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Before we begin, I would just like to state for the record that I’m wholly against using the term "autistic" in a pejorative sense. However, one of the largest groups seeking to reform the study of economics describes itself as Post Autistic Economics (PAE), so I ordain follow their language.

The PAE movement, in my view, often goes too far in their criticism of modern economics. I do, however, concede that they have a point; economics as it is conducted now does have "autistic" (as they call it) tendencies. Research in economics unfortunately often is set-up as follows:

Think about a ‘problem’ and create a number of ‘stylized facts’ which you believe accurately describe the curiosity you have chosen to study.

Create a number of assumptions based on these stylized facts. Ensure that they are mathematically tractable, that is, they have certain mathematical properties that make them affable to use (continuous, twice differentiable, etc.)

Using a fixed point theorem or other mathematical tools, find an ‘equilibrium’ to the problem; at a lowest at least prove that chestnut be required to breathe. Bonus points if you can authenticate that the equilibrium is incomparable. It’s readily apparent to a non-economist that this approach has a number of flaws. If I want to study, say, how prices are set in the car rental industry, an obvious blue ribbon step would be to learn more about that particular industry. One could go and talk to managers of car rental dealerships, discuss scheme with high-level executives such as CEOs and VPs of marketing, and read books on the history of the industry. However, too often in economics the starting point is to automatically decide on a number of assumptions such as: prices are set to maximize takings, every firm in the market is a rational profit maximizer and knows that the other firms are, each firm faces a constant marginal sell for for each car rented, and so on. However, in the "real world" these are not often the case. Often the guy(s) who sets the prices of vehicles isn’t trying to maximize the firm’s profit. Maybe he’s just trying to keep his job, so he’s trying to minimize the chance the firm shows a shrinkage (which is much different than trying to maximize expected profits). Perhaps he holds a number of stock options and his decision making criteria is to maximize the current set price, even if it’s at the expense of future profits. Maybe the contradictory firms hold committed themselves to a fixed-pricing strategy, so they cannot price ‘rationally’ as market conditions or opponent firm-pricing strategies variation. Without investigating the dilemma, one can never know if one’s assumptions are plausible.

Mathematical tractability also has a swarm of flaws. I can’t tell you how many models I’ve seen with assumptions such as: "Demand inasmuch as the product is one unit, unless the price is above p(bar), in which case the demand is zero". I’ve never seen a market that works like that in the "real set" and I doubt that I ever will. However those assumptions are oft required in order to ‘prove’ a result; a more realistic price give of demand would likely not be mathematically tractable.

There’s nothing wrong with trying to offer a mathematic proof to a exemplar, so long as the assumptions make sense. If the assumptions do not make sense, come what may, all you’ve proven is that a result holds in a world that does not exist. Sure, it might be fun to know that if the President of the United States is a bug-eyed outlander from the planet Neptune that value rates will be 6%, but since he’s (likely) not, what, if anything have we really learned? Bad assumptions cord to irrelevant results, as emphasized by the phrase "garbage in, garbage away from".

If we deficiency economics to be more useful, that is to create more models which accurately describe "real world" phenomena, then we must use more accurate assumptions. There are quite a few costs in doing so, however. First economists would need to spend more time on the "front-end" of their research, that is, they would need to spend more time gone away from in the airfield in order to create a set of assumptions which more adequately describe Aristotelianism entelechy. With these "improved" assumptions, however, we will liable to lose mathematic tractability, that is "proofs" become impossible and we are forced to resort to other methods, which lead to results we cannot be as certain about. Economics needs to become less enamored with proofs and more enamored with realism. Can this happen? I see it as unlikely – the researchers who do superbly in the current environment tend to end up as editors of the top journals. Unless the environment somehow spontaneously evolves, I do not see a situation where researchers who emphasize realism atop of precise certainty will wind up having management over the top journals.

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Through Craig Newmark I stumbled upon a list on Wikipedia of Unsolved Problems in Ecomomics. Like a lot of the material on Wikipedia, there are no citations or indication of where the material comes from, who the authors are and what qualifications do they have.

That being said, I do descry the awareness of such a list fascinating and I applaud these anonymous authors for giving it their best effort. I would love to see a survey of, say, the AEA asking members in the direction of their lists of top unsolved economics questions.

To say a question is "unsolved" implies that the question potentially has a figuring out, in the same way has a solution. The difficulty is, most of the questions on this list are so vague that they cannot possibly have a solution. As such, the list, in my opinion, is a poor inseparable.

