The art of calling the start and finish of economic recessions might seem a minor one but it is critical to understanding how policy decisions can affect the economy.
Making such calls is normally a backwards-looking exercise, with business cycle analysts waiting for the accumulation of enough data before they feel comfortable issuing even a nuanced interpretation of whether the economy has reached key points in a cycle. This spring, however, the sheer depth and size of the economic losses stemming from the COVID-19 lockdowns left no room for doubt. The C.D. Howe Institute’s Business Cycle Council was able to declare by May 1 that Canada had entered a recession in the first quarter of 2020 and that the peak of the…
The federal fiscal snapshot in July projects a pandemic-induced deficit of $343-billion in 2020-21 and a debt-to-GDP ratio jumping to 49 per cent from 30 per cent. Don’t forget provincial debt, too. An Ontarian’s combined government debt-to-GDP ratio will push toward 100 per cent of GDP and beyond.
Such a high debt burden is an ailment that will become threatening when the economy returns to normal operations and interest rates rise. Just as we have done with the COVID-19 pandemic, we should address this ailment head-on. Fortunately, there is an evidence-based treatment plan.
The least painful treatment is to rely on economic growth to reduce our debt burden. However, it is risky to rely on growth alone when interest rates…
The House of Commons’ Industry, Science and Technology committee has been examining recent changes to the administration of the Investment Canada Act, the federal regime for reviewing foreign acquisitions of Canadian businesses. The changes are intended to respond to likely merger and acquisition activity as the economy recovers from the pandemic. We believe that although the changes are well intended, some elements need further consideration. Our main concern is that economic factors will be given short shrift in the more opaque national security review process — this at a time when efficiency and timeliness will be crucially important.
Under the act, the federal government can conduct a “net benefit” review when foreign…
