Today’s Statistics Canada release of January employment numbers reveals staggering job losses: Employment fell by 129,000 in January (-0.8%), almost all in full time, pushing the unemployment rate up 0.6 percentage points to 7.2%. This drop in employment exceeds any monthly decline during the previous economic downturns of the 1980s and 1990s. More jobs were lost in January than in […]
Read moreIn a column in The Tyee, former BC Socred cabinet minister Will McMartin reviews the ups and downs of BC’s three strikes at balanced budget legislation. Each time this legislation has been repealed, although when the latest BC legislation is “amended” next week it will mark the first time this has been done by the same government and premier that […]
Read moreHousing has been one of the major drivers of the BC economy in recent years. Low interest rates led to rising home prices and a psychology of “must get in before being locked out forever”; leading a housing bubble that had everyone in town swapping jaw dropping stories of bidding wars and outrageous prices paid. The economic driver was not […]
Read moreNow that the federal budget is over, I’ve been girding myself for the Feb 17 BC budget. My concern to date has been bold statements from both parties that they would never run a deficit, and that therefore we were in for a rerun of last Fall’s federal election where all parties kowtowed to the alter of fiscal conservatism. BC’s […]
Read moreWatching the news last night, there was a lot on the pros and cons of tax cuts versus public spending. As one who has been following the debate on both sides of the border, it is interesting to note the convergence. The Canadian debate, up to the near-fall of the Harper government, was about whether the Canadian economy is actually […]
Read moreWe are repeatedly told in the press that getting out of deficit was oh so difficult, and so we need to proceed cautiously down that road in the 2009 budget. In fact, Paul Martin’s landmark 1995 budget that took aggressive measures (1995/96 fiscal year) turned into a surplus of $3 billion in the 1997/98 fiscal year. So it took exactly […]
Read moreImpact on Jobs and the Economy Over 100,000 full-time jobs were lost in the last two months of 2008, confirming that Canada has followed the U.S. into a serious recession. Going into the Budget, the emerging consensus among economic forecasters (e.g., BMO and TD Bank) was that the Canadian economy would shrink by at least 1% in 2009, after almost […]
Read moreThe Maclean’s cavalry has ridden over the hill to help Bill Robson defend the conventional wisdom against Keynesian fiscal policy. Here are four problems with Andrew Coyne’s “Special Report” (which I am having trouble finding online) in the latest edition of Maclean’s magazine: 1. Coyne presents as evidence of failed deficit spending a 1991 paper by Christina Romer, who is now […]
Read moreThe Bank of Canada should announce a target interest rate of 0% on Tuesday. This move would match the action taken by the US Federal Reserve a month ago. Recent experience suggests that the chartered banks would not pass along the entire cut. But such a dramatic announcement by the Bank of Canada would place strong pressure on the chartered banks to noticeably […]
Read moreA well-timed release from StatsCan today that speaks for itself in terms of relevance to the current Budget debate: http://www.statcan.gc.ca/daily-quotidien/090114/dq090114a-eng.htm “Between 1962 and 2006, roughly one-half of the total growth in multifactor productivity in the private sector was the result of growth in public infrastructure. Public capital (the nation’s roads, bridges, sewer systems and water treatment systems) constitutes a vital input for […]
Read moreWe are now into full blown Budget consultation mode, with MPs of all parties going through a bit more than the usual pretence of listening before the actual Budget is finally put to bed by the government a few days hence. For once, even the Conservative inner circle seem a bit unsure of where to go. Below the closed (charmed) […]
Read moreWhy does the Globe oped page save all the good stuff for days when most people are not paying attention? In today’s edition, tax economist Jon Kesselman from SFU says reinforce the automatic stabilizers and focus on social needs: Getting more funds into the hands of individuals who most need support should take priority over cutting taxes. Much of traditional […]
Read moreThe best prof I ever had doing my undergrad at Western was David Laidler. I took a fourth year economic policy course with him, and learned a lot, especially a certain horror known as inflation (John Crow soon embarked on a disastrous war on inflation in the early 1990s that still sends shivers up many of our spines). Interestingly, Laidler […]
Read moreOn CBC news this weekend, they ran a string of stories about how families were cutting back this Christmas due to fears about the economy. There were no poor families interviewed; actually, they were all comfortably upper-middle class (the demographic stereotype of news and most television these days). One family spent $1,000 per kid (times four kids) last year. Perhaps […]
Read moreMy colleague Sylvain Schetagne prepared this Update on Economic Stimulus packages announced as of December 10. Quite a few governments do seem prepared to act on the IMF recommendation to provide significant stimulus, but there’s a wide range of approaches. Introduction Last November, leaders of the world’s 20th largest economies, know as the G20, met in Washington to discuss the […]
