Stephen Poloz is a Keynesian now.
For the the second time in as many speeches, Canada’s central bank governor last week referenced the appropriateness of using fiscal policy to save an economy suffering from a dramatic decline in business investment and confidence. Poloz told an audience in Ottawa on January 7 that a weaker dollar would not be a panacea for the country’s economic woes, and that other treatments also should be administered.
“Other complementary policies can be deployed to offer a broader array of buffers while still encouraging the necessary longer-term adjustments, including fiscal policies and policies that make labour markets more flexible,” Poloz said. And a month earlier, Poloz said this in Toronto: “It may sound ironic, but the circumstances under which it may be appropriate to consider unconventional monetary policies are also those under which fiscal policy tends to be most effective.”
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