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Protectionism

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  In August, Canada announced a C$3.6 billion ($2.7 billion) tariff on US aluminum products.  Before the tariff, OQ2 tons of aluminum was being consumed at a price of Pw. Domestic production was OQ1 and imports were Q1Q2. When the tariff is imposed, S (World) shifts up by the amount of the tariff to S (World) + tariff and the market price rice to Pw + T. Total Quantity demanded falls from OQ2 to OQ4 because the price has risen.  Impact on domestic producers: Domestic producers increase production to OQ3 and so their revenue increases from g to g + a + b + c + h. However, the importers must pay a higher price for the imported goods. This will raise the costs to producers who need aluminum to manufacturer their products and eventually lead consumers to have to pay higher prices for such products. If the producer is an exporter, then the higher cost of imported components could reduce its international competitiveness.  Impact on foreign producers:  Foreign produc...
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Fiscal Policy Country Blog

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One significant fiscal policy implemented by Canada in recent years was a stimulus bill to combat the negative economic effects of COVID-19. Through this plan, the Canadian government has committed over $212 billion in direct support to Canadians and businesses(Canada, Department of Finance). Another fiscal policy was recently implemented with a similar objective. This policy included a commitment of $85 billion in tax differentials, $5.8 billion in support of health care, and $14 billion to support the safe reopening of the country’s economy. Finance Minister Chrystia Freeland is in favor of both these policies, stating in a prepared budget speech to lawmakers that “We must punch our way out of the COVID recession. That means ensuring lost jobs are recovered as swiftly as possible, and hard-hit businesses rebound quickly.” However, Robert Asselin, the senior vice president of the business council of Canada, is less optimistic about the plan. Asselin says he is unsure of how this polic...
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OECD Country Blog - Changes in AS/LRAS

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Canada Real GDP per hour worked  2000-2020  (2015 USD $) https://data.oecd.org/lprdty/gdp-per-hour-worked.htm  I would argue that the trends in Canada's real GDP per hour worked suggest a shift to the right in its long-run aggregate supply curve. As shown in the graph, Canada's Real GDP per hour worked has been steadily increasing since 2000. This means that its productive potential has increased - causing a shift to the right in the LRAS. In other words, the productive capacity of Canada's economy has been increasing over time.   Canada Real GDP per person employed  2000-2020  (constant 2017 PPP USD $ )  OECD (2021), GDP per hour worked (indicator). DOI: 10.1787/1439e590-en (Accessed on 26 April 2021) https://data.oecd.org/lprdty/gdp-per-hour-worked.html Similar to the previous graph, this data suggests that Canada's long-run aggregate supply has increased since 2000.  This graph shows that Canada has experienced an improvement in the q...
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Canada GDP

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  Real GDP - 1980 - 2019(current US $) Source :  https://data.worldbank.org/indicator/NY.GDP.MKTP.CD?end=2019&locations=CA&start=1980  Real GDP per capita 1980 - 2019 (Current US $) Notes: GDP per capita and real GDP are very similar.  source: https://data.worldbank.org/indicator/NY.GDP.PCAP.CD?end=2019&locations=CA&start=1980  Real GDP growth per year  1980 - 2019(current US $) Source:  https://data.worldbank.org/indicator/NY.GDP.MKTP.KD.ZG?end=2019&locations=CA&start=1980  Unemployment Rate  1980 - 2019(% of total labor force ) Notes: Unemployment most likely shot up in 2019 because of COVID 19 source: https://data.worldbank.org/indicator/SL.UEM.TOTL.NE.ZS?end=2020&locations=CA&start=1980  Consumer Prices Inflation Rate  1980 - 2019 (Annual %) Notes: Inflation rates have gone down as GDP has gone up  source: https://data.worldbank.org/indicator/FP.CPI.TOTL.ZG?end=2019&locat...
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