Skip to main content

The Case of the COVID-19 Budget

Macroeconomic Policy - Fiscal and Monetary Policy

Introduction

In 2020-21, the liberal Trudeau government issued more than 300 billion dollars of Treasury Bonds which were mostly purchased by the Bank of Canada with new money. This allowed Ottawa to double the federal government's annual operating budget, as a massive response to the COVID-19 pandemic which severely halted economic activity in Canada - and around the world - in a way we had never seen before. The same was done in Europe and the USA.

Wall Street Journal - Where Does Stimulus Money Come From?

https://www.youtube.com/watch?v=PZpYgQiZXhI 

Bank of Canada - Monetary Policy Report

https://www.bankofcanada.ca/multimedia/press-conference-monetary-policy-report-july-2022/ 

Description 

COVID-19 brought lots of changes to the world economy, and many governments acted in a very Keynesian way to intervene in the economy, using lots of borrowed funds. This has led to almost galloping inflation in 2022.

What would you have done differently? Consider the following aspects.

- Value of Life and Health
- Labour Shortages
- Hospital Capacity Shortages
- Services vs. Goods Economy
- Value of Money
- Economic Adaptation and Resilience
- Role of Government, Intervention

Evaluation Criteria 

Your solution will be graded using the following expectations.

  • The answers are explained concisely
  • The answers cover the issues of health and labour
  • The answers cover the issues of money and debt
  • The answers cover the issues of output and adaptation

Guidelines

Your solution should be written up as a 350 word text, using at least three paragraphs to cover the three sets of issues.

The text should be focussed on what the governing party at the House of Commons could have, or should have, done differently.

Deliverables

Submit a 350 word solution on the Innovatank Case Platform.