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Canada 6th most “miserable” country among 35 advanced economies

Canada 6th most “miserable” country among 35 advanced economies

THUNDER BAY, ONTARIO  ~~~~~  January 18, 2022  (LSNews)  Canada’s higher inflation rate coupled with higher unemployment make it the 6th most miserable countries among 35 advanced economies worldwide, finds a new study released today by the Fraser Institute, an independent, non-partisan Canadian public policy think-tank.

“Canadians are rightly concerned about the country’s high inflation and unemployment rates, and when compared to other developed countries, Canada is not doing well,” said Jason Clements, executive vice president of the Fraser Institute and co-author of The Misery Index Returns

The study finds that out of the International Monetary Fund’s 35 most advanced economies, Canada has the 6th worst Misery Index score in 2021 of 10.88—a combination of Canada’s inflation rate of 3.15 and unemployment rate of 7.72.

Only five countries are more miserable than Canada. Spain is the worst with a Misery Index score of 17.61, followed by Greece (15.73), Italy (11.96) and Iceland (11.26). Other notable countries, which are less miserable than Canada, include France (10.10), the United States (9.72), Australia (7.33) and the United Kingdom (7.17).

The least miserable countries with the lowest index scores are Switzerland (3.57) and Japan (2.61).

The Misery Index was developed by American economist Arthur Okun as a way to capture both the costs of high inflation and high unemployment.

While prominent in policy discussions in the 1970s and 1980s, the Misery Index all but disappeared from public discourse starting in the early 1990s as inflation was tamed and remained low, and unemployment in most countries trended downwards.

“The fact that we are again discussing the Misery Index and Canada’s high ranking on it is bad news for all Canadians, who will suffer as a result,” Clemens said.

“Governments across Canada, particularly the federal government, should prioritize those policies that will make Canadians less miserable by lowering inflation and unemployment.”

Summary

  • The Misery Index, a combination of inflation and unemployment rates created by economist Arthur Okun, is resurfacing as a measure of interest across developed countries as inflation rates increase and unemployment remains relatively high.
  • Canada suffered from inflation rates that were routinely above 4 percent up until 1992 when the Bank of Canada was finally able to bring inflation under control. Canadians have enjoyed low inflation rates, ranging from near zero to under 3 percent from 1992 to 2020.
  • In 2021, inflation rates increased markedly and are expected to remain at their current level throughout 2022. While many argue the current inflation rates are transitory, meaning that they are short-term in nature, there are genuine reasons to worry that higher inflation could be longer lasting.
  • Indeed, Canadians are now rightly concerned with inflation, our Misery Index, and our comparative performance with other industrialized countries.
  • The International Monetary Fund forecasts Canada to have the 4th highest inflation rate among 35 industrialized countries in 2021 and the 8th highest unemployment rate.
  • This results in Canada having the 6th worst Misery Index score (combined rates of inflation and unemployment) in 2021 out of 35 industrialized countries.
  • Such results should prompt much greater interest in both inflation and unemployment—and policies that can respond to both—by governments, particularly the federal government.

Authors:

Jason Clemens
Executive Vice President, Fraser Institute

Milagros Palacios
Director, Addington Centre for Measurement, Fraser Institute

Nathaniel Li
Economist

#LSN_Econ  #LSNews_Tbay 

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    The Fraser Institute is an independent, non-partisan research and educational organization based in Canada. We have offices in Calgary, Montreal, Toronto, and Vancouver. Visit our Website 

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