POLS 3125 Lecture Notes - Lecture 30: Monetary Policy, White Paper

• School: York University
• Department: Political Science
• Course: POLS 3125
• Professor: Glenn Goshulak

Document Summary

1945-1975: formally, federal gov"t is committed to keynesian principles (1945 white paper, but in practice, most policies were not very keynesian. Need to pay off wartime debt = maintaining low interest rates. Government has to buy up large amounts of foreign exchange for reserve. Canada eventually able to negotiate exemption from surcharge. But problem of opec exacerbates inflationary problems leads to major and permanent shift in monetary and fiscal policy: new policy: manage macroeconomic policy according to general growth in national economy. Restrict monetary and expenditure growth to same rate of growth as gnp to avoid inflation. Anti-inflation board (aib: 1984: election of pcs (mulroney, committed to balanced budgets but problem of fiscal restraints (transfer payments) and exacerbated by tax cuts of pcs. 1989: instead of matching expenditures with program cuts, now tax increases (gst: 1990s: under new liberal government, problems of deficits slowly reversed largely due to changes in expenditures.