research bis central bankers ’ speeches showed that, within six to eight years, us government spending on highway projects delivered at least one dollar, possibly two to three dollars, in increased output for every dollar spent. it would be helpful to have more research on the fiscal multipliers of infrastructure spending in canada. but it seems likely to me that well - targeted infrastructure investments will yield more economic growth than just the first infusion of cash because they enable more growth to occur in the future. another key avenue shared by all economies is trade liberalization. we all need to encourage this, both within canada and internationally, since the world seems to be entering a phase of doubt about the benefits of international trade. beyond the rhetoric, the future of the trans - pacific partnership ( tpp ) has come into question, and the trade agreement between canada and the european union, while much more advanced, still must go through a long ratification process. we know from history that sliding into protectionism would be highly counterproductive. it is important for authorities to continually make the case for freer trade. here at home, the announcement this summer of a preliminary agreement on interprovincial free trade is certainly welcome. there are many indications that interprovincial barriers are holding back the growth of individual companies and the economy as a whole. it is also important to recognize and understand the reasons behind rising anti - globalization sentiment. for example, people who have been affected by restructuring brought about by globalization often face difficult adjustments, including retraining and moving long distances. policy - makers need to be sensitive to these difficulties and do what they can to facilitate those adjustments. at the same time, there is a role for economists to do compelling research that reminds people of the impact of trade. increasing trade is a positive - sum game. companies, too, could do more to demonstrate how globalization has made all kinds of goods and services more widely available at a lower cost, and how important trade is for their own employees. making infrastructure investments, defending existing trade arrangements and pursuing new ones are certainly good candidates for boosting canada ’ s economic potential. but when we move from theory to practice, how big can those effects be? well, bearing in mind that we start our analysis with a projection that canada ’ s economic potential is likely to grow by only around 1. 5 per cent, which is not very inspiring, we need to take every decimal point of potential growth more seriously than we have in the past. now,

david dodge : summary of the latest monetary policy report opening statement by mr david dodge, governor of the bank of canada, at a press conference following the release of the monetary policy report, ottawa, 26 april 2007. * * * today, we released the april monetary policy report, which discusses current economic and financial trends in the context of canada's inflation - control strategy. growth of the canadian economy has been essentially in line with the bank's expectations as set out in the january monetary policy report update. but inflation has been higher than expected. after considering the full range of indicators, the bank now judges that the canadian economy was operating just above its production capacity in the first quarter of this year. over the projection horizon, domestic demand continues to be the main driver of growth in canada. with the u. s. slowdown now expected to be somewhat more prolonged than previously projected, net exports should exert a slightly greater drag on growth in 2007. the canadian economy is projected to grow by 2. 2 per cent in 2007 and 2. 7 per cent in both 2008 and 2009, returning to its production capacity in the second half of 2007 and remaining there through 2008 and 2009. core inflation should remain slightly above 2 per cent over the coming months, given pressures on capacity and the impact of higher core food prices. but with the economy projected to return to its production capacity in the second half of this year and with further easing of pressures from housing prices, upward pressure on core inflation is expected to moderate, bringing core inflation back to 2 per cent by the end of 2007. total cpi inflation is projected to rise above the 2 per cent inflation target in the second half of this year, peaking below 3 per cent near the end of 2007 before returning to the target by mid - 2008. the bank continues to judge that the risks to its inflation projection are roughly balanced, although there is now a slight tilt to the upside. on tuesday, the bank left its key policy rate unchanged at 4 1 / 4 per cent. the current level of the policy interest rate is judged, at this time, to be consistent with achieving the inflation target over the medium term.