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Monday, July 28, 2014

Killing the recovery

Oliver rejects economic stimulus advice

In yet another example of the Harper government’s unsettling tendency to make snap decisions based on dogma rather than consultation and calm deliberation, Finance Minister Joe Oliver has quickly dispensed with advice to put job creation ahead of eliminating the deficit.

The recommendation to grow jobs is in a C.D. Howe Institute report, released Wednesday, by William Scarth, an economics professor at Hamilton’s McMaster University, a consultant to Finance Canada, the Economic Council of Canada and Statistics Canada and a senior economics policy fellow with the Reserve Bank of Australia.

In his report, Mr. Scarth argues that given Canada’s, and indeed the world’s, low interest rates and weak economic performances, more government spending is an effective way to stimulate the economy.

Pointing out that monetary policy in Canada and the U.S. cannot reasonably lower interest rates much more, Mr. Scarth advises the Harper government to wait another three years to eliminate the deficit.

Keeping the deficit at 0.5 per cent of GDP, instead of eliminating it, would create some 75,000 new jobs.

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