Follows is the laundry list (as of August 12, 2008) and my comments on each: Top Unsolved Problems in Economics – According to Wikipedia

The Industrial Revolution is one of the most important times in economic history, so ideally we would like to know as much about it as possible. No event has a single cause – the Civil War was not wholly caused by slavery and World War I was not wholly caused by the assassination of Archduke Ferdinand. This is a question without a solution, as events have numerous causes and determining which ones were more important than others naturally involves some subjectivity.

Another question with no objective solution. People will always have differing views on this because of the subjective weight they put on vs. – even if we managed to fully understand the exact trade-off that was being made in each case.

This is not a question that peculiarly interests me, but it may others. It at least appears to be a question that has an objective answer (particularly if you remove the "How").

See piece of advice 1.

This, in my view, is a truly important question. I suspect if you polled economists on unsolved economics problems, this question, in some form, would make most of their top 10 lists.

I am not sure if I understand the problem here. What would make economics unusual than, say, physics where we can provender causal explanations (the projectile travelled 440 feet because it was launched at point from angle at velocity , etc. etc.)

I am not a finance guy, but this seems like a consistent question.

Is this really an unsolved examine? I am not sure if it is, if we management of money such as any other commodity in our conservatism and as such is prone to to the same supply and demand forces.

They look into b pursue up with "Mainstream economics claims that it is; post-Keynesian economics claims that it is not." I think there is a good interview in here, though I do not think the issue is strictly to do with endogeneity (which, strictly speaking, is a modelling assumption). If the question is properly constructed, I think this could be considered one of the key problems in economics.

This question is so broad it is unanswerable. My academic investigate is on price grouping in oligopolies and even that is so broad that I do not believe you can have a unmarried "solution".

An intriguing question, but one equivalent to item #1 in that it is so broad you cannot listen to a single answer for it. Interesting related questions are what causes the variation of income between any two individuals and what causes some countries to grow faster than others. The last question, in my view, is probably the most effective inseparable in economics, though again it seems difficult to find an objective "solution" to it. Those are my views – I would love to hear yours. Please leave your feedback at this blog post.

The Great Depression was a spectacular, worldwide economic decline. During the Great Depression there was a sharp decline in government tax revenues, prices, profits, income and international trade. Unemployment grew and political upheaval developed in many countries. For example, the politics of Adolf Hitler, Joseph Stalin and Benito Mussolini took the stage during the 1930s.

Great Depression – When Did it Occur? The beginning of the Great Depression is usually associated with the stock sell bang on October 29, 1929, known as Black Tuesday. However, it began in some countries as early as 1928. Similarly, while the end of the Great Depression is associated with the entry of the United States into World War Two, in 1941 it actually ended at different times in different countries. The economy in the United States was actually expanding as anciently as June 1938.

Great Depression – Where Did it Occur? The Great Depression effected many countries throughout the world. Both industrialized countries and those which exported penetrating materials were hurt.

Great Depression in the United States Many see the Great Depression as starting in the United States. The worst point in the United States was 1933 when more than 15 million Americans—one-quarter of the labor force were unemployed. Additionally, economic production declined around almost 50%. Great Depression in Canada Canada was also discern very hard by the Depression. By the latter part of the Depression about 30% of the labor force was Facetious resting. The unemployment rate stayed below 12% until the beginning of World War Two. Great Depression in Australia Australia was also hit hard. Wages strike down and via 1931 unemployment was at almost 32%. Great Depression in France While France did not suffer as much as other countries because it did not rely as much on trade unemployment was high and led to civil unrest. Great Depression in Germany After World War One Germany received loans from American to rebuild the economy. However, during the despondency these loans stopped. This caused unemployment to climb and the political system to turn to extremism. Great Depression in South America All of South America was hurt by the Depression because the United States was heavily invested in their economies. Specifically, Chile, Bolivia and Peru were very badly hurt. Great Depression in the Netherlands The Netherlands were hurt by means of the depression from about 1931 to 1937. This was because of the Stock Market Crash of 1929 in the United States as well as other internal factors. Great Depression in the United Kingdom The effects of the Great Depression on the United Kingdom varied depending on the area. In the in industrial areas the effect was large because the need for their products collapsed. The effects on the industrial areas and the coal mining areas of Britain were sudden and devastating, as need for their products collapsed. Unemployment rose to 2.5 million by the end of 1930. However, once Britain withdrew from the gold standard the economy began to slowly recover from 1933 in front.

