The Uses and Abuses of the Euro in the Canadian Currency Debate. Jean Monnet/Robert Schuman Paper Series, Vol. 3 No. 3, August 2003

(From the introduction). In the late 1990s, some prominent Canadian economists – notably Thomas Courchene, Herbert Grubel, Richard Harris, and Robert Mundell – began arguing that a North American common currency would solve the problems underlying the growing gap between U.S. and Canadian real GDP per capita.1 They succeeded in provoking a lively economic policy debate that occurred in parallel with the launch of the euro. The purpose of this paper is to examine the uses – and abuses – of European parallels by both sides in the economic policy debate that peaked in the 1999-2001 period. The body of the paper begins by providing an understanding of the European case. Hence, the second section outlines our interpretation of the major developments in the birth of the euro. The third section, the core of the paper, examines in detail the use of European parallels in the Canadian currency debate. We start by providing a brief overview of the protagonists in the debate. We then continue by arguing that the euro provided a “temporal spur” for the Canadian discussion but that it was only one among several important factors. We argue further that the proponents of a North American common currency relied very little on the European experience to support their case for the need for a common currency. Where they did use the European experience, however, was in their analysis of the institutional form that a common currency in North America might take. We argue that the opponents of a North American common currency were correct in viewing this as an abuse of the European parallel. In the concluding fourth section, we summarize our findings and argue that the most important parallel between the European and North American forces for a common currency is that both were driven primarily by politics

Spins of (dis)integration: What might 'reformers' in Canada learn from the 'social dimension' of the European Union?

In the Canadian discussion, the EU model ('Social Europe') has inspired a range of proposals for restructuring Canada. The article gives an introduction to 'where the social dimension and social policy are at' in the EU. Then the political relevance of the EU experience for Canada is explored whether this be for a Québécois independence perspective or for a Canadian interprovincial-compact as outlined in 1996 by Thomas Courchene. Finally, I shall conclude with some remarks on 'globalization and the welfare state' - a powerfully related issue, wherein welfare states can turn out to be foundations for both opening up and thence ensuring the openness of western economies for 'embedded liberalism' - as well as for 're-embedding liberalism' - as against being perceived purely as the inevitable victims of an unstoppable 'march of [the forces of] globalization' (Thomas Courchene), as has been most often envisioned. --

A fiscal needs approach to equalization transfers in a decentralized federation

The author reviews the conceptual basis for fiscal equalization transfers, analyzes the theoretical implications for optimal design of equalization transfers, and suggests quantitative approaches for assessing the fiscal needs of subnational governments and determining their entitlement to transfers. The author illustrates proposed methods using data for local and provincial Canadian governments. The proposed methods could be useful tools, he says, for undertaking systematic objective reviews of aggregate and sectoral public spending in developing countries. The author argues that in a decentralized federation, fiscal inefficiencies and inequities arise because of subnational governments'differing levels of ability to provide comparable public services at comparable tax rates. Fiscal equalization transfers that reduce or eliminate differentials in net fiscal benefits create a rare instance in economics when considerations of equity and efficiency coincide. These transfers must allow for differences in the spending needs and revenues-raising abilities of the various subnational governments. The author argues for a two-tiered approach to equalization. The first tier would be a federal responsibility to equalize the burden of federal taxes. The second tier would be an interprovincial equalization fund to be administered by the Council of Provincial Finance Ministers. It would entail a comprehensive equalization system that takes into account provincial spending needs. The standard of equalization would be negotiated.Public Sector Economics&Finance,Banks&Banking Reform,Municipal Financial Management,National Governance,Environmental Economics&Policies

Canada's money targeting experiment

An inquiry into why the Bank of Canada was unable to bridle the inflation of the 1970s by controlling money growth.Monetary policy - Canada ; Canada ; Inflation (Finance)

Labor Force Migration, Unemployment and Job Turnover

[Excerpt] In this paper, we show how labor turnover considerations can be integrated into the human investment theory of migration and demonstrate that such a model provides a much better explanation for migration rates into major metropolitan areas than the conventionally-used unemployment rate. The method used here may be of interest as well to researchers working on other human investment problems that also have a multi-period dimension

