keynesianism within one country

I still have only a rudimentary understanding of the Canadian political system, but one thing that’s stood out in my news reading in this time of public budget crises is the fact that Canadian provinces are allowed to run deficits. As far as I know, every U.S. state has to balance its budget. There must be limits to the provincial deficits or potentially the situation could get out of hand, but I don’t know how those are determined (assuming that they exist).

Long-term questions aside, I suspect that, in the short term, the ability to run a deficit gives the provinces the flexibility to avoid the furloughs and closures faced by the public sectors in many of the states.

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2 Responses to keynesianism within one country

  1. Erik Lund says:

    Furloughs?
    http://en.wikipedia.org/wiki/Social_Contract_(Ontario)
    So, no, we haven’t been able to avoid them.

  2. andrew says:

    Huh, I didn’t know about that. It makes sense that there’s a point where no amount of buffering through deficits can put off things like furloughs. I don’t think that’s happened this time around in Canada, but of course it still could.

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