Tuesday, March 21, 2023
No Result
View All Result
  • Media
Support Us
Macdonald-Laurier Institute
  • Home
  • About
    • Who We Are
    • Who Makes MLI Work
    • Tenth Anniversary
    • Jobs
    • Women’s History Month Fundraiser
  • Experts
    • Experts Directory
    • In Memoriam
  • Issues
    • Domestic Policy Program
      • Agriculture and Agri-Food
      • Canada’s Political Tradition
      • Economic policy
      • Health Care
      • Innovation
      • Justice
      • Social issues
      • Telecoms
    • Energy Policy Program
      • Energy
      • Environment
    • Foreign Policy Program
      • Foreign Affairs
      • National Defence
      • National Security
    • Indigenous Affairs Program
  • Projects
    • COVID and after: A mandate for recovery
    • COVID Misery Index
      • Beyond Lockdown
    • Provincial COVID Misery Index
    • Centre for Advancing Canada’s Interests Abroad
      • Dragon at the Door
      • The Eavesdropping Dragon: Huawei
    • An Intellectual Property Strategy for Canada
    • Competition Policy in Canada
    • Speak for Ourselves
    • Canada and the Indo-Pacific Initiative
    • DisInfoWatch.org
    • The Transatlantic Program
    • Indigenous Prosperity at a Crossroads
      • Aboriginal Canada and Natural Resources
    • Talkin’ in the Free World with Mariam Memarsadeghi
    • Past Projects
      • Justice Report Card
      • Munk Senior Fellows
      • A Mandate for Canada
      • Confederation Series
      • Fiscal Reform
      • The Canadian Century project
      • Fixing Canadian health care
      • Internal trade
      • From a mandate for change
      • Size of government in Canada
  • Events
    • Upcoming Events
    • Past Events
      • MLI Dinners
      • Great Canadian Debates
  • Latest News
  • Libraries
    • Annual Reports
    • Inside Policy Magazine
      • Inside Policy Back Issues
      • Inside Policy Blog
    • Papers
    • Columns
    • Books
    • Commentary
    • Straight Talk
    • Video
    • Multimedia
    • Podcasts
    • Leading Economic Indicator
    • Labour Market Report
    • MLI in the Media
  • Home
  • About
    • Who We Are
    • Who Makes MLI Work
    • Tenth Anniversary
    • Jobs
    • Women’s History Month Fundraiser
  • Experts
    • Experts Directory
    • In Memoriam
  • Issues
    • Domestic Policy Program
      • Agriculture and Agri-Food
      • Canada’s Political Tradition
      • Economic policy
      • Health Care
      • Innovation
      • Justice
      • Social issues
      • Telecoms
    • Energy Policy Program
      • Energy
      • Environment
    • Foreign Policy Program
      • Foreign Affairs
      • National Defence
      • National Security
    • Indigenous Affairs Program
  • Projects
    • COVID and after: A mandate for recovery
    • COVID Misery Index
      • Beyond Lockdown
    • Provincial COVID Misery Index
    • Centre for Advancing Canada’s Interests Abroad
      • Dragon at the Door
      • The Eavesdropping Dragon: Huawei
    • An Intellectual Property Strategy for Canada
    • Competition Policy in Canada
    • Speak for Ourselves
    • Canada and the Indo-Pacific Initiative
    • DisInfoWatch.org
    • The Transatlantic Program
    • Indigenous Prosperity at a Crossroads
      • Aboriginal Canada and Natural Resources
    • Talkin’ in the Free World with Mariam Memarsadeghi
    • Past Projects
      • Justice Report Card
      • Munk Senior Fellows
      • A Mandate for Canada
      • Confederation Series
      • Fiscal Reform
      • The Canadian Century project
      • Fixing Canadian health care
      • Internal trade
      • From a mandate for change
      • Size of government in Canada
  • Events
    • Upcoming Events
    • Past Events
      • MLI Dinners
      • Great Canadian Debates
  • Latest News
  • Libraries
    • Annual Reports
    • Inside Policy Magazine
      • Inside Policy Back Issues
      • Inside Policy Blog
    • Papers
    • Columns
    • Books
    • Commentary
    • Straight Talk
    • Video
    • Multimedia
    • Podcasts
    • Leading Economic Indicator
    • Labour Market Report
    • MLI in the Media
No Result
View All Result
Macdonald-Laurier Institute

Now more than ever, Canada needs a statutory fiscal rule: Jack Mintz in the Financial Post

June 16, 2020
in Columns, Domestic Policy Program, Economic policy, In the Media, Jack Mintz, Latest News
Reading Time: 2 mins read
A A

Instead of having a fiscal rule that only depends on political commitment, we should make it statutory, as many countries have done. If the German economists are right, that will make Canada grow faster, writes Jack Mintz in the Financial Post. Below is an excerpt of the article, which can be read in full here. 

By Jack Mintz, June 16, 2020 

Last week, Harvard economist Alberto Alesina passed away at the age of 63 from cardiac arrest while hiking. He had recently visited Canada, speaking in February at a C.D. Howe Institute event to discuss his new co-authored book, Austerity, which won the Hayek book prize. Although the word “austerity” is often chided by those on the left, governments of whatever stripe eventually engage in austerity to establish fiscal creditability after debt gets out of hand.

