16.6 Conclusion


Fiscal policy and government debt have been central in the Canadian political debate. When Paul Martin became Minister of Finance in 1993, he made reducing the budget deficit a high priority of the Liberal government. Some members of the Liberal party worried that they might lose popular support since deficit reduction was perceived as a priority more suited to the Reform and Conservative parties(separate political parties at the time).

This chapter has discussed the parallel debate among economists over government debt and budget deficits. Economists disagree about how fiscal policy is best measured and how fiscal policy affects the economy. To be sure, these are among the most important and controversial questions facing policymakers today. Given the growing fiscal dividend in the short term, and the aging of the baby boomers in the longer term, there seems little doubt that these debates will continue in the years to come.