Plot separately data (1970 onwards) for fiscal spending on capital spending and for current account in Canada. What do you notice? How do these change through the cycles?

a)     Please plot historical annual data on deficit to GDP ratios (1970 to today); and on national debt to GDP.  Comment on the results.  Compare to periods of recession in Canada.





This is rather straight forward. I don’t really care what the deficit is in nominal terms.  A $10billion dollar deficits today is less today in RELATIVE terms to GDP than even a decade ago because the economy growths.  So plot deficit to GDP and debt to GDP ratios.  Then look at what happens to them during recessions.





Here are the dates of Canadian recessions.  This will help:

https://www.thecanadianencyclopedia.ca/en/article/recession

Recession in Canada | The Canadian Encyclopedia

A recession is a temporary period of time when the overall economy declines; it is an expected part of the business cycle. This period usually includes declines in industrial and agricultural production, trade, incomes, stock markets, consumer spending, and levels of employment. In purely technical …

www.thecanadianencyclopedia.ca

 

b) Plot the above data against general unemployment rates and inflation rates for the same period.  What can you offer as an analysis? 

So use the data for deficit/GDP and Debt/GDP, then plot also data from unemployment and inflation (general, don’t use unemployment by province, or gender or age). Comments on those.

 

c)     Plot separately data (1970 onwards) for fiscal spending on capital spending and for current account in Canada.  What do you notice? How do these change through the cycles?

 

OK so government spending is quantified in terms on what the government spent it on.  Current account means day to day expenses to run the government (wages, heating, pencils …).  The Capital spending is roads, bridges, etc.  Things will lives beyong a year, true investment in our infrastructure.  If you look at Stats Can, you will see under fiscal expenditures references to current and capital spending.  Comment on what you see.