Canadian Business Cycles since 1919: A Progress Report

Abstract

Since the appearance of annual estimates of gross national expenditure and its components, their use has dominated the analysis of Canadian business fluctuations. They provide the most comprehensive picture of the value and volume of those goods and services, currently produced and consumed, which have passed through the market place. The national accounts have been adapted to analyses of the relationship between the Canadian economy and the economies of the United Kingdom and the United States, particularly of the latter. Interest in these relationships existed for many years before national income accounting became available, but its development certainly gave the problem new focus.The use of national accounts for cyclical analysis has given rise to two problems. The first is that attention in Canada has focused on the period since 1926. There has been great emphasis accordingly on the Great Depression, its transmission to and impact on the economy. This cyclical experience has dominated the recent thinking of Canadian economists quite apart from the crises and misery which it brought. After all it is the one cyclical movement which stands out clearly in the national accounts. Furthermore, the experience of 1929-32 presented an unusual combination of circumstances. Nothing like it in duration or extent had occurred since the 1870’s. To base much of the analysis of Canadian business cycles on this one downturn, however major it might have been, and to draw implications for policy therefrom, could easily put public and private decision-making on an inadequate and misleading foundation.