Tuesday, November 18, 2008

Resource Wealth and Purchasing Power

Statscan has a nice graph showing that real gross domestic income per capita in Newfoundland grew by 9.5% annually from 2003 to 2007, the vast majority of which stems from increased resource prices. That's a lot. Not that I would have predicted that degree of change from simply from observing changes to the capital region. The permanent income hypothesis is true, I guess.

Of course, this will reverse this year as the decline in oil prices puts government in a real fiscal bind. Anyone who thinks that Newfoundland is structurally off equalization is crazy.

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