The effect of macroeconomic uncertainty on public finance
Empirical evidence for Canada and Quebec
Over the past few decades, the Canadian economy has faced a series of macroeconomic shocks of various origins and types: the 2008–2009 global financial crisis, commodity price fluctuations, the COVID-19 pandemic, periods of high geopolitical uncertainty, and rapid monetary tightening aimed at containing inflation. These episodes have profoundly affected macroeconomic conditions and posed significant challenges to public finances. In this study, the authors provide an empirical assessment of the effects of a series of macroeconomic shocks on key economic and fiscal aggregates in Canada. Their analyses highlight the need for a fiscal management strategy that is sensitive to external macroeconomic conditions and sources of uncertainty.
