Central bank governors are not normally known for being outspoken or critical of prevailing economic policies. Not the case, it seems, for Mark Carney and David Dodge, former governors of the Bank of Canada.
Mr. Dodge, in a report for the legal firm Bennett Jones, has recently warned against premature fiscal tightening in the current economic climate. Indeed, he and his coauthors advocate an expansion in infrastructure spending — in ports, roads and transit systems — among other things. Even though this will mean continuing fiscal deficits, they say that “in the current environment of low long-term interest rates, fiscal prudence does not require bringing the annual budget balance to almost zero immediately”. Such counsel flouts the current policy stance of the federal Conservative government, which is to eliminate the budget deficit next year.