Fiscal and Tax Policy - Op Eds

The global economic lockdown implemented to contain the COVID-19 virus has caused the most severe economic downturn in Canada since the Great Depression of the 1930s. But while production plummeted, the overall income of Canadians hardly budged because of the federal government’s aggressive debt-financed policy response. Including both planned stimulus spending and the effects of the recession on revenues and expenditures, the lockdown-related increase in government debt amounts to about $550 billion.

As I point out in a recent C.D. Howe Institute paper, most of the current discussion around the additional debt focuses on its sustainability — whether it can be rolled over indefinitely without requiring tax…

Suddenly, inflation is in the news. In Canada and abroad, spending is surging and COVID-impaired production is struggling to keep up. Key commodities – oil, lumber and metals – are expensive.

It is front-of-mind in financial markets as well. The yield on the federal government’s 30-year bonds, which was below 0.9 per cent last August, topped 2.0 per cent last week – well above its pre-pandemic level.

Do these headlines and fears represent overreactions to rogue statistics and possible minor tactical shifts by central banks? Or is something more fundamental happening? Will politicians who won’t stop spending more than they tax end up forcing central banks to print money to cover the difference?

Current indicators and…

Vaccines are giving everyone hope that the COVID-19 global pandemic may soon allow us to return to our normal lives. That hope has been tempered by frustrations about vaccine rollout and fear of mutating variants and so almost all parts of the country remain in some kind of lockdown. But what strategy should we follow on lockdowns to get us through to what we hope is full inoculation? What we need is a tool that considers both health and the economy, not the false dichotomy that we must choose one over the other.

Research we have conducted for a C.D. Howe Institute paper using an epidemiological-economic model provides important insights to help guide us until a vaccine is widely available. The results we…

Ils ne vont pas jusqu’à contester la loi de l’offre et de la demande, mais aux États-Unis, plusieurs économistes de renom révisent certaines « vérités » sur l’endettement public et le rôle de la politique budgétaire.

Chercheurs émérites et même Nobel d’économie, ils ont été président de la Réserve fédérale, économistes en chef du Fonds monétaire international, conseillers des présidents des États-Unis, directeurs du budget et secrétaire au Trésor. Ils se nomment Joseph Stiglitz, Paul Krugman, Ben Bernanke, Olivier Blanchard, Kenneth Rogoff, Larry Summers, Jason Furman et Robert Rubin, pour ne citer que les plus connus.

Ils ne sont pas d’accord sur tout. Certains penchent à gauche, d’autres à droite, mais…

Canada’s weak economic growth prospects threaten the well-being of Canadians and preclude the introduction of the Liberal government’s spending initiatives without undue fiscal risk or much higher tax rates.

The fall fiscal statement estimated Canada’s potential growth rate to be just 1.4 per cent from 2020 to 2025, down from the still modest pace of 1.8 per cent calculated before the pandemic. Growth could be worse still as, in research done for the Council of the Federation in 2015, I estimated the growth potential to be just slightly more than 1½ per cent, without pandemic effects.

The main reasons for such low growth are the aging population, slowing labour force growth and a continuation of a long trend of…