CD HOWE Paper Proposes New Fiscal Mechanism to Moderate Economic Downturns

Editor’s Note: We do not have permission to print this timely report by Robin Boadway and Thorsten Koeppl, both of Queens University, so we have posted the C.D. Howe ad with a link to their site.
Automatic GST Cuts Should Be In Ottawa’s Tool Box To Fight Downturns
November 18, 2021 – The federal government should consider automatic cuts to the goods and services tax (GST) in downturns as a complementary fiscal policy measure, according to a report from The C.D. Howe Institute.In “The Demand Stabilization Mechanism’: Using Temporary GST Cuts as Automatic Fiscal Policy,” authors Robin Boadway and Thorsten Koeppl propose an automatic mechanism that would use temporary cuts in the GST to deliver timely, targeted and fiscally anchored stimulus for aggregate demand during economic downturns and recoveries. In a post-COVID economy, high public debt levels severely restrict governments’ capacity to provide discretionary fiscal stimulus. View full press release »

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