Financial Crisis in Canada

Topics: Monetary policy, Inflation, Unemployment Pages: 16 (4422 words) Published: April 17, 2011
|UNIVERSITY OF NAVARRA | |Financial Crisis in Canada (07-09) | |A brief exposure of the effects of the crisis. Canada before, during, and after the global financial | |crisis. |



1. Abstract. Executive Summary.

2. Canada before the crisis. A brief summary of the most important event in Canadian economic history.

3. Canada during the crisis:

- Why Canada resisted better to the crisis than other world major economies?

- Monetary policies during the crisis (2008-2009)

- Fiscal Short-Run Policies (2008)

- Fiscal Long-Run Policies (2009)

4. Canada after the crisis. How the economy of Canada changed. A brief look into Canadian interest rate, inflation rate, balance of trade, government budget, unemployment, GDP, and exchange rate during the last years.


In our work we are going to present how the Canadian economy changed under the pressure of the ongoing financial crisis. We will briefly go through the period before the crisis. Afterwards the consequences of the crisis on the economy will be presented together with the decisions that the central government made as well as describe the moves of the Central Bank of Canada. We will try to show what effects that had (fiscal and monetary moves) if any on the situation that was being faced. At the end we will present the current situation in Canada.

‘Canadian banks have been relatively resilient to the ongoing credit turmoil. The effect of the turmoil on the Canadian financial system is, so far, milder than in other G7 economies. Interbank money markets remained functional. No injections of public capital into banks were necessary. The resilience appears particularly striking given the close economic and financial links between Canada and the United States’[1]

Canada has announced:

• cuts in personal income taxes 
• increase spending on infrastructure in the form of direct central government spending, and through capital transfers to local authorities. • protect liquidity-constrained or vulnerable groups, including by strengthening unemployment cash transfers, including to the poor and pensioners • setting up support for small- and medium-sized enterprises such as construction. • address longer-term policy challenges, such as improving the quality of health and education and introducing incentives for development of environmentally friendly.


Economic History of Canada (1950-2006)

Since World War II, Canadian economy has experienced very important changes. During the conflict, unemployment virtually disappeared, mainly because of the recruitment of soldiers, and industry turned to war production.

After the war, Canada was able to maintain and expand the growth and development of it`s economy. Unemployment levels remained low, and wartime production was quickly turned over to making consumer goods. Canada also signed the Bretton-Woods Agreement that consisted on establishing a postwar international monetary system of convertible currencies, fixed exchange rates and free trade.

Canada was successful establishing itself as a welfare state. For example, in 1957 Public Medical Care Access was established. During those 25 years after the war, Canada experienced an immense economic growth. One of the points of this economic development was the fact that Canadian economy became much closer to United States one. This was possible thanks to the fell of tariff barriers and the sign of trade agreements like the Canada-United...
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