Category Fiscal policy
Fiscal Equity, Taxes and GTHA Transit
Federal Finance Minister Jim Flaherty has shot down Ontario Premier Kathleen Wynne’s proposal that the 34 billion dollar Metrolinx Greater Toronto and Hamilton Area (GTHA) transit expansion plan could be funded by a special regional increase in the provincial portion of the HST. For this to happen, Ottawa would have to agree to Ontario’s request […]
The Challenges of Mark Carney’s European “Mission Civilisatrice”
In his farewell address to Canada before assuming the reins of the Bank of England, Mark Carney argues that Canada works because of the strength of the Canadian federation when it comes to its institutional framework and its four critical advantages of responsible fiscal policy, sound monetary policy, a single and resilient financial system and […]
The Interest Rate Time Bomb
The recent policy debate over whether its time for interest rates to start to rise after being at the lowest levels since the Great Depression for nearly five years shows just how much of a policy box governments are in when it comes to fiscal and monetary policy. Never mind the debate over whether there […]
Taxation and Economic Growth
I had a bit of an intellectual crisis this evening as I pondered the conventional wisdom in economics regarding the choice between reducing consumption taxes or income taxes. Briefly put, the simple conventional wisdom is that taxes on consumption are preferred to income taxes because they encourage saving and long-term capital formation and economic growth. […]
Minding the Gap
The Mowat Centre has issued a new report on Ontario’s fiscal balance within the Federation called "Filling the Gap: Measuring Ontario's Balance within the Federation." The report finds that: “based on the latest available figures, Ontarians transfer approximately $11B on net to the rest of Canada. This transfer is equivalent to 1.9% of the province’s […]
Good Luck Balancing the Federal Budget by 2015-16
Budgets are political and aspirational documents as they lay out a future course for the economy and government revenues and expenditures much as the government of the day would like them to be. Well, the 2013 federal budget is no exception as a bit of additional study of the budget numbers suggests that balancing the […]
Fiscal policy with Old and New Keynesian IS curves
With the Old Keyensian IS curve, the natural rate of interest is a positive function of the level of government expenditure. High G means high r*. With the New Keynesian IS curve, the natural rate of interest is a negative function of the rate of change of government expenditure over time. High Gdot means low […]
Federal Budget Forecasting
What a difference just a few months can make in the world of federal government finance. Apparently, weak commodity prices and a slowing economy are playing such havoc with government finances that Thursday’s federal budget will show a downward revision of economic growth forecasts as well as a shortfall in revenue that will be addressed […]
Two extreme fiscal/monetary worlds
I want to imagine two extreme worlds, at opposite ends of the spectrum of possibilities. In the first world (the "fiscal" world), all financial liabilities of the government are non-monetary liabilities, "bonds", that cannot be used as media of exchange. People use something else for money. Maybe gold, or maybe money issued by commercial banks. […]
Leviathan, Exit, Voice and Ontario Teachers
The last few weeks has seen the death of two economists – James Buchanan and Albert O. Hirschman – whose work has influenced my intellectual development and thinking over the years. Their thoughts combined with tomorrow’s “political action” by Ontario teachers against the soon to expire McGuinty government has caused me to think about what […]
Worthwhile Canadian Initiative 
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