Publications and Research
Periodicals
Bank of Canada Review
Winter 1994-1995
Index of Working Papers | Index of Technical Reports| Title | Some macroeconomic implications of rising levels of government debt |
| Author(s) | Tiff Macklem |
| Type | Bank of Canada Review article |
| Date of publication |
Winter 1994-1995 |
| Language | English and French |
| Abstract |
The level of government debt in Canada relative to gross domestic product has risen steadily since the mid-1970s. Canada has not been alone in experiencing rising government indebtedness, but in comparison to other countries, Canada's debt load is now distinctly on the high side.
The author reviews some of the effects of rising government debt levels on macroeconomic performance and provides some calculations aimed at illustrating their possible long-run impact on the Canadian economy. His analysis, which is based on a model of the Canadian economy used at the Bank of Canada, suggests that higher levels of government debt reduce both the level of output and the share of output that is available for domestic consumption. The central policy implication is that there are substantial benefits to halting the rise in government debt and thus preventing further erosion of consumption opportunities. |
| Bank topic index |
Fiscal policy; Recent economic and financial developments |
| JEL classification |
C53; H30; H60 |
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