Read moreThe Bank of Canada got it right this morning in cutting the key interest rate by 0.75%. This bold action makes up for the timidity of cutting by only 0.25% last time. The central bank should be applauded for (finally) recognizing the severity of the economic crisis and going further than recommended by the C. D. Howe Institute’s conservative Monetary Policy […]
Read moreMuch of the debate about economic stimulus has been on infrastructure (picture the Hoover Dam, as Stephen Gordon comments). But there is more! One neglected area is around income support, including EI, the CCTB, GST credit and provincial social assistance programs. Below is the quick synopsis from the CCPA’s alternative economic and fiscal update, and thankfully, the Caledon Institute has […]
Read moreJames Galbraith kicks so much ass in this comment about a recent Paul Krugman column that I have to quote it for posterity’s sake (he basically agrees with PK). The question: Is the deficit a threat to future recovery. The answer: No. The question is grossly misconceived. Right now and for the immediate future, the budget deficit is the only […]
Read moreOver at Worthwhile Canadian Initiaitive, Stephen and Nick have been making the point that “Canada is not the United States, we are not in recession (although the odds that we will be soon are much better than even), and there’s no reason to rush into a program of public works”. To some extent, they are right, and that go-slow approach […]
Read moreThe ever deepening global and national economic crisis has produced highly divergent views among mainstream economists on how radical a change is needed to orthodox fiscal and monetary policies with their focus on balanced budgets and low inflation. At one extreme, the recent Economic and Fiscal Statement indicates that the prevailing Department of Finance view is still that only very […]
Read moreA useful piece from the Caledon Institute – making the case for economic stimulus via targetted increases in and reforms to federal income support programs. http://www.caledoninst.org/Publications/PDF/727ENG%2Epdf
Read moreA friend of mine did this up. Please share it.
Read moreI wasn’t originally planning to write a longer analysis and critique of Flaherty’s fiscal and economic statement beyond our immediate response because, like most people, I expected it would at least show some reasonable recognition of the problem and at least the framework for a stimulus program (besides, I had young children to pick up from school, feed and put […]
Read moreThe PEF got a plug in the Toronto Star today. This article by Linda Diebel noted our open letter on the economic crisis and interviewed a few of our signatories. Overall it is a good article and the comments of a few signatories are excellent. We really appreciate the plug, but I should note, as PEF Chair, that those interviewed […]
Read morehttp://news.guelphmercury.com/Opinions/article/409306 Today’s economic update by Jim Flaherty must provide investment in jobs the canadian press November 27, 2008 Ken Georgetti Federal Finance Minister Jim Flaherty must use today’s economic update to become part of the solution to our ever deepening economic crisis. Governments, leading economists and even the International Monetary Fund agree that cutting interest rates alone will not save […]
Read moreBy desperately clinging to the facade of a balanced budget, today’s Economic Statement rules out a meaningful stimulus package. The federal government optimistically assumes an economic slowdown rather than a sustained recession (it projects real GDP growth every year). To avoid the modest annual deficits that a slowdown would cause, the government proposes to reduce overall expenditures, sell public assets, […]
Read moreIt appears that, once again, “We are all Keynesians now.” Almost everyone agrees that the federal government needs to inject significant fiscal stimulus into the deteriorating Canadian economy. In particular, there now seems to be a consensus for more infrastructure investment. While accepting this prescription in theory, the federal Conservatives maintain that tomorrow will simply be a fiscal “update” and […]
Read moreThe following sign-on letter comes from PEF steering committee members Louis-Philippe Rochon and Mario Seccareccia, who challenge us to think differently about the role of deficits in fiscal policy. The Toronto Star’s Carol Goar recently published an article based on the letter. A NOTE ON DEFICITS AND FUNCTIONAL FINANCE EXPENDITURES Louis-Philippe Rochon, Associate Professor of economics, Laurentian University Mario Seccareccia, […]
Read moreThe CCPA released an Alternative EFU today by yours truly (with lots of helpful comments from other PEF bloggers!). It is available here. The EFU is a prelude to the feds’ own EFU to be released Thursday. I modeled four scenarios of economic downturn to see what the status quo deficits look like, as other analyses to date have not […]
Read moreThe financial crisis and economic downturn have led to some silly ideas, namely, completing the Doha Round of trade talks at the WTO, and in Canada, a variant around eliminating inter-provincial trade barriers. BC Premier Gordon Campbell has pressed for the latter, in spite of scant evidence that any meaningful barriers actually exist (the perception, however, runs deep with the […]
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