Class Notes (837,848)
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POL2101 (222)

L15 - Economic Policy

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Political Science
Luc Turgeon

March 12, 2014 Economic Policy Key Terms  Economic policy: Government action to influence the economy  National policy (first, second, and third)  Import substitution industrialization  Liberal market economy Economic Policy  Different components • Monetary policy: process by which a central bank regulates the supply, availability, cost/interest rate of money (to stimulate growth and stability) • Fiscal policy: any government policy that influences the direction of the economy (taxation, public borrowing, and public expenditure) • Industrial policy: official strategic effort to encourage development and growth in specific sectors. • Trade policy: set of rules and regulations intended to promote/hinder international trade flows (by facilitating or holding up trade ports)  Different objectives • Stimulate or maintain growth (stability) • Increase employment • Increase economic competitiveness (with other countries) • Balance of payments stability o Making sure you’re getting a fair deal with other countries Economic Policy in Canada: the Main Actors  Federal government • Industrial policy • Monetary policy o Through the Bank of Canada (largely autonomous) • Fiscal policy o Taxation (both corporate and personal tax) o Equalization • Free trade agreement - run by the federal government  Provincial governments • Industrial policy o Resource exploitation (Alberta oil) • Fiscal policy – provincial governments’power over policy • Trade policy – provinces play a role Marginal tax rate on investment Province Rate British Columbia 27.7 Manitoba 27.1 Saskatchewan 25.2 Ontario 19.8 Alberta 17.9 Quebec 16.9 Newfoundland 11.2 Nova Scotia 7.7 New Brunswick 4.6 • Challenges the idea that tax rates are higher in certain provinces (redistribution) Economic Policy in Canada: National Policy  Refers usually to the economic program adopted by the Conservative Party of John Macdonald in 1879  Refers also to the “conscious, nation-building policies of successive federal governments” (Eden and Molot, 1993) • Smiley: “The most persistent expression of the nationalist impulse in Canada has been economic.” • Three national policies (just because the policy was in place doesn’t mean there was full consensus) o First national policy (1879-1940) o Second national policy (1941-1981) o Third national policy (1982- ) The
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