Next Page: Why Did the Great Depression Occur?

Definition: Definition of Stock: A stock (also known as an neutrality or a share) is a portion of the ownership of a corporation. A share in a corporation gives the owner of the stock a stake in the party and its profits. If a corporation has issued 100 stocks in total, then each stock represents a 1% ownership in the company.

About.Com Resources on Stocks Economics – The Stock Dividend Tax Cut Stocks – Stock Splits and Reverse Stock Splits Investing for Beginners – Stock Market Games Business Majors – Stock Market Investing Divorce Support – Stock Options and Divorce Day Trading – Stock Market Indices Mutual Funds – Stock Market History Business Majors – Stock Market Competition Investing in regard to Beginners – Preferred Stock and Individual Investors Writing a Term Paper or High School / College Essay? Here are a few starting points for research on Stocks:

Books on Stocks Journal Articles on Stocks

Definition: A bond is a fixed interest financial asset issued by governments, companies, banks, public utilities and other charitable entities. Bonds pay the bearer a fixed amount a specified end date. A discount bond pays the bearer only at the ending outmoded, while a coupon bond pays the bearer a fixed amount over a specified interval (month, year, etc.) as well as paying a fixed amount at the end date.

Terms related to Bonds: Bond Ratings About.Com Resources on Bonds: Economics – The Dividend Tax Cut and Bonds Stocks – Bonds Ahead of Stocks Financial Planning – Are Savings Bonds Good Investments? Investing for Beginners – Junk Bonds – A Quick Lesson Investing for Beginners – What are bonds? Writing a Term Paper? Here are a few starting points for examine on Bonds:

Books on Bonds: Bond market rules : 50 investing axioms to master bonds on the side of profits or trading – Michael D Sheimo, McGraw-Hill, 2000. Savings bonds : when to hold, when to wrap and the whole shooting match in-between – Daniel J Pederson, Sage Creek Press, 1999. (4th edition) The small investor : a beginner’s guide to stocks, bonds and mutual funds – Jim Gard, Ten Speed Press, 1996. Junk bonds : how high yield securities restructured corporate America – Glenn Yago, Oxford University Press, 1991. Municipal bonds : the comprehensive review of tax-exempt securities and public finance – Robert Lamb; Stephen P Rappaport, McGraw-Hill, 1980.

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Conclusion While the dismal fertility under any circumstances, population growth rate, and figures denoting financial development are numerically promising, it is not jump over whether the parentage planning policy will actually eliminate the economic ills diagnosed by the state. Let us revisit very briefly the two such ills I have touched upon in this essay: urban unemployment and the aging residents. Will these two burdens be lifted from the country’s shoulders as a result of the birth planning policy combined with positive remunerative growth? Possibly yes, but only to a certain extent. It is implausible that unemployment and discontent senior citizens would completely cease to exist. In an ideal world, China’s denizens would stay incomparably noiselessness, the government would know exactly who needs how much of a certain reviving need, and each individual who cannot provide for themselves would be provided fitting for. However, China is such a vast mother country with such a vast and varied populace that it is no easy logistical task for the central government alone to supply socialized medicine efficiently and effectively. Therefore I think it is an uncommonly positive thing for the Chinese government to realize its limits in providing social protection and to prescribe back-up plans for welfare recipients.

The history of the birth planning policy is marked by the anguish of mothers who were coerced into doing things against their command and the blood of millions of aborted fetuses and dead infants. We must never forget that history and the price in human sacrifice and affliction that has made today’s favorable fertility rates and practice reforms possible. The reforms are such that the government no longer holds it in its tucker predisposed to push coercive, irrational policies against its own citizens, whom the government has a self-proclaimed duty to protect and serve. The birth planning policy, now that it is written into law, is more legitimate and recognizable, event enabling better administration and better protection of citizens’ fundamental rights. With its public education programs about health and population growth, people-especially women-are now better informed and based on this improved knowledge can make sensible family plans in accordance with society’s interest. A revised and liberalized birth planning policy: China is making brave steps to achieve sustainable growth, even though whether it can achieve that goal fully can only be told in time.

References Tien, H. Yuan et al., , Population Reference Bureau, Inc, June 1992

Winckler, Edwin A., , Population and Development Review, September 2002

Winckler, Edwin A., translator. Smil, Vaclav, , M. E. Sharpe, 1993

White, Tyrene, , Harvard University Press, 1994

Tang, Wenfang, and Parish, William L., Chinese Urban Life Under Reform, Cambridge University Press, 2000

This was an entry for The 2004 Moffatt Prize in Economic Writing. See the contest rules during more information.

