Fiscal Policy in Canada

Paper Summary:

This paper presents an ideal fiscal policy for Canada in today's economic climate. The paper begins with a background on Canada's current economic situation, including a look at some literature on the topic. The writer then explores the problem of public expenditure and tax policy in Canada to date. The paper continues with a review of possible changes in North American fiscal and money policy before offering some recommendations based on the study, which include lowering taxes and debt.

From the Paper:

"The Bank of Canada may need to raise interest rates further to prevent rising inflation. Canada's money stock grew an explosive 24 percent over the past year. When money is abundant, households and businesses gain confidence and raise their spending. When, as at present, the economy is operating close to capacity, this extra spending is likely to push up inflation. apid money growth may not imply higher inflation if the economy's demand for money is growing at the same pace."

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