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Deficit Elimination, Economic Performance and Social Progress in Canada in the 1990s

In: The Review of Economic Performance and Social Progress 2001: The Longest Decade: Canada in the 1990s

  • Don Drummond

    (Chief Economist and Senior Vice-President at the TD Bank Financial Group)

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    In this chapter, Don Drummond makes the case that with large deficits there was little room for the Bank of Canada to reduce interest rates to stimulate the economy and generate revenues. It was imperative that the deficit be eliminated. Tax rates were already high so the government had no choice but to cut program spending. Drummond recognizes that the cuts caused hardship for some Canadians, but feels that the suffering was relatively limited and temporary in nature. Drummond argues that the elimination of the deficit has reduced risk premia and allowed the Bank of Canada to bring interest rates down.

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    This item is provided by Centre for the Study of Living Standards & The Institutute for Research on Public Policy in its series The Review of Economic Performance and Social Progress with number v:1:y:2001:dd.
    Handle: RePEc:sls:repsls:v:1:y:2001:dd
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