In this rejoinder the key role played by high interest rates in the Canadian economic and fiscal crisis of 1990-96 is reaffirmed. I argue that (i) important econometric biases could have led many to underestimate the effects of high interest rates on output; (ii) it is imprudent to conduct...

Quebec’s relative growth performance with Ontario has always been an issue of concern for economic historians. In his paper Pierre Fortin discusses trends in Quebec’s real domestic income relative to that in Ontario over the last half-century. He finds that per capita real domestic income in...

Canadian policymakers currently adhere to the view that the benefits of establishing and maintaining price stability (near-zero inflation) are "many and large" and that the costs are "small and temporary". This paper, in contrast, warns about the lightness of zero-inflation optimism. Evidence...

Canada has now almost eliminated inflation, but it is still struggling with a slow productivity growth, high and persistent unemployment, and large fiscal and external deficits. This essay reviews the identifiables causes and consequences of this evolution, and draws a number of lessons for the...

During the 1990s, the lowest sustainable rate of unemployment (LSRU) in Canada declined from the 7.5-to-8% range to perhaps around 6%. Barring an international recession and excessive rigidity on the part of the central bank, Canada could achieve this 6% unemployment level within a few quarters....

We analyze the determinants of Canadian unemployment in a framework incorporating demand and supply-side variables: the interest rate, taxation, foreign activity, minimum wages, union density, demographic pressure, unemployment insurance, terms of trade. The model is estimated with 500...