Coalitions and the Economy

(I have also posted this to the new CCPA election blog which plans to run fairly short non technical pieces over the next month.)

 

Harper’s key framing argument is that a stable majority is needed to maintain an economic recovery which would be derailed by a coalition.

I find this more than a little ironic.

Canada has indeed had a milder recession and stronger (though increasingly tepid) recovery than other advanced industrial countries. Real GDP growth (OECD average in brackets) was -2.5% (-3.4%) in 2009; 3.0% (2.8%) in 2010 and is projected by the OECD to be 2.3% in 2011, the same as the OECD average.

While this performance is partly explained by strong global demand for resources, it is also the case that Canada had one of the largest fiscal stimulus packages of any advanced industrial  country. (See the recently released National Bureua of Economic Research working paper 16779.)

Why did we get such a relatively big package?

Because the threat of an opposition coalition in reponse to the Harper government’s economic statement of Fall, 2008 prompted the prorogation of Parliament followed in fairly short order by a totally revamped recession-fighting strategy featuring many of the key demands of the coalition – extended EI benefits, infrastructure investment etc.

So is the Harper government responsible for recovery, or the dreaded coalition?

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