OTTAWA—A new study released today by the Canadian Centre for Policy Alternatives finds that, contrary to popular belief, it does not make economic sense for the Canadian government to pay down the national debt.
The study, by Tony Myatt and Joe Ruggeri of the University of New Brunswick, examines the assertion by many economists that lowering the debt-to-GDP ratio will have a substantial positive effect on the standard of living. The consensus estimate is that permanently reducing the debt-to-GDP ratio from 80% to zero would raise the long-run level of consumption by around 8%.