Spiro Economic Consulting
Peter S. Spiro is an economic consultant and a Fellow of the Mowat Centre for Policy Innovation at the University of Toronto's School of Public Policy and Governance.
Economic Consulting Services Available
I am thoroughly familiar with government decision making processes. This would make me particularly helpful to clients who need a cogent presentation of their views for the purpose of influencing public policy decisions. I am available for projects both large and small, either to work as part of a team or on independent tasks. My hourly rates are moderate.
Please contact me at the e-mail address shown below.
My interests in economics are varied, and I have done research on many topics in both macroeconomics and microeconomics. My extensive background covering more than thirty years as an economist in the private and public sectors has provided me with experience in issues such as quantitative modeling of economic impacts, energy markets, factors driving capital investment, productivity growth, economic competitiveness, scenario analysis and cost of capital studies for benefit-cost analysis. I am one of Canada's leading experts on the social discount rate, and my analysis has been used for major infrastructure project evaluations, and in regulatory filings at the Ontario Energy Board.
I completed my BA and MA in economics at the University of Toronto. Subsequently, I enrolled in the doctoral program at the University of Chicago, where I studied under Nobel Laureates Robert Lucas, Gary Becker, Milton Friedman and Ronald Coase, and obtained the highest grade in macroeconomics in my year. While I disagree with some of the ideology of the Chicago School, I subscribe to its tradition of challenging conventional wisdom and testing theories against the data. I have also studied law at two different institutions.
I have research experience on a wide variety of issues related to tax policy, the underground economy, macroeconomic forecasting, and real interest rate analysis. A complete list of my professional publications can be found here.
The following are some examples of my writing that are freely available for download:
"Was your mortgage made in Bangladesh?" The linkages between Canada and developing Asia are far reaching. We depend on them not only for cheap goods, but ironically also to fund our borrowing. There is a serious global imbalance due to the rapid industrialization and unequal distribution of income in those countries. They are trying to sell more to the developed world than they are willing to buy. This global savings glut has been rightly identified by Ben Bernanke as the root cause of the developed countries' economic malaise.
"More Stability, Please." The central thesis of this paper is that a freely floating exchange rate is too much at the mercy of speculative fads. History has demonstrated over and over that unregulated financial markets do not produce optimal outcomes, and the events of the last several years are just a particularly unpleasant example. The exchange rate is the single most important price signal affecting the real economy. Its fluctuations have been particularly hard on Ontario, which is the part of Canada most dependent on non-commodity exports. The surge in the exchange rate to far above its fundamental value has undermined investment, productivity and employment in Ontario, and caused a severe setback in growth in the standard of living. A central bank can always keep a cap on the value of its own currency, as the Swiss National Bank has successfully shown in the last few years.
"The Mystery of Cash." This contribution to the Globe's Economy Lab looks at recent growth in cash in circulation in the Canadian economy. Based on increasing use of debit card and credit cards, one would expect the use of currency in Canada to be on a declining trend. In fact, it has remained quite robust, perhaps because of the popularity of cash transactions in the underground economy.
"Sectoral Analysis of Ontario's Weak Productivity Growth." Productivity is like the weather. It's bad, everybody talks about it, and usually nobody succeeds in doing anything about it. In this paper, prepared for presentation at the 2013 conference of the Canadian Economics Association, I examine productivity in a detailed way, looking at performance in more than 50 individual sectors. What emerges is that the average productivity figure for Ontario (zero for the past 6 years) is rather misleading. It's the random outcome of a great deal of underlying diversity. Some sectors had strong productivity growth, while others have had not low or zero growth, but actual declines in productivity. My key finding is that productivity is closely related to demand growth and economies of scale. The main reason for Ontario's dismal productivity performance over the past several years is falling exports. That is mainly due to the weak US economy and an overvalued Canadian dollar. These problems will not disappear overnight, but the prospect is brighter going forward.
"Petrodollar really a loonie bubble," Financial Post, 2012. In this article, I suggested that the Canadian dollar is overvalued, and the high correlation between the dollar and oil prices is not justified by fundamentals. (Original title: "The Canadian Dollar and Oil Prices: A Case of the Tail Wagging the Dog.")
"Evidence on inflation expectations from Canadian real return bonds," 2003. This article confronts the common view that the difference between the yields on nominal versus real return bonds precisely reflects the market's forecast of inflation. I find that this is not the case, and the two types of interest rate are influenced by different factors.
"The Differential between Canadian and U.S. Long-Term Bond Yields." Canadian Business Economics, 1994. In this article I confronted the view argued by the Bank of Canada, that their policy only affects short-term interest rates. The evidence shows that longer-term bond yields are in fact quite sensitive to expectations about short-term monetary policy.
"Taxes, Deficits and the Underground Economy," in O. Lippert and M. Walker, eds., The Underground Economy: Global Evidence of its Size and Impact (Fraser Institute, Vancouver, 1997.) This article looks at some of the global evidence of the size of the underground economy, and some of the sociological factors surrounding the public acceptance of taxation. It argues that the political handling of the introduction of the GST increased the public's antipathy towards the tax, and worsened the evasion problem. By contrast, the introduction of a similar tax in Switzerland was approved in a referendum.
"Estimating the Underground Economy: A Critical Evaluation of the Monetary Approach." Canadian Tax Journal, 1994. This econometric study found that tax rates were a significant factor determining the demand for currency in circulation (cash money). Cash is used by participants in the underground economy because it is anonymous and enables them to hide their activity from tax collectors. This linkage enables us to infer growth in the size of the underground economy from changes in the stock of currency.
Examples of Specific Project Experience
Econometric analysis of the determinants of productivity growth.
Econometric analysis of the factors affecting business capital investment decisions.
Evaluation of equity and economic efficiency impacts of altering the types of taxes used to collect government revenue.
Evaluating costs of factors of production for nuclear decommissioning in the distant future.
Developing long-term scenarios of economic growth and productivity.
Inflation adjustments in public utility regulation.
The relative cost of borrowing using real versus nominal return bonds.
Financial risk analysis with alternative scenarios and statistical probability ranges.
Discount rates for benefit/cost evaluations of major infrastructure projects.
of risk factors to be considered in benefit-cost evaluations of infrastructure
Assisted lawyers in preparing an appeal to the Supreme Court of Canada on a matter related to legal policy and taxation.