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Economy Lab

Delving into the forces that shape our living standards
Best Business Blog, EPPY awards, 2011 and 2012

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Poloz caught between debt and an oil price


Events in the world economy, combined with recent data released from the Bank of Canada, reveal why conducting monetary policy is so difficult. We may not need to feel sympathy for Bank of Canada Governor Stephen Poloz, but we should at least understand and appreciate how conflicting economic forces can complicate his policy decisions.

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Poor experience a wealth revival as innovation slashes prices


A dollar is only worth what it can buy. Because this is the case, when we get exercised over wide gaps in income between the better and the less well-off, we miss a whole dimension of inequality that actually matters much more. If those at the bottom of the income scale are actually getting more for their money, their standard of living is rising even though their cash income may not be.

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High household debt lurks as a major threat to Canadian economy


The Bank of Canada has once again warned that high levels of household debt “present a significant risk to financial stability.” But rising consumer and mortgage debt remain major drivers of the economy This is not as it should be.

In a textbook capitalist economy, growth should be led by investment. Credit financing of investment increases demand in the economy, while also raising productivity. This sets the stage for higher wages, higher levels of consumer spending, and further rounds of investment.

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Federal tax cuts: The timing couldn’t be better for Central Canada


The Canadian economy has been very resilient during the “Great Recession,” due to many factors. Demand for commodities has been sustained during the global recovery and demographic growth has been positive, helped in large part by Canada’s “glow” factor that helps it attract and retain qualified immigrants. Also, and quite importantly, our housing market was able to avoid falling into the subprime mortgages trap.

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Too many toys! And you can blame economics


It’s time again to break out the holly, eggnog and cheerful reindeer lawn ornaments. But another yuletide tradition is also upon us – one that doesn’t seem very jolly at all. Today’s children are being buried in a Christmas avalanche of toys, games and electronics.

I’m not a parent myself, but almost every parent of young children I know is trying to deal with this problem. Entire rooms in their homes – ones we used to call the “living room” or “family room”–have been turned into toy warehouses. The Lego and Transformers and Disney princess dolls that were once contained within the lowly rumpus room have now taken over entire wings on the main floor.

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An imbalanced global economy awaits more aggressive reforms


It is now six years after the 2008-09 global financial crisis and recession, and the global economy is still out of balance. Feeble growth and inadequate structural reform in key regions, such as the European Union and Japan, have combined with fading growth prospects in emerging markets, and there are plenty of geopolitical risks.

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Another (macro) defence of Economics 101


Six weeks ago, I wrote a column defending economists against the allegation that we fill our students’ minds with useless theories. I argued that the content of Economics 101 is invaluable to organizing their thinking and helping them sort through the many economic phenomena they encounter, either in their daily lives or in the news. But my arguments were all about “micro” economics; today I focus on “macro” economics.

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Energy East has benefits: Just not the ones many people think

Brian Lee Crowley

There is something about pipelines and oil that causes some switch to flip in people’s brains. Otherwise normal rational people somehow feel called upon to spout arrant nonsense as soon as the topic is raised.

Take the Energy East pipeline proposal to convert an underused natural gas pipeline to carry western Canadian oil instead and to extend the pipe to Montreal and Saint John. This is a fine idea and the proposal has many benefits for all parts of Canada. But those benefits are not the ones so often trotted out by its “friends.”

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Helping low-income families is key to ending child poverty in Canada


Twenty-five years ago, the House of Commons unanimously passed Ed Broadbent’s resolution to abolish child poverty by the year 2000. We are far from that goal.

Child poverty as measured by Statistics Canada’s low-income cut-offs has fallen since 1989, meaning that the proportion of families forced to spend a well-above-average share of their budgets on food, clothing and shelter has diminished somewhat.

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