In April, members of Canada’s parliamentary press corps thought they had uncovered some shenanigans over -- of all things -- the fiscal multiplier.
The Parliamentary Budget Officer (PBO), who provides nonpartisan analysis of the the government’s finances and economic projections, had criticized Finance Minister Bill Morneau’s outlook for economic growth. The PBO said Morneau was using favourable maths to calculate the economic impact of his stimulus program and that a smaller fiscal multiplier would be more realistic. A mini-scandal arose when the central bank used the Finance Department’s calculations in its own forecast. Some reporters sensed collusion. At a press conference in Ottawa, a reporter suggested Bank of Canada Governor Stephen Poloz might be covering for his “boss.” The governor reacted angrily. “The finance minister, I’m sorry, is not my boss,” he snapped. “The Bank of Canada is a fully independent policy maker.”
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