SIPP Public Policy Papers 01

Abstract

What have been the causes of the accumulation of government debt in Canada? How large have been the respective contributions of high interest rates, low growth rates, the business cycle, and changes to tax rates and program expenditures? To what extent have the fiscal choices of members of the Canadian economic union impacted upon one another? This paper investigates these questions and finds that the causes of debt accumulation at the federal level differ substantially from the causes of provincial government debt accumulation. What’s more, we find that the fiscal policy choices of the federal government have had a negative impact on the efforts of the provinces to control their accumulation of debt. This paper was presented at the Fiscal Federalism: Working Out the Future conference, Regina, October 12 and 13, 2000. The conference was sponsored by Saskatchewan Finance and Saskatchewan Institute of Public Policy.