Alesina, who was best known for his work on fiscal policy, argued that to reduce deficits it is better to control spending rather than raise taxes. His extensive empirical work, looking at 200 multi-year austerity programs among 16 OECD countries, showed that tax-hike-based plans lead to deeper and longer recessions compared with spending-cut plans. The key point is that higher taxes undermine private sector confidence: contrary to Keynesian multiplier theory, taxes contract the economy more than spending expands it.

A less known but equally important contribution was Alesina’s take on U.S. fiscal rules. In a 1998 paper, he showed that governments adopting a balanced budget rule had less debt over time but did not suffer worse economic cycles. Some budget flexibility was lost (depending on how the rule was applied) but such flexibility provided little benefit anyway in controlling the economic cycle. The expansionary effects of deficit spending were typically offset by households and businesses consuming less and saving more to pay for future taxes.

Governments around the world now frequently use fiscal rules, including balanced budgets, limits on expenditure growth, tax ceilings and debt rules. The IMF found that almost half of all national governments imposed fiscal rules of various types between 1985 and 2015. Studies have shown that rules discourage debt accumulation, limit the size of government and improve government credit quality. The main concern about them is that they could crowd public infrastructure spending if government becomes reluctant to spend money on social programs of immediate benefit to voters.

Generally, fiscal rules are applied over three years or more without being revised by annual budgets. They are not as strict as one might think, however. They usually allow some latitude for cyclical adjustments or escape clauses. They may also exempt public infrastructure.

***TO READ THE FULL ARTICLE, VISIT THE FINANCIAL POST HERE***

Tags: economic policyeconomyJack Mintztaxtax policy
Previous Post

MLI Experts Available to Comment on UN Security Council Seat Vote

Next Post

Was the government right to suspend regular sittings of Parliament? No: Christian Leuprecht in the Star

Related Posts

Oaths, trust and Canadian democracy: Stephen Van Dine and Karl Salgo for Inside Policy
Inside Policy

Oaths, trust and Canadian democracy: Stephen Van Dine and Karl Salgo for Inside Policy

March 17, 2023
Preparing for the Foreign Threats to Canadian Democracy: Straight Talk with Richard Fadden
Inside Policy

Canada and Japan’s common miscalculation in cyberspace: Koichiro Komiyama for Inside Policy

March 15, 2023
Defending against foreign interference in our elections: Marcus Kolga for Inside Policy
Columns

As Ottawa balks at an election interference inquiry, public trust in our democracy is draining away: Marcus Kolga in the Globe and Mail

March 15, 2023
Next Post
State intrusion into our lives is stifling vitality: Philip Cross in the Financial Post

Was the government right to suspend regular sittings of Parliament? No: Christian Leuprecht in the Star

Macdonald-Laurier Institute

323 Chapel Street, Suite #300
Ottawa, Ontario
K1N 7Z2 Canada

613.482.8327

info@macdonaldlaurier.ca
MLI directory

Follow us on

Newsletter Signup

Support Us

Support the Macdonald-Laurier Institute to help ensure that Canada is one of the best governed countries in the world. Click below to learn more or become a sponsor.

Support Us

Inside Policy Magazine

  • Current Issue
  • Back Issues
  • Advertising
  • Inside Policy Blog
  • Privacy Policy

© 2021 Macdonald-Laurier Institute. All Rights reserved.

No Result
View All Result
  • Home
  • About
    • Who We Are
    • Who Makes MLI Work
    • Tenth Anniversary
    • Jobs
    • Women’s History Month Fundraiser
  • Experts
    • Experts Directory
    • In Memoriam
  • Issues
    • Domestic Policy Program
      • Agriculture and Agri-Food
      • Canada’s Political Tradition
      • Economic policy
      • Health Care
      • Innovation
      • Justice
      • Social issues
      • Telecoms
    • Energy Policy Program
      • Energy
      • Environment
    • Foreign Policy Program
      • Foreign Affairs
      • National Defence
      • National Security
    • Indigenous Affairs Program
  • Projects
    • COVID and after: A mandate for recovery
    • COVID Misery Index
      • Beyond Lockdown
    • Provincial COVID Misery Index
    • Centre for Advancing Canada’s Interests Abroad
      • Dragon at the Door
      • The Eavesdropping Dragon: Huawei
    • An Intellectual Property Strategy for Canada
    • Competition Policy in Canada
    • Speak for Ourselves
    • Canada and the Indo-Pacific Initiative
    • DisInfoWatch.org
    • The Transatlantic Program
    • Indigenous Prosperity at a Crossroads
      • Aboriginal Canada and Natural Resources
    • Talkin’ in the Free World with Mariam Memarsadeghi
    • Past Projects
      • Justice Report Card
      • Munk Senior Fellows
      • A Mandate for Canada
      • Confederation Series
      • Fiscal Reform
      • The Canadian Century project
      • Fixing Canadian health care
      • Internal trade
      • From a mandate for change
      • Size of government in Canada
  • Events
    • Upcoming Events
    • Past Events
      • MLI Dinners
      • Great Canadian Debates
  • Latest News
  • Libraries
    • Annual Reports
    • Inside Policy Magazine
      • Inside Policy Back Issues
      • Inside Policy Blog
    • Papers
    • Columns
    • Books
    • Commentary
    • Straight Talk
    • Video
    • Multimedia
    • Podcasts
    • Leading Economic Indicator
    • Labour Market Report
    • MLI in the Media

© 2021 Macdonald-Laurier Institute. All Rights reserved.