There seems to be some confusion these days about how to think of the macroeconomic effects of the pandemic. This might be a good time to review some Econ 101 material that should help our thinking. 1/n It's worth remembering that aggregate demand and supply curves don’t actually exist. They are theoretical constructs that we use to think about macroeconomic problems. 2/n

There is a big pothole in the road up ahead and we need to stop looking in the rearview mirror if we want to avoid it. I’m talking about assuming that traditional anti-recession policies will work in the current downturn. 1/n Our usual recession is caused by a demand shock. In 2008, bad financial market regulation froze markets and caused a US housing price crash. 2/n

People sometimes send me questions about gov’t debt - do we need to worry about it if we “never pay it back” and “interest rates are really low”. This is something we used to discuss every year in my undergrad public finance course, so perhaps a refresher would be helpful. 1/n First, all government debt does get ‘paid back’ when it matures (unless it is a ‘perpetual bond’). When bonds mature, the gov’t typically sells new bonds to generate funds to repay the principal of the maturing bond. Interest on the new bond my be higher or lower. 2/n

Here are a few thoughts and questions about yesterday’s announcement of taxpayer loans (let’s call them what they really are) for large companies. I hope parliamentarians and intrepid journalists will track down the answers! 1/n This is NOT a bailout like GM & Chrysler - these are taxpayer loans for a limited period to large companies who were NOT troubled pre-pandemic (although oil & gas firms have a separate set of price issues to deal with). To protect taxpayers, we need to drive a hard bargain. 2/n

Increasingly, I am hearing industry groups and provincial politicians call for additional federal assistance for firms to get through the pandemic + oil price war. They often cite the precedent of the bailouts of GM & Chrysler in 2008/09. 1/n Listening to them makes me think that they don’t remember what we actually did back then. Here is a quick reminder: 2/n

“Shovel-ready” infrastructure is back in the news as a way to stimulate the economy post pandemic. We learned a lot about that post-financial crisis. We even wrote an @iveybusiness teaching case about it (Industry Canada: The Knowledge Infrastructure Program #9B14M163). 1/n The work was led by @ISED_CA Iain Stewart (now @NRC_CNRC President) who headed the design and implementation team and Simon Kennedy (now DM @ISED_CA) who managed the central agency/reporting team at @PrivyCouncilCA. The program was aimed at PSE infrastructure projects. 2/n

My neighbours are reading about carbon taxes in the news and are wondering what its all about. Here is my handy Q+A to help them. Feel free to use it too. @EcofiscalCanada Q1. Is climate change a real thing?
Yup - Carbon dioxide (CO2) in the atmosphere is increasing because the global population is growing and, on average, we are all doing more things that emit CO2... /2