Kevin Carmichael's Observer: It is time for Canada to rethink the economic orthodoxy of balanced budgets
Bank of Canada Deputy Governor Timothy Lane rarely speaks in public. The longest serving member of the Governing Council has given only 14 speeches since his appointment in February 2009, or about two per year.
But on the occasions Lane decides to grace an audience, he often makes an impact. Last week, Lane’s carefully considered analysis of the economic impact of the plunge in oil prices informed a good deal of reporting. His conclusion that $50 oil would be “bad for Canada” was hard to ignore. The Bank of Canada has a new reason to leave interest rates low for longer.
I read Lane’s speech as a statement of failure. Not on the part of Lane or the Bank of Canada, but rather Canadian economic policy in general. The reason that the plunge in oil prices is “bad for Canada” is because the country once again has missed an opportunity to diversify its economy. Canada faces a difficult road because it failed to hedge against its bet of becoming an energy superpower.
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