Using Financial Market Information to Enhance Canadian Fiscal Policy
AbstractIn this article we argue that the evaluation and implementation of Canadian fiscal policy could be significantly improved through the systematic use of information provided by global financial markets. In particular, we show how the information contained in internationally traded asset returns can be used to (1) provide a more meaningful cyclical-adjustment of the budget deficit, (2) assess the sustainability of the public debt, and (3) reduce the risk of the debt becoming unsustainable without having to run excessively large surpluses.
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Bibliographic InfoPaper provided by Queen's University, Department of Economics in its series Working Papers with number 1041.
Length: 28 pages
Date of creation: Aug 2004
Date of revision:
Publication status: Forthcoming in Public Finance Management
Public debt; cyclically-adjusted deficit; sustainability; hedging;
Find related papers by JEL classification:
- G1 - Financial Economics - - General Financial Markets
- H6 - Public Economics - - National Budget, Deficit, and Debt
This paper has been announced in the following NEP Reports:
- NEP-ALL-2006-03-12 (All new papers)
- NEP-FIN-2006-03-11 (Finance)
- NEP-FMK-2006-04-08 (Financial Markets)
- NEP-PBE-2006-03-14 (Public Economics)
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