Fixing the Recession: Policy Guidance for Canada and Governments Everywhere

The full weight of the recession in major industrial economies is now upon us. The United States, Japan, and the European Union are all in deep recession, with Canada close behind. Challenging times demand bold leadership and action. While Canada was in much better initial shape than most other industrial economies, we too have been dragged into the recessionary vortex. Monetary policy has been used aggressively to date, but it may be reaching the limits of its effectiveness. Complementary fiscal action must now ride to the rescue. This briefing analyzes the macro-economic options available to governments and offers more detailed advice on Canadian fiscal policy specifically.