In that model, GDP is demand-determined, and a "rise in imports" is interpreted as a substitution of demand towards foreign-produced goods away from domestically-produced goods. There's no supply-side, no monetary offset, and no exchange rate. So of course you get that result.

In the Keynesian Cross model of GDP determination, imports DO subtract from GDP. They subtract double/treble/whatever from GDP (depending on the multiplier). Yes, that model is very misleading. BUT, dammit, it's been taught too often for too long in Macro 101.

The more powerful the Stock Market Vigilantes think they are, the less the stock market will fall. Because they will expect a higher probability of a bigger and quicker policy reversal.

My *hunch* is that AI will raise the returns to Land. If AI increases total output (= total income), that extra income has to go somewhere. If AI is a substitute for human capital, and makes non-human capital cheaper to produce, then increased returns to Land seem plausible.

Suppose the only economic model you could remember is the simple Keynesian Cross model you learned in undergrad in the late 1960's. Then if the US had a trade deficit with Canada, you really would believe that the US is subsidising Canada.

Normies: Tariffs may cause inflation, and inflation lowers our real incomes. Economists: Tariffs lower our real incomes. And tariffs may cause inflation (depending on monetary policy, and on nominal rigidities). (With an NGDP target, economists would talk more like normies.).

If a tax causes a bigger fall in congestion than drivers expected, there should be a (partial) "rebound effect" (lower congestion encourages more drivers). Converging to equilibrium takes time. Rational expectations =/= perfect foresight, with a new policy. Data says?.

RT @stephenfgordon: Krugman gave a huge boost to Worthwhile Canadian Initiative's visibility back in the day, linking often to @MacRoweNick….

"The costs of higher inflation".is reasoning from a price change. What causes that higher inflation?.What policies could have prevented it?. "The costs of a higher inflation *target*" answers those questions.

A Phillips Curve for unemployed apartments:.

You aren't supposed to treat an ordinal variable as cardinal. OK. But if you have no idea whether the relationship is linear (and we usually don't), does it matter?.Aren't these equivalent?.

OK, I'm off to Cape Cod. You young economists can take over again.

It's *theoretically* possible for house prices (as opposed to rents) to fall. But only if the flow supply effect is so massively big that the Expected Present Value of rents falls, even though current rents rise. But no, house prices will rise too, along with rents.

This stock-flow issue in housing demand-supply means that the immediate effect of immigration is to increase rents, even if they all work construction, and even if there are no restrictions on building land.

Immigrants add to the *stock* demand for housing. And (maybe, if some of them work construction) add to the *flow* supply of new housing. There's a stock-flow issue here.

So I'm getting the car evaluated Monday (which will take more time and money), then we will try again. Wish me luck!.Anyway, the moral of this story is that transactions costs can be really big, and much bigger for normal people who have 9-5 jobs.

So we both go to the SAAQ office. (Only open 9-5, so we could only do this because we're both retired). After lining up for an hour, we learn we can't do the title transfer, until we have a professional evaluation of the car's worth. (Maybe because tax is a % of market value?).

Now the fun begins. We each spend a couple of hours trying to do the title transfer online. It lets her transfer title to me, but *won't let me transfer title from her*!.Because the car is 25 years old.

I give her the bank's money order, she puts the car in my garage, and removes the plate. But (understandably) she won't transfer title until she knows the money order is good (they are easy to fake). She has to go to *her own branch* to get confirmation it's in her account?!.

Spend an hour inspecting the car, and taking it for short test drive. All looks good, agree to buy it, give seller $80 cash deposit (all I had in my wallet). Trivial amount, but works as a signal, so she knows I'm serious. Agree to meet next day, to do the transfer.