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Slightly OT but any thoughts on the fact that Harper's economic advisory council appears to have only one economist (Jack Mintz)? Also, I propose that from now on, anyone uttering the assinine phrase "technical recession" be simultaneously subjected to a wet willy, indian sunburn, purple nurple and a wedgie.

I would say the set of 'technical recessions' is probably a subset of 'true' recessions, rather than the superset people seem to be suggesting when they use the term.

You owe me one keyboard cleaning, ramster!

I never understood what a "technical" recession was until I was long past my PhD. And then I only learned it from a newspaper. It's defined IIRC (and it is just so unimportant for me to remember it correctly) as "2 successive quarters of negative GDP growth".

I dislike (hate?) the concept. It is so non-useful. It is so arbitrary. It gives a totally misleading sense of precision. It would be like trying to define "bald" as "having fewer than 42 hairs on one's head" (Wittgenstein's example, I think, except for the "42"). Some useful concepts/distinctions are nevertheless imprecise, and should stay that way. It suggests that there is some important distinction between +0.001% and -0.001% GDP growth, that's not there between +0.002% and +0.001%.

In the US, again IIRC, the NBER has set itself up as the "official" arbiter (who says?) of what is and is not a recession. OK, they look at more stuff than just GDP, but even so, the exercise is pointless. Can you imagine some official body of barbers arguing over the precise dividing line between bald and hirsute? It's pointless. "Recession" is a useful and meaningful but fuzzy concept, just like "bald".

Jack Mintz is a very good public finance economist, and I'm glad he's on the team. But he is a micreconomist, not a macroeconomist. I'm a bit surprised there's not a macroeconomist there as well. On the other hand, maybe Finance has plenty of good macroeconomists already (I can think of at least one who is excellent), so was going outside to gather the expertise it doesn't have internally.

The composition of the council is probably meaningless. Practically every economist in Canada argued that consumption taxes were preferable to income taxes yet that didn't stop them from cutting the GST. I expect that any economic stimulus policy will largely be directed by political calculations. Though misguided, I suspect that the GST cut was popular. I also doubt that the big-brains in finance have much of an impact on any real decisions.

I'm amazed that more people aren't getting an extreme case of whiplash from the PM's statements over the last few months. Here's a chronology:

October: “probably some great buying opportunities out there.”

November: "the most recent private sector forecasts suggest the strong possibility of a technical recession of the end of this year"

November: 800 million dollar surplus in 2008/2009 (Economic and Fiscal Statement)

December: "The truth is, I've never seen such uncertainty in terms of looking forward to the future,"...on the possibility of a depression, "it could be"

December: “Some people are talking in the neighbourhood of a $5- to $10-billion deficit. Our own assessment is frankly that will not be sufficient given the challenges we're facing...I think what will be more realistic in terms of the kind of stimulus our economy is going to need is going to be in the $20-billion to $30-billion range."

And that's from about 10 minutes of google-mining. Well I guess we can at least be consoled by the fact that the PM isn't ideologically hidebound and is willing to dump the Hoover-ism when necessary. It's a good thing we don't have a PM who panics!

I also enjoy how this panel fulfills yet another item on Dion's '30 day plan', except it took Harper over 60 days to implement. But remember, that plan was panicking.

Considering the threat of deflation, is a money financed deficit the first option right now or is the low-borrowing cost on government debt more attractive?

Wow - now my post looks off topic.

Who needs macroeconomists on an advisory panel when you can have rich white guys and Canada's own Sarah Palin (Carole Taylor).

The IMF and OECD both peg Canada's debt to GDP ratio at approx. 60%. This is a long way from the 30% you quote. Why the discrepancy?

Sargasso: I think that must be for the combined federal plus provincial debt/GDP. I did a quick Google search and found 2005-6 total provincial debt/GDP ratio of 35%. http://blog.scott.tylers.info/index.php?/archives/49-Provincial-Debt-Table.html . Assuming it's dropped 5% since then, we get the same numbers: 30% federal +30% provincial = 60% combined debt/GDP. It does make sense to look at combined federal + provincial debt for a solvency perspective (though why not add municipal as well?), but for my purposes, trying to get a feel for the federal deficit, it made more sense just to look at the federal debt.

brendon: from a "cost of borrowing" perspective, it makes little difference if deficits are bond or money financed in the short-term, since interest rates are so low. From the perspective of escaping a liquidity trap, money finance is better, since if the increase in the money supply is assumed permanent, money finance increases expected future inflation (and increases net wealth) by more, so has a bigger and more certian stimulus to aggregate demand.

Sargasso: I think that must be for the combined federal plus provincial debt/GDP. I did a quick Google search and found 2005-6 total provincial debt/GDP ratio of 35%. http://blog.scott.tylers.info/index.php?/archives/49-Provincial-Debt-Table.html . Assuming it's dropped 5% since then, we get the same numbers: 30% federal +30% provincial = 60% combined debt/GDP. It does make sense to look at combined federal + provincial debt for a solvency perspective (though why not add municipal as well?), but for my purposes, trying to get a feel for the federal deficit, it made more sense just to look at the federal debt.

brendon: from a "cost of borrowing" perspective, it makes little difference if deficits are bond or money financed in the short-term, since interest rates are so low. From the perspective of escaping a liquidity trap, money finance is better, since if the increase in the money supply is assumed permanent, money finance increases expected future inflation (and increases net wealth) by more, so has a bigger and more certian stimulus to aggregate demand.

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