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article imageStudy: Canadian stimulus package had negligible economic effect

By Gordon K. Chan     Mar 23, 2010 in Business
A Canadian economic think-tank has released a study reporting that billions of dollars of economic stimulus had little contribution to the turnaround of the nation's economy. Instead, the report warns that a "massive deficit" is now in place.
The time has come to take credit for the country's economic turnaround. However, in looking around, it wasn't the $47 billion economic stimulus package that helped, says the Fraser Institute.
It has become apparent that the enormous government spending and investment did not amount to 1 percent improvement in the country's GDP growth, reports the CBC.
Specifically, stimulus measure amounted to 0.2 percent GDP growth, while the entire economy grew by 1.1 percent.
The report points toward private sector initiatives in investment and exports that drove real growth in Canada.
One economist states that while the Canadian government has taken claim to economic recovery, "Statistics Canada data show that government spending and investment in infrastructure had a negligible effect on the country's improved economic growth."
Notably, this report was not a surprise as 40 percent of the stimulus package was allocated for infrastructure projects, which have long term economic impacts and would not reveal any economic development in the short run.
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