Long-term Fiscal and Economic Projections for Canada and the Provinces and Territories, 2014-2038

Don Drummond and Evan Capeluck

No 2015-08, CSLS Research Reports from Centre for the Study of Living Standards

Abstract: This report presents long-term fiscal and economic projections for Canada, the provinces and the territories for the 2014-2038 period, and discusses their implications for budgetary balance at the provincial/territorial level. The projections are based on assumptions concerning growth in the working age population, the evolution of participation rates and average hours worked, labour productivity growth, and the inflation rate. Since the assumptions underlying the projections are subject to uncertainty, we present a series of alternative scenarios for long-term economic growth in Canada and the provinces and territories. The report also looks at whether provincial/territorial governments will be able to finance public spending under these alternative fiscal and economic scenarios. Under the realistic assumptions that non-health spending is flat in real per capita terms and health spending grows at its average pace from the past 15 years, then, by and large, the provinces and territories will not be able to meet the test of balancing revenue growth with growth in public spending without either raising taxes or cutting program spending. Given the higher probability of this scenario and the relative distaste for higher taxes and spending cuts, Canadian governments must find ways to boost economic growth and hence revenue growth to maintain fiscal balance to 2038 and beyond.

Keywords: Projection; Ageing; Fiscal Sustainability; Demographics; Canada; Budget; Provinces; Revenue Growth; Taxes; Economic Growth (search for similar items in EconPapers)
JEL-codes: E17 E27 E37 E47 E60 E62 E66 H20 H50 H51 H60 H61 H62 H68 H70 H71 H72 J10 O40 (search for similar items in EconPapers)
Date: 2015-07
New Economics Papers: this item is included in nep-age, nep-lab, nep-mac and nep-pbe
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

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