A Comment on "The Great Canadian Slump"

In this comment on Fortin (1996), the authors argue that the sluggishness in economic activity in Canada in the 1990s is better explained by a combination of factors than by monetary policy alone. They find that: (1) it is difficult to explain the sluggishness on the basis of the historical relationship between monetary conditions and real activity; (2) Fortin's evidence of downward nominal wage rigidity is seriously overstated; (3) there are several reasons why technological change may have had a larger impact on employment in Canada in the 1990s than in the United States; and (4) the build-up of government debt in the 1980s and 1990s was much more than a cyclical problem associated with monetary policy.