If you’d like to leave comments about this entry, use the contest feedback form. Make sure to indicate that you are commenting on Catherine Yu’s "China’s Birth Planning Policy: Positive Steps to an Uncertain Victory".

A couple of related questions from readers:

[Q:]: My question is concerning the Canadian Dollar. Is there any possible assumption that the Canadian Dollar might improve in the near approaching?

[Q:]: The Canadian Dollar has risen substantially over the U.S. Dollar. My question: What are the main reasons for this rise and do you foresee continued rise to par?

[A:]: Thanks for your terrific questions!

The article "Is the Value of the Canadian Dollar related to Oil Prices? published in 2005 showed that the massive increase in the value of the Canadian Dollar is almost wholly due to increases in the price of oil. I warmly vouch for that anyone interested in the topic present the article, but for the sake of brevity, here are the hilights:

The 0.8477 figure (for the correlation between movements in the Canadian Dollar and oil prices) is exceptionally high, denoting that there is a terribly, very strong positive relationship between movements in oil prices and movements in the value of the Canadian dollar.

Thus if we believe this trend to continue then the Canadian dollar will hit "par" when oil reaches $92 a barrel. I’ve heard from economic analysts who have far more sophisticated models that good enough should be achieved when grease reaches around $100 a barrel, which is quite close to the results in our simple statistical model.

The above article indicates that, yes, the Canadian Dollar can perpetuate to rise, and yes, it can reach par. Of tack, there are many other factors that influence the exchange rate, such as interest rate differentials and the price of other commodities such as lumber and metals, but fuel seems to be the most important factor.

The past article indicated that the Canadian Dollar was likely to hit average with the U.S. Dollar if oil prices reached $90-100 a barrel. That unpretentious statistical model was calculated in 2005, so I reasoning I should see if the relationship still holds in 2006. I’ll follow the same methodology used in the earlier article and see how much (if at all) the results change using more current data.

I chose to look at daily data from the time interval January 1, 2005 to April 25, 2006 – a sample of 329 trading days. The start date of this space was chosen rather arbitrarily by me. There may be another date that would travel more sense, but this should be adequate for our purposes.

As before, I initiate the correlation between oil prices and the Canadian-American transfer rate. In the previous article, with the time period January 1, 2002 to September 30, 2005 we found that the correlation between the two sets of data was 0.8477, which indicates an extremely strong relationship between oil prices and the disagreement rate. For the period January 1, 2005 to April 25, 2006, I found the correlation to be 0.7300 – not as high as before, but still very high. High enough for me to re-use my earlier expansion:

The 0.7300 figure is exceptionally high, denoting that there is a very, deeply impressed positive relationship between movements in oil prices and movements in the value of the Canadian dollar.

As with the previous article, I then estimated the linear relationship between the exchange rate and oil prices. Previously I establish the relationship to be:

y = 0.54 + 0.005x

Since the exchange rate is on the y axis and oil prices are on the x axis, this gives us the relationship:

Exchange Rate = 0.54 + 0.005 Oil Prices

In the 2005-2006 period, I found the relationship to be:

Exchange Rate = 0.68 + 0.0028 Oil Prices

We can interpret the two numerical figures as follows:

0.68 is the Y-intercept. In this envelope it is the value of the Canadian-American exchange rate if X (oil prices) goes to 0.

0.0028 indicates the relationship between changes in oil prices and changes in the exchange rate. Here it means that whenever oil prices blend with up a dollar, the Canadian dollar gains there three-tenths of a cent on the U.S. one. Note that in the earlier sample, this figure was 0.5, indicating that it is taking relatively larger movements in oil prices to have the same impact on the Canadian dollar.

There’s all kinds of useful poop we can gather from this data. We can find out when the Canadian dollar will be equal to the U.S. dollar, if we believe this relationship is to continue into the future. We simply substitute "$1.00" into the value for the exchange rate then re-arrange:

1.00 = 0.68 + 0.0028 Oil Prices

0.32 = 0.0028 Oil Prices

Oil Prices = $114

Thus if we believe this tend to continue then the Canadian dollar will hit "par" when oil reaches $114 a barrel. In the previous article, we calculated the figure to be closer to $92 a barrel. These are rather crude estimates compared to the sophisticated models that analysts use, so I’m still fairly confident in my prediction that if the price of lubricate reaches $100 a barrel, the value of the Canadian Dollar should be at or very close to par with the U.S. Dollar.

