This paper presents a simulation model of the main budget aggregates of federal, provincial and territorial governments in Canada. The general approach is to use a cyclical indicator (output gap), estimate the sensitivity of government revenue and expenditure to this cyclical indicator using...

Although Canada remains in an advantageous fiscal position relative to many other OECD countries as the global economy recovers from the 2008/09 recession, the deterioration in the country’s public finances has been substantial. Years of spending increases above trend economic growth have led...