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Title page 1

Contents 3

Executive summary 4

1. Introduction 5

2. Background 8

3. Empirical Results and Discussions 16

3.1. Specification and data 16

3.2. Empirical results 19

3.3. Sensitivity analysis 23

4. Policy Implications 27

5. Conclusions 30

Appendix 1. Additional Results 31

Appendix 2. Notes on Labour Productivity Data Comparisons 33

References 35

About the Author 40

Acknowledgments 40

Publishing Information 41

About the Fraser Institute 42

Editorial Advisory Board 43

Tables 18

Table 1. Basic summary statistics for key variables, 1980-2023 18

Table 2. Public debt and the growth of productivity, Canada, 1980-2023 20

Table 3. Sensitivity Analysis, 1980-2023 24

Figures 9

Figure 1. Trends in labour productivity in Canada and the United States, 1998-2023 9

Figure 2. Average growth rates of labour productivity in Canada and the United States, various periods, 1981-2023 10

Figure 3. Labour productivity ($US per hour) in OECD countries, 2023 11

Figure 4. Ratio of general government gross debt to GDP, Canada, 1980-2023 13

Figure 5. Percentage-point increase in the ratio of general government debt to GDP as a result of the COVID-19 pandemic, Canada, G7, and other countries, 2020 13

Figure 6. Ratio of general government gross debt to GDP, Canada and other advanced countries, 2023 14

Figure 7. Effect of reductions in general government debt on labour productivity ($ per hour worked; 2017$), 2021-2029 29

Appendix Tables 31

Table A1.1. Data descriptions and sources 31

Table A1.2. Unit-root tests, 1980-2023 32

Table A2.1. Public debt and productivity using different datasets, 1997-2023 34

Appendix Figures 33

Figure A2.1. Growth rates of labour productivity as computed from alternative data sources, 1998-2023 33