Government grants in federal countries account for a small share of the national product of these countries. I suppose that this, and the fact that federal arrangements are relatively flexible, explains why no well-organized body of economic doctrine deals with the issues raised by the existence of these grants. In terms of general principles, I venture the opinion that the consensus among economists—though perhaps not among students of public administration—holds that these grants can be defended with ethical and distribution arguments, but that on grounds of efficiency (in the economist's sense) and resource allocation they are to be condemned. Further, I would guess that majority opinion would favour unconditional over conditional grants on the ground that the latter do not respect the sovereignty of the “consumer” or of the spender.

These principles seem to have been accepted and even defended by economists like Bhargava, Buchanan, and Scott and to have received the support of Dehem and Wolfe among others. Dissenters, like Buchanan—on the question of efficiency versus ethics—have dissented only in part.

The Keynesian faith in the effectiveness of fiscal policy consists in the belief that there is a positive rate of change of national income with respect to autonomous expenditure. This in turn stems from the belief that the marginal efficiency schedule is downward-sloping. This dependence can be seen from a simple formulation of the Keynesian system. Letting Y be national income, E1 investment expenditure, E2 autonomous expenditure, r the marginal efficiency of capital, i the interest rate, and M the stock of money:

The dependent variables are Y, E1, r, and i. The derivative dY/dE2, evaluated from (1)–(4),is the expression:

The addition of dE1/dt to the right side of (3) yields a differential-equation system whose solution is stable only if the denominator of this expression is positive. It follows that dY/dE2, the rate of change of national income with respect to autonomous expenditure, is opposite in sign to ∂η/∂E1, the slope of the marginal efficiency schedule.

When the British North America Act was passed in 1867, the distinction between Privy Council, cabinet, and ministry was already well established in Britain. The Privy Council was the body recognized by law, but its original function of advising the Crown had been taken over by the cabinet, which remained in principle a committee of the larger body. The ministry was composed of those privy counsellors who formed the cabinet, plus certain other ministers who were outside the cabinet and were not normally sworn of the Privy Council.

Before the federation of the British North American provinces, colonial “cabinets” had been styled “executive councils” and resignation from office had carried with it no continuing title of precedence; that is, contrary to British practice, a minister who resigned his portfolio ceased to be a member of the the executive council and hence lost his title of “Honourable.” Undoubtedly it was felt, as Alpheus Todd has stated, that an organization resembling the British Privy Council, liable to be convened on special occasions or for ceremonial purposes, was unnecessary in a colony, where government should be kept as simple as possible. Similarly, since the powers of colonial governments were relatively limited, there was no need for a large ministry; thus, the British distinction between ministers in the cabinet and those outside had not developed in the colonies.

This paper presents some computations of the impact of exports to various areas of the world in 1956 upon output, employment, and income originating in Canadian industries. It also examines what might have happened if both exports and imports in 1956 had increased by, say, one hundred million dollars; that is, if a balanced increase in foreign trade had occurred. A major purpose of the analysis is to illustrate a method by which the effects of such an increase on the industrial distribution of output, employment, and income might be estimated. The analysis includes, in addition to the direct effects, the indirect effects on industries which produce materials or other inputs used by the industries directly affected by foreign trade. Inter-industry input-output analysis has been used to estimate these indirect effects. Secondary effects resulting from the changes in income induced by the changes in foreign trade are, however, not included in the analysis.

The year 1956 was chosen largely as a result of statistical convenience. As a result of previous work by the present authors, a large body of inter-industry statistics for 1956 exists. This made it possible to “update” the 1949 input-output matrices to 1956 by a technique which will be explained below so that it could be used in conjunction with the export figures specially prepared for this study.

This study has two main purposes: the estimation of certain demand relations, and the assessment of the usefulness of Canadian consumer expenditure surveys as a source for the derivation of such estimates. Results from five surveys of Canadian urban family expenditures in the post-war period have been published, and the returns from a sixth are now being processed. These reports have received relatively little attention from economists, probably because of the limited scope of most of the surveys. Their principal objective was to provide appropriate commodity weights (or a check on existing weights) for the Consumer Price Index (CPI); the sample interviewed was mostly restricted to the CPI target income group and often to only a few cities. The surveys for 1947–48 and 1959, however, do not contain any family-size or income restrictions. The former sampled the non-farm population and the latter those living in cities with populations of 15,000 and over. For these two surveys, expenditures on major commodity groups were cross-classified by income and family-size. It is only for these two surveys that Engel curves can be fitted. Estimates of income and family-size parameters were obtained for this study by using two methods of estimation—least squares and instrumental variables. The results obtained from the latter method provide, under certain assumptions, a measure of the extent of the downward bias in the least squares estimates of the parameters caused by transitory income. In addition, estimates of the income elasticity of consumption are obtained on the basis of different methods of grouping the spending units surveyed, in an attempt to test the hypothesis that this value is unity.

Canadian anticipations data for manufacturers' capital and repair expenditures are now extensive enough to allow statistical estimates of their accuracy to be made. The data are based on mail questionnaire surveys conducted and analysed by the Dominion Bureau of Statistics and the Department of Trade and Commerce. Their year-end “cut-off” surveys include manufacturing establishments having gross sales in excess of $200,000.00 annually, and are used to estimate intentions for the year ahead, as well as to provide actual expenditures for the current year and the previous year. The results are published the following spring, and the forecasts are revised at mid-year on the basis of smaller “follow-up” surveys which include only the larger establishments.

The accuracy of these forecasts is measured in this study by comparing them with the estimates of actual expenditures which are published two years later. Objections to such comparisons on the grounds that the forecasts could be used as an instrument of control, designed to influence the subject of the forecast, can be safely ignored, since the published results are simply summations of the estimates of individual establishments, with a mechanical allowance for non-surveyed expenditures. Our measure of accuracy might also be criticized on the grounds that the estimates of actual expenditures may be as inaccurate as the forecasts themselves, so that the comparison of forecast to “actual” is no measure of the accuracy of the former. This is unlikely to be the case, however, since the accounting data of most firms provide accurate and readily available statements of actual capital outlays.