Economic Shocks: Defining a Role for Government (Policy Study, 35)

Devastating floods and other natural calamities, economic upheaval caused by drastic changes in domestic and international markets, and government policy or plain economic mismanagement - all these events can cause acute economic shocks to the people of a region or to a sector of the economy. In such circumstances, what is the appropriate role, if any, for government? This sweeping study examines the types of economic shocks that can occur, the rationales governments use to justify their response to shocks, and the policy tools available to governments that are considering intervention. At the heart of the monograph are case studies of recent economic shocks and how governments responded to them. Natural shocks are represented by the massive floods that occurred in the United States Midwest in 1993 and in the Red River Valley in 1997. For market shocks, the authors look at the oil price shocks of the 1970s and the hardships caused by the volatility of agricultural commodity prices. And for examples of government-induced shocks, there are the Canadian federal government's mismanagement of the east coast cod fishery and the dislocations and transition costs wrought by trade liberalization in some sectors of the Canadian economy. The authors argue that the lessons learned from these case studies can help discipline governments in their response to economic shocks.
About the
Edward M. Iacobucci is Assistant Professor in the Faculty of Law, University of Toronto. Michael J. Trebilcock is Professor of Law in the Faculty of Law, University of Toronto, and a Research Fellow of the C.D. How Institute. Huma Haider is a graduate student at the University of Toronto and was profiled in the Special Millennium Issue of Maclean's magazine as one of 100 young Canadians to watch.