As restrictions continue on in-person dining, COVID-19 has made restaurants increasingly dependent on food delivery platforms. Last month, the City of Toronto asked Ontario to temporarily cap the service fees restaurants are charged, which can be as high as 30 per cent of the bill. There is superficial appeal to price caps, but taking economic guidance from Hippocrates – first, do no harm – they amount to quackery. Regulatory interventions need to be carefully dosed according to a precise diagnosis of market failure and the extent of the disease. Instead of introducing new price cap regulations, Premier Doug Ford urged food delivery apps to slash commissions as a way to help out pandemic-stricken restaurants. This moral suasion...
Whew. Canadians are showing unalloyed relief with the results of the U.S. election, ending four year’s worth of chaos, unpredictability and antagonism under President Donald Trump’s “America First” agenda. The tone of the bilateral relationship will change 180 degrees under a Joe Biden presidency. Yet when it comes to trade, there are some hard facts that give reason to temper some of this enthusiasm. Here is a short list of items – some good, some not so good – to consider in the days ahead. SUPPORT FOR MULTILATERALISM The Biden administration will reverse Mr. Trump’s disdain and disregard for the World Trade Organization and the multilateral system generally. We can look to the United States removing its veto over...
Last week’s quarterly “Monetary Policy Report” (MPR) from the Bank of Canada sketched the long and likely winding road Canada’s economy needs to travel before it gets back to where it was pre-pandemic. And, with it, the long road inflation will have to take to return to its target rate of two per cent. At the same time, the bank announced it would hold the target overnight rate of interest at its effective lower bound of 25 basis points (i.e., 0.25 per cent), “until economic slack is absorbed so that the two per cent inflation target is sustainably achieved,” which the bank estimates will not happen until sometime in 2023. This amounts to “forward guidance” about the path of the overnight rate target — an effort to reduce policy...