Economic Growth and Austerity: The Truth About the Situation in Quebec

Governments play an important role in stabilizing the economy. The impact of this government intervention on economic growth depends on the levers used, their scale, and at what point in the economic cycle the intervention takes place. After providing strong economic stimulus between 2007 and 2009, the Quebec government began a period of spending cuts in 2010 that will continue until 2016. For the 2003–16 period as a whole, direct government stimulus will total approximately $3.5 billion. When we include the indirect and induced impacts of these government investments, the overall economic impact of government stimulation during this period is also positive. Are the current budget cuts too much, too soon? According to all the indicators analyzed by the Institut du Québec, postponing balancing the budget in order to further stimulate the economy in the short term is not warranted at this time.