In the Friday, July 18, 2008 edition of the Montreal Gazette, reporter Eric Beauchesne discusses a recent C.D. Howe Institute study entitled Richer Than We Think: Why Canadians’ Purchasing Power Is Up While Economic Growth is Down, written by Colin Busby, a Policy Analyst at the C.D. Howe Institute. Busby shows that despite a slowdown in economic growth as measured by the GDP, Canadians’ real incomes and purchasing power have continued to rise. Busby states that over last decade the global demand for oil and gas has sent energy export prices to historic highs, and the costs of Canada’s imports have fallen. The import-price decline is due to Canada's appreciated currency (and a falling US dollar) and to imports of low-cost manufactures from countries such as China. Both factors increase Canada’s purchasing power abroad. To account for terms-of-trade effects, Busby uses “command GDP,” an income measure that gives a rough approximation of the purchasing power increase generated by expensive exports and cheap imports. By this measure, he finds, rises in Canadians’ real incomes have outstripped growth in real GDP. The Gazette (Montreal) Friday, July 18, 2008. Page: B5. Section: Business. Byline: Eric Beauchesne. Dateline: OTTAWA. Source: Canwest News Service.
The Montreal Gazette: Busby Argues that Canadians Income and Purchasing Power is on the Rise
July 18, 2008
