How Successful Have the Canadian Government and Bank of Canada Been in Running the Canadian Economy over the Last Two Years
The aforementioned letter cited the following statistics to underscore the point:Labour markets have weakened, and employment is poised to decline further as the slowdown takes hold… Over 300,000 jobs in manufacturing have been lost. Yet less than 40% of unemployed workers qualify for Employment Insurance benefits.The body of literature that has examined the Canadian economy points to the public policies that determine how the resources of the nation are to be distributed as the main reason for the dismal performance of the economy. Indeed, traditionally, economic policy and economic policy formation in Canada followed the conventional principles of stabilization policy, resource allocation and distribution. And so this is not surprising.In the preamble of the Act creating the central bank, the main functions were: 1) to regulate credit and currency in the best interest of the economic life of the nation. 2) to control and protect the external value of the national monetary unit. 3) to mitigate by its influence fluctuations in the general level of production, trade, prices. and employment, and, 4) to promote the economic and financial welfare. (Salvatore, p. 153) The Bank of Canada is linked to the Canadian Department of Finance in economic policymaking, substantively called as the “monetary-fiscal mix.” The policies of the bank are implemented on the national level and together with the government fiscal policy constitute the Canadian economic policymaking mechanism.It must be underscored that the long-run objective of the Bank of Canada is overall price stability. More recently, the Bank has paid increasing attention to broader monetary aggregates, with special emphasis on exchange-rate developments as the Bank sees interest rates and exchange rates as the main channels of transmission of monetary policy.