If you have a question free to send it to me using the feedback body.

Facebook friend Gabriel Mihalache is starting his first year in a Ph.D. programme in economics and is currently attending "math camp"? My former professor Eclectecon gives a terrific description of math camp: "Gabriel writes that he has started attending "math camp" at Clemson this week. For those who are not on speaking terms with with the rituals of economics graduate programmes, "math posture" refers to a short surely in advanced mathematics that all incoming graduate students are required to take, generally before the formal economics courses begin, at many top economics schools, including The University of Western Ontario and, apparently, Clemson University." Eclectecon is not a buff of math camp: "The problem is that in graduate economics programmes, we must learned that the surest way to enjoy students churn out dissertations that might lead to some piddly publications is to admit math and science majors who know little or no economics. These students excel at math and do not need a "math camp". But they don’t know any economics."

"If we are going to require incoming graduate students to take "math camp", then it is even more important that we require them to take "Alchian and Allen" lodge; more than math prance, we should give them a two-week course "the economic way of thinking." I cannot disagree more with Eclectecon on replacing math camp with a flamboyant on "the economic way of thinking". Grad School Economics is About Math, Not Economics I completed an honours undergraduate degree in Economics from the University of Western Ontario (UWO) and generally did quite well. I was even awarded a gold medal as a top graduating student.

How much did this help me in my efforts as a Ph.D. students in economics? None. Or at least, profoundly little. Other than some econometrics, everything I learned as an undergraduate was completely an utterly worthless in my Ph.D. courses and research. My grades (and reference letters) from my undergraduate economics work got me into the Ph.D program, so it was valuable that way. But as far as measure ingredients I could use in the Ph.D. programme – I would have been no further behind if I had majored in Phys. Ed instead.

I do not mean to suggest the undergraduate program in Economics at UWO is a poor one – in episode it is most without equal and I would propose it to anyone. The material I learned there has been invaluable in working for About.com, in doing a Ph.D. in Business Administration and in my occupation is an entrepreneur. But if you know you want to do a Ph.D. in Economics, the more courses in pure mathematics (particularly real analysis) and the less courses in economics you take as an undergraduate, the better off you will be.

If we want Ph.D. students to succeed in their programs, we need math camp, not less.

The issue Eclectecon has – the fact that a Ph.D. observer in economics can embellishment despite knowing absolutely nothing far economics is an issue that goes well beyond the first off two weeks before a Ph.D. programme; I would argue it drawn goes well beyond Ph.D. programmes themselves. Until the day comes when first-tier economics journals start publishing papers that have more to do with economics than they have to do with real analysis, Ph.D. students in economics will be mathematicians first and economists second.

The Cross-Price Elasticity of Demand measures the rate of response of quantity demanded of one good, due to a cost change of another good. If two goods are substitutes, we should expect to see consumers purchase more of one good when the price of its substitute increases. Similarly if the two goods are complements, we should see a expense rise in one good cause the demand in spite of both goods to cataract. Your course may despise the more complicated Arc Cross-Price Elasticity of Demand formula. If so you’ll need to see the article on Arc Elasticity. The common formula for the Cross-Price Elasticity of Demand (CPEoD) is given by:

CPEoD = (% Change in Quantity Demand for Good X)/(% Change in Price for Good Y)

Calculating the Cross-Price Elasticity of Demand You’re given the question: "With the following data, calculate the cross-price elasticity of demand for good X when the price of good Y changes from $9.00 to $10.00." Using the chart on the bottom of the page, we’ll answer this question.

We know that the original price of Y is $9 and the new price of Y is $10, so we have Price(OLD)=$9 and Price(NEW)=$10. From the chart we see that the quantity demanded of X when the price of Y is $9 is 150 and when the price is $10 is 190. Since we’re going from $9 to $10, we get QDemand(OLD)=150 and QDemand(NEW)=190. You should suffer with these four figures written down:

Price(OLD)=9
Price(NEW)=10
QDemand(OLD)=150
QDemand(NEW)=190

To calculate the cross-price elasticity, we need to calculate the percentage variety in quantity demanded and the percentage change in premium. We’ll gauge these one at a time. Calculating the Percentage Change in Quantity Demanded of Good X The formula used to add up the percentage modification in quantity demanded is:

