bait.

Wednesday, May 17, 2017

Advantages Of Discrete Time Models In Economics

One sometimes encounters continuous time economics, such as the Minsky package developed under the direction of the economist Steve Keen (link: In a continuous time model, the time axis is the real line, instead of being discrete steps (as in the Python sfc_models package). This article discusses some of the advantages of the discrete time formalism.

Saturday, May 13, 2017

Labour Market Tightness Confusion

Click to find retailer.
The latest set of data out of the United States increases the confusion factor associated with future monetary policy and inflation trends. Although I am a recovering secular bond bull, it seems that the bond market remains somewhat complacent about Federal Reserve policy (with my usual disclaimer about a near-term recession). Historically, central banks followed the economy with a lag, and I would not expect things to be radically different this time.

This article discusses a few topics that have struck my interest in recent days. Unfortunately, discussions of theory are back. I am starting to pursue a collaboration with Alexander Douglas (an academic philosopher), as we wish to write an article about Dynamic Stochastic General Equilibrium (DSGE) models from a philosophy of science perspective. As a result, I feel somewhat like I am trapped in a parody of The Godfather, Part III, being pulled back in to discuss DSGE macro. Although I want to otherwise avoid being bogged down in theory, the belief that we can discuss the empirical data without reference to theory in this case is just wishful thinking.

Wednesday, May 10, 2017

Book Review: Can We Avoid Another Financial Crisis?

Professor Steve Keen, the well-known critic of mainstream economics and professor at Kingston University, published Can We Avoid Another Financial Crisis? His argument that unsustainable private debt dynamics make a future crisis of some sort inevitable; and the biases of mainstream economics helps ensure that little useful will be done to prevent this outcome. The book offers an overview of his economic theories, which are somewhat distinct niche within the heterodox tradition. Although the book is interesting, I have some reservations about his strategy vis-à-vis mainstream economics within the book.

Sunday, May 7, 2017

Book Review: When The Bubble Bursts

Hilliard MacBeth published When the Bubble Bursts: Surviving the Canadian Real Estate Crash in 2015. It is mainly targeted at Canadians, but it would be of interest for foreigners who wish to understand what is happening in the Great White North. Although real estate bubbles are a familiar international phenomenon, there are some institutional differences that matter.

Wednesday, May 3, 2017

Canadian Housing Crash (Again)!

The news that some Canadian alternative mortgage lenders have had financing issues has brought around speculation about the Great Canadian Real Estate Crash. Certainly, the Canadian economy is extremely vulnerable to another global financial spasm like 2008. I am somewhat of a Negative Ned, and can think of many catalysts for such an event. However, barring such an event, the problems look like they can be contained managed.

Sunday, April 30, 2017

Interpreting DSGE Mathematics

To describe the mathematics of Dynamic Stochastic General Equilibrium (DSGE) as confusing is an understatement. Although trained in applied mathematics, I always had difficulties following the logic used. I now realise that the economists were not solving the global optimisation problem set out at the beginning of the paper. In fact, they are solving a different mathematical model. Importantly, this new formulation no longer solves the original optimisation problem. As a result, it is incorrect to assume that model behaviour reflects optimisation by households.