OECD Measures Debt via GDP

One of the most important but confusing economic benchmarks is the level of debt carried by a nation. Is it in constant or inflated dollars? How do we account for population growth and inflation? Adding to the complexity is the different levels of government in a country like Canada. Probably the best way of measuring debt is as a percentage of gross national product. In an indirect way, it accommodates natural growth (like population and inflation), the health of our economy, and the capacity to carry debt at any given time.

The following are two interesting graphs that help explain Canada’s debt, as reported by the Globe and Mail on Aug. 3, 2010:

One interesting thing to note in the second graph is that Canada’s total debt load looks as bad as the United States. In a certain sense it’s true; debt is debt, after all. But constitutionally speaking, Canada’s federal government is not responsible for provincial debt, whereas the the 50 states in the United States cannot run deficits. So the American federal government owns most of its debt, while Canada’s federal government is only responsible for 63% of Canada’s overall government debt.

Posted by Colin Welch at 6:33 PM
Edited on: Sunday, August 08, 2010 7:14 PM
Categories: American Politics, BC Politics, Canadian Politics, The Economy

 

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