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Deficits and Debt in Canada: Some Lessons from Recent History

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  • Ronald D. Kneebone

Abstract

This paper reviews the recent history of federal and provincial deficits and debt in Canada with the purpose of investigating whether rules of behaviour need to be imposed on fiscal authorities as a way of controlling the growth of these deficits and debt. The evidence suggests that the need for rules governing provincial fiscal behaviour is weak because financial markets already impose such rules and that they have been effective at controlling provincial budgetary choices. Financial markets fail to impose similar rules at the federal level due to a lack of credibility regarding the Bank of Canada's policy of not monetizing federal debt.

Suggested Citation

  • Ronald D. Kneebone, 1994. "Deficits and Debt in Canada: Some Lessons from Recent History," Canadian Public Policy, University of Toronto Press, vol. 20(2), pages 152-164, June.
    • Handle: RePEc:cpp:issued:v:20:y:1994:i:2:p:152-164
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    References listed on IDEAS

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    1. Caporale, Guglielmo Maria, 1992. "Fiscal Solvency in Europe: Budget Deficits and Government Debt under European Monetary Union," National Institute Economic Review, National Institute of Economic and Social Research, vol. 140, pages 69-77, May.
    2. Casella, Alessandra & Frey, Bruno, 1992. "Federalism and clubs : Towards an economic theory of overlapping political jurisdictions," European Economic Review, Elsevier, vol. 36(2-3), pages 639-646, April.
    3. Canzoneri,Matthew B. & Grilli,Vittorio & Masson,Paul R. (ed.), 1992. "Establishing a Central Bank," Cambridge Books, Cambridge University Press, number 9780521420983, November.
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    Cited by:

    1. Herman M. Schwartz, 1997. "Reinvention and retrenchment: Lessons from the application of the New Zealand model to Alberta, Canada," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 16(3), pages 405-422.
    2. Thomas Courchene, 1999. "Subnational Budgetary and Stabilization Policies in Canada and Australia," NBER Chapters, in: Fiscal Institutions and Fiscal Performance, pages 301-348, National Bureau of Economic Research, Inc.
    3. Jean-Francois Wen, "undated". "Capital Budgeting and Fiscal Sustainability in British Columbia," Working Papers 2014-41, Department of Economics, University of Calgary, revised 29 Sep 2014.

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