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HomePolicy Articles Article Summary

Anyone Got a Plan?

Commentary by Michael Mendelson

As a result of Hurricane Katrina, governments worldwide have scrutinized their emergency response plans for natural disasters. However, Michael Mendelson cautions, they have failed to plan for another type of emergency: an economic slump likely to happen within the next two to three years.

According to the author, a recession is inevitable and it is foolish not to plan for it. Although it is unclear what format the recession will take, Mendelson warns that unemployment will likely skyrocket, perhaps entering double digits as it did in the early 1980s and 1990s. Construction and retail sales will plummet and governments will face declining revenues. Welfare and Employment Insurance payouts will rise. If oil prices remain high, Mendelson suggests, Alberta, Saskatchewan and Newfoundland may sail through an economic downturn, while Ontario and Quebec, two provinces reliant upon manufacturing, will endure hardship.

Mendelson argues that preparing a plan for the next recession will entail four critical challenges. First, governments must consider rational fiscal and monetary policy in the event of a recession. He contends there must be deficits in a recession and monetary policy must not focus solely on inflation. Second, governments should also begin a list of capital projects that will create jobs and improve physical and social infrastructure. Third, all levels of government should collaborate to restructure Canada’s income security system so they can cope with poor economic performance. Finally, Canada’s structure of fiscal federalism must also be renewed. Mendelson concludes that currently Canada is unprepared for a recession; however, with advanced planning the country can adequately prepare itself and protect its citizens from undue hardship.

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Policy Publication Details

Author(s): Michael Mendelson;
Publisher: Caledon Institute of Social Policy [ Visit Website ]
Year Published: 2005; Publisher Type: Research Institute
Publicly Available: Yes Research Focus: National;
Registration Required: No Language: English
Payment Required: No Publication Format: Adobe PDF

Subjects / Categories:

Policy Articles / Fiscal & Budgetary / Fiscal Federalism
Policy Articles / Monetary & Capital Management / Monetary Policy
Policy Articles / Monetary & Capital Management / Inflation
Policy Articles / Economy / Provincial Economy
Policy Articles / Economy / Federal Economy
Policy Articles / Economy / State of the Economy
Policy Articles / Economy / Economic Forecast
Policy Articles / Economy / Economic Forecast / 2005
Policy Articles / Economy / Federal Economy / 2005
Policy Articles / Economy / Provincial Economy / 2005
Policy Articles / Economy / State of the Economy / 2005
Policy Articles / Fiscal & Budgetary / Fiscal Federalism / 2005
Policy Articles / Monetary & Capital Management / Inflation / 2005
Policy Articles / Monetary & Capital Management / Monetary Policy / 2005
Policy Articles / Economy
Policy Articles / Fiscal & Budgetary
Policy Articles / Monetary & Capital Management


Keywords / Tags:

economic downturn; recession; unemployment; oil prices; manufacturing; monetary policy; social infrastructure; income security; fiscal federalism; inflation;