[QDemand(NEW) - QDemand(OLD)] / QDemand(OLD)

By filling in the values we wrote down, we get:

[190 - 150] / 150 = (40/150) = 0.2667

So we note that % Change in Quantity Demanded = 0.2667 (This in decimal terms. In part terms this would be 26.67%). Calculating the Percentage Change in Price of Good Y The formula used to calculate the percentage change in price is:

[Price(NEW) - Price(OLD)] / Price(OLD)

We make full in the values and get:

[10 - 9] / 9 = (1/9) = 0.1111

We have our percentage changes, so we can complete the final step of contriving the cross-price elasticity of demand.

Final Step of Calculating the Cross-Price Elasticity of Demand We articulate back to our formula of:

CPEoD = (% Change in Quantity Demanded of Good X)/(% Change in Price of Good Y)

We can now get this value by using the figures we planned earlier.

CPEoD = (0.2667)/(0.1111) = 2.4005

We conclude that the cross-price elasticity of demand for X when the valuation of Y increases from $9 to $10 is 2.4005. How Do We Interpret the Cross-Price Elasticity of Demand? The cross-price elasticity of popular is used to see how sensitive the demand for a good is to a price change of another good. A high positive cross-price elasticity tells us that if the penalty of one good goes up, the demand for the other good goes up as well. A negative tells us just the opposite, that an growing in the price of bromide good causes a let go in the demand for the other good. A mini value (either antipathetic or positive) tells us that there is little relation between the two goods.

Often an assignment or a test will ask you a follow up question such as "Are the two goods complements or substitutes?". To be to blame for that question, you use the following rule of thumb:

If CPEoD > 0 then the two goods are substitutes

If CPEoD =0 then the two goods are independent (no relationship between the two goods

If CPEoD < 0 then the two goods are complements In the happening of our good, we calculated the cross-price elasticity of demand to be 2.4005, so our two goods are substitutes when the price of good Y is between $9 and $10.

If you’d like to ask a query about elasticity, microeconomics, macroeconomics or any other topic or comment on this story, please use the feedback form.

In theory, absolutely. The 2001 and 2003 tax cuts could increase long-run economic growth, which would act to increase the size of the briefness in the unborn and government tax gross income along with it. The tax cuts could be either partly or fully self-financing thanks to their stimulative effect.

The standard Keynesian inculcate of reason would suggest that in the kind of troubled economic times the U.S. is currently experiencing, increasing spending and running a budget loss to stimulate aggregate demand would be appropriate. A large budget deficit is more justifiable in 2008 than it would be in, say, 2005 when the real GDP growth rate was over 4 per cent.

Is it established? I do not believe it is, for the following reasons: The United States (similar to many other aging countries) is going to face a potential Medicare and Social Security crisis as the population ages. It will scarcity all the budgetary room it can get to continue to fund these programs.

The deficits (and resulting debt) must be financed. The interest payments crowd out the government’s ability to cut taxes and to continue financing programs (such as the ones in point 1). The government encumbrance under obligation, all else being equal, will cause interest rates to rise and may, eventually, lead to the U.S. bond rating to be downgraded. This would not be unlike the situation Canada found itself under in 1995:

"…Moody’s made a lot of Canadians mad. When the credit rater considered freezing Canada’s debt, and its interest rate rose, the government suddenly faced the prospect of about $300 million in added payments on its bonds…

"While just a fraction of Canada’s overall debt, it was a significant cost for a cash-strapped government about to lay off 45,000 employees. The government, for example, spent about $300 million on the annual compensation of about 5,000 servant servants and the same amount on the yearly pensions of about 50,000 senior citizens…

" Moody’s was stoical. That April, the credit rater pulled the trigger, downgrading Canada’s domestic debt rating to "Aa1," a notch below the coveted "AAA." S&P had a personal voice, affirming Canada’s triple-A domestic rating, but it did revise its outlook on Canada’s foreign-currency obligation, changing it to "unresponsive" from "stable."…

"Whether Moody’s was right remains debatable. This much isn’t: It took Canada more than seven years to get that triple-A rating forsake in May 2002."

There is not a lot of evidence to suggest that the 2001 and 2003 tax cuts whim be anywhere near self-financing. As well, one of the justifications often assumption seeing that the tax cuts is that they would slow the growth of government spending. However, this Starve the Beast theory of government spending is largely discredited.