What I've said all along.
There really is no need to be concerned about the economy.
The top issues are still xenophobia and climate change.
Canadians must lose irrational fear of increased deficits, economist says
As Canada's finance minister consults widely in preparation for the next federal budget, an urgent question on every economist's mind is: Should the federal government increase its spending to help the Canadian economy?
Such a question undoubtedly sends chills down the spines of many Canadians, who have an almost irrational fear of increased deficits. Many labour under the illusion that spending will somehow lead to higher inflation and higher interest rates. Yet there is no empirical support for such fears.
These concerns lead many to argue that fiscal policy is inefficient and the government should reduce spending or risk jeopardizing the recovery. Proponents of reduced spending argue there are good economic reasons to pursue more austerity in the name of sound finance.
But there is no valid economic rationale for austerity. In fact, the growing consensus today is that austerity is wrong and does harm. The IMF now supports this claim, having argued recently that the idea of austerity has been largely "oversold." This suggests that the only possible reason for promoting austerity is political, not economic.
The truth is that the last decade has not been kind to the Canadian economy. We have had, on average, mild growth, and prospects for the next few years are not encouraging. The IMF has recently downgraded growth prospects for Canada for the next two years, and the more we remain in dismal growth territory, the more it costs the Canadian economy in the long run.
Chances of economic revival stand and fall with the Trudeau government injecting massive spending into the economy.
And by massive, I mean massive.
Our current deficit is projected to be between one and 1.5 per cent of GDP. By historical standards, that is quite low. For instance, at the heart of the crisis, Canada's deficit-to-GDP ratio was "only" 3.5 per cent. Yet it had an immediate and positive effect: it stopped our downward spiral, and for a moment, the Canadian economy stabilized. By 2010, however, the federal government reverted back to austerity, and this is when the Canadian economy began to stall.
In the U.S., the deficit-to-GDP ratio was 9.89 per cent in 2009 and 8.65 per cent in 2010. It is little wonder why the U.S. outperformed the Canadian economy in terms of recovery. This suggests that governments can always spend more, and nobody can say that these deficits contributed to inflation or to high interest rates.
Canadians must lose irrational fear of increased deficits, economist says - Manitoba - CBC News
There really is no need to be concerned about the economy.
The top issues are still xenophobia and climate change.
Canadians must lose irrational fear of increased deficits, economist says
As Canada's finance minister consults widely in preparation for the next federal budget, an urgent question on every economist's mind is: Should the federal government increase its spending to help the Canadian economy?
Such a question undoubtedly sends chills down the spines of many Canadians, who have an almost irrational fear of increased deficits. Many labour under the illusion that spending will somehow lead to higher inflation and higher interest rates. Yet there is no empirical support for such fears.
These concerns lead many to argue that fiscal policy is inefficient and the government should reduce spending or risk jeopardizing the recovery. Proponents of reduced spending argue there are good economic reasons to pursue more austerity in the name of sound finance.
But there is no valid economic rationale for austerity. In fact, the growing consensus today is that austerity is wrong and does harm. The IMF now supports this claim, having argued recently that the idea of austerity has been largely "oversold." This suggests that the only possible reason for promoting austerity is political, not economic.
The truth is that the last decade has not been kind to the Canadian economy. We have had, on average, mild growth, and prospects for the next few years are not encouraging. The IMF has recently downgraded growth prospects for Canada for the next two years, and the more we remain in dismal growth territory, the more it costs the Canadian economy in the long run.
Chances of economic revival stand and fall with the Trudeau government injecting massive spending into the economy.
And by massive, I mean massive.
Our current deficit is projected to be between one and 1.5 per cent of GDP. By historical standards, that is quite low. For instance, at the heart of the crisis, Canada's deficit-to-GDP ratio was "only" 3.5 per cent. Yet it had an immediate and positive effect: it stopped our downward spiral, and for a moment, the Canadian economy stabilized. By 2010, however, the federal government reverted back to austerity, and this is when the Canadian economy began to stall.
In the U.S., the deficit-to-GDP ratio was 9.89 per cent in 2009 and 8.65 per cent in 2010. It is little wonder why the U.S. outperformed the Canadian economy in terms of recovery. This suggests that governments can always spend more, and nobody can say that these deficits contributed to inflation or to high interest rates.
Canadians must lose irrational fear of increased deficits, economist says - Manitoba - CBC News
