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The Impact of Productivity Growth on Government Fiscal Balances

In: The Review of Economic Performance and Social Progress 2002: Towards a Social Understanding of Productivity

Author

Listed:
  • Peter Dungan

    (Adjunct Associate Professor, Department of Economics and Rotman School of Management at the University of Toronto)

Abstract

In this chapter, Peter Dungan investigates the sensitivity of Canadian government fiscal balances to alternative long-run productivity growth rates using elements of the FOCUS macroeconometric model to conduct simulations on a 'base-case' projection of the Canadian economy, and of its fiscal detail, through the year 2030. The simulation strategy employed here in part parallels the technique used by the Department of Finance in recent budgets and fiscal statements to estimate the implicit size of the 'fiscal dividend'. A total of five alternative growth paths and sensitivity tests are presented. As Dungan points out changes in productivity growth rates can occur for a variety of reasons and can have many different possible effects on the economy. Therefore, these types of simulation exercises inevitably require a number of simplifying assumptions which must be taken into account in interpreting the results.

Suggested Citation

  • Peter Dungan, 2002. "The Impact of Productivity Growth on Government Fiscal Balances," The Review of Economic Performance and Social Progress,in: Andrew Sharpe, Executive Director & France St-Hilaire, Vice-President , Research & Keith Banting, Di (ed.), The Review of Economic Performance and Social Progress 2002: Towards a Social Understanding of Productivity, volume 2 Centre for the Study of Living Standards;The Institutute for Research on Public Policy.
  • Handle: RePEc:sls:repsls:v:2:y:2002:pd
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    File URL: http://www.csls.ca/repsp/2/peterdungan.pdf
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    Cited by:

    1. Thomas A. Wilson, 2003. "A Perspective on Future Productivity Growth in Canada," International Productivity Monitor, Centre for the Study of Living Standards, vol. 7, pages 46-49, Fall.

    More about this item

    Keywords

    Productivity; Fiscal Balances; Fiscal Policy; Revenues; Government Revenues; Taxes; Tax; Taxation; Social Programs; Social Spending; Social Policy; Expenditures; Government Expenditures; Government; Econometric Forecasting; Forecasting; FOCUS; Macroeconometric; Macro-econometric; Econometric Modeling;

    JEL classification:

    • E66 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General Outlook and Conditions
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy

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