Canada's Potential Growth
Author | : Mr.Marcello M. Estevão |
Publisher | : International Monetary Fund |
Total Pages | : 30 |
Release | : 2010-01-01 |
ISBN-10 | : 9781451962048 |
ISBN-13 | : 1451962045 |
Rating | : 4/5 (48 Downloads) |
Download or read book Canada's Potential Growth written by Mr.Marcello M. Estevão and published by International Monetary Fund. This book was released on 2010-01-01 with total page 30 pages. Available in PDF, EPUB and Kindle. Book excerpt: This study investigates the impact of the current financial crisis on Canada's potential GDP growth. Using a simple accounting framework to decompose trend GDP growth into changes in capital, labor services and total factor productivity, we find a sizeable drop in Canadian potential growth in the short term. The estimated decline of about 1 percentage point originates from a sharply decelerating capital stock accumulation (as investment has dropped steeply) and a rising long-term unemployment rate (which would raise equilibrium unemployment rates). However, over the medium term, we expect Canada's potential GDP growth to gradually rise to around 2 percent, below the pre-crisis growth rate, mostly reflecting the effects of population aging and a secular decline in average working hours.