The Accumulation of Public Debt in Canada

Using data covering the period 1974-98 we identify the increase in Canada's debt-to-output ratio that was due to policy choices, the business cycle, and the relative magnitudes of interest and growth rates, respectively. This analysis shows that the conclusions of Fortin (1996) hinge upon a number of decisions and that reasonable choices give rise to different results. We extend the analysis to examine the causes of debt accumulation by level of government. This exercise shows that the causes of debt accumulation are very different at the federal and sub-national levels