Monetary Policy Targeting in Argentina and Canada in the 1990s: A Comparison, Some Contrasts, and a Tentative Evaluation

There are two generally accepted ways of plotting the aggregate demand (AD) and aggregate supply (AS) curves in the goods market. One puts the price level on the vertical axis (the P - y approach); the other plots the real interest rate on the vertical axis (the r - y approach). This paper develops the theoretical connections between these two approaches that permit one to tell a coherent dynamic story with the AD-AS model and also explores the conditions under which one approach or the other yields greater insight into the working of the model.Monetary Policy; Monetary; Policy

Outcomes of territorial competition and the role of intergovernmental transfers among Mexican regions

In an environment of growing globalization, which goes along with a relative increase of factor mobility, the role of territories and its competitiveness is under debate. In order to spur local attraction territories often enter in competition with each other. At this respect it is commonplace that governments at various territorial levels apart from other public and private institutions concern about providing the conditions that make attractive their countries, regions or cities for productive activities and in so doing they get involved in the race for competitiveness. Even though competition involves the actions of multiple actors, these often are connected with each other through local policy makers. By and large, local government and regional development policy are regarded to play a central function in territorial competition and in fact can be considered that the competitive success of regions and cities cannot be achieved without the active action of local governments. To the extent to which governments are more conscious about the actual territorial competitive environment they will try to formulate more policies for the development of competitive capabilities. The actions and efforts may take many forms (marketing, assisting local businesses, constructing infrastructure, information and land provision, taxation and so on). Particularly governments may use programs or apply funds, which are available as a result of national or regional policy, to attend to local interests. However local governments’ actions depend to a large extent on their financial capabilities. The federal government in Mexico provides most of the financial support to states and municipalities on an ongoing basis through transfers and participations. These are federal transfers supporting specific policy areas or unconditional transfers.This paper is concerned with presenting an integrated framework for territorial competition analysis which emphasises the fundamental role of local government action and assessing the role of federal aid on the competitive results of Mexican regions. The methodology proposed will develop a series of competitive results indicators for Mexican regions and use a multivariate analysis to assess the influence of transfers and participations. The periods include those years when Mexico has been and opened and liberalised economy.

Assessing Devolution in the Canadian North: A Case Study of the Yukon Territory

Despite a rich literature on the political and constitutional development of the Canadian territorial North, few scholars have examined the post-devolution environment in Yukon. This lacuna is surprising since devolution is frequently cited as being crucial to the well-being of Northerners, leading both the Government of Nunavut and the Government of the Northwest Territories to lobby the federal government to devolve lands and resources to them. This paper provides an updated historical account of devolution in Yukon and assesses its impact on the territory since 2003. Relying mainly on written resources and 16 interviews with Aboriginal, government, and industry officials in the territory, it highlights some broad effects of devolution and specifically analyzes the processes of obtaining permits for land use and mining. Our findings suggest that devolution has generally had a positive effect on the territory, and in particular has led to more efficient and responsive land use and mining permit processes

What do we Know about the Relationship between Regionalized Aspects of the Unemployment Insurance System and Internal Migration in Canada?

The purpose of this paper is to critically review the past four decades of empirical research on the relationship between internal migration and regional variation in the generosity of Canada’s unemployment insurance system. It has long been argued that because the Canadian insurance system is more generous towards people who live in relatively disadvantaged regions, it retards the out-migration that is part of the market process, thereby slowing economic development and contributing to the persistence of regional inequality in earned incomes. The survey shows, however, that there is no evidence in the empirical literature that regional variation in the generosity of the insurance system has altered internal migration patterns in Canada in a substantial manner.regional variation in unemployment insurance generosity, internal migration, interprovincial migration, earned income, comprehensive income differentials, index of insurance generosity, labour market attachment, conditional logit model

Seventy Years of Central Banking: The Bank of Canada in International Context, 1935-2005

On the seventieth birthday of the Bank of Canada, we evaluate the Bank's contribution to monetary policy in an international context. We focus on: the reasons for the establishment of the central bank in 1935, its unique record of floating in a sea of fixed currencies under Bretton Woods; its experience with the Great Inflation and monetarism; its pioneering adoption of inflation targeting; and recent innovations in the payments and the phasing out of reserve requirements.