Microeconomics Case Study

Growth and Stability of Canadian Economy: Government’s Job?

OR

Abstract:
This case is meant to investigate the role of the government as regards the growth and stability of the Canadian economy. Canada designed elaborate social welfare state programmes, which pushed government spending. But the spiralling government deficits during the 1980s and early 1990s raised Canada's total government debt-to-GDP ratio and diminished its international creditworthiness. Whether Canadian government rolled back its spending programmes, resorted to the monetary and fiscal policies to achieve the twin objectives of an economy gets unveiled as one progresses with the case. The case offers an opportunity to assess the role of the government by providing a comparison of Canada with major advanced countries having relatively less governmental participation in the affairs of the economy. Canada's Economic Action Plan (EAP) 2009 designed to protect Canadians from the global downturn of 2008 is a litmus test for the efficacy of the government in achieving the economic goals. Whether it has passed the test or not forms an exciting piece of discussion in the case.

Pedagogical Objectives:

• To understand the objectives of the economy
• To understand the role and significance of government in stabilisation and growth of the economy.

Keywords : GDP, Inflation, Deflation, Monetary Policy, Fiscal Policy, Debt-to-GDP Ratio, Budget Deficit, Budget Surplus, Tax Structure, Competition Policy, Comparative Tax Advantage, Inclusive Economic Growth, Inflation Targeting, Social Assistance Programme, Venture Capital, Managerial Economics, Microeconomics, Economics for Business, Business Economics, Economics for Managers, Paul Samuelson