<p>The Canadian provinces implement most of the welfare state programmes. The role of the Canadian Federal Government is to set out guidelines, and undertake fiscal transfers to allow provinces to stay near national standards. Since they have much larger budgets, they necessarily end up absorbing more of the economic cycle as being an automatic stabliser (i.e. they issue more debt).</p>

<p>There are no balanced budget laws for Canadian Provinces. American states generally have balanced budget rules, so debt levels are necessarily low. The states that do not have balanced budget laws are pretty much forced to follow the borrowing norms set by states with balanced budget rules.</p>

<p>Finally, the funding mechanism is different. Canadian city governments do not issue much debt, and there is very little project-based bond issuance. In other words, debt that shows up at the Provincial level ends up being financed otherwise in the United States (and does not show up in State level debt).</p>

CC BY-SA 3.0
2017-06-01T09:44:25.223Z
How does this address the question? The issue is **higher** debt per GDP in Canada than US. You are instead saying that the funding is different, so Canada's cities issue less debt. How is this consistent with the numbers provided? How is the budget rule relevant? Do all US states have them? What if taxation rates are different? (Debt depends importantly on tax revenues) And why who implement welfare state programmes matter? I seriously fail to see how this answer is relevant. It needs considerable editing and further information, and ideally, backed with references.
luchonacho
CC BY-SA 3.0
2017-06-01T10:38:36.887Z
It's an argument from authority, I worked as a provincial bond analyst. I'll add a couple of explanatory remarks, but what I gave is the set of reasons that matter.
Brian Romanchuk
CC BY-SA 3.0
2017-06-01T10:47:47.270Z
Finding a reference in the public domain would be tough. Ratings agencies would be the only people do to analysis like this, and their research is not free.
Brian Romanchuk
CC BY-SA 3.0
2017-06-01T11:45:38.793Z
@BrianRomanchuk : A scientist can tell you that using a specific value e.g. nutrients , to say apple is better than orange, is not science. So call "authority argument" is merely apple and orange comparison , for the sick of political gains only.
mootmoot
CC BY-SA 3.0
2017-06-01T12:38:45.910Z
It's common knowledge among the people who actually care about provincial debt. Finding references for common knowledge is not going to be easy, especially when all the relevant research is private. If states have to balance their budgets and provinces do not, how could states get high debt levels?
Brian Romanchuk
CC BY-SA 3.0
2017-06-01T14:58:47.800Z
@BrianRomanchuk How do you make an easy conclusion on countries that using different tax collection policies and fund distributions policies? You can't.  Otherwise, for USA standard, Puerto Rican debt crisis will not be a crisis.
mootmoot
CC BY-SA 3.0
2017-06-01T23:54:32.550Z
This is a good answer.  It says that the relationships between cities, counties, provinces and the national government are different from the comparable levels in the United States.  Since Canadian cities tend not to fund bridges that city level debt becomes provincial level debt.  The question originally asked used weasel words and was problematic.  This answer is common knowledge and does not require references.  The fact that you don't know it is different from it not being widely held knowledge.
Dave Harris
CC BY-SA 3.0
2017-05-31T11:34:50.353Z
2017-06-01T10:52:26.503Z
2017-06-01T10:52:26.503Z
Brian Romanchuk
<p>By the current account, the highest debt-to-GDP state in the US is NY, which is around 23%, with most states around 18%. By comparison, Canadian provinces tend to have much higher ratio, with Ontario at around 37% and Quebec over 40%. What accounts for this? Are the Canadian provinces responsible for distributing social benefits that would be under the federal jurisdiction in the US which skews up their %? Or are they just spending more irresponsibly than the US?</p>

CC BY-SA 3.0
2017-05-31T11:09:27.383Z
Higher debt is not the same thing as "spending more irresponsibly." It's possible to run a budget surplus and spend irresponsibly; just as it's possible to run a budget deficit and invest wisely.
410 gone
CC BY-SA 3.0
2017-05-31T16:35:42.280Z
As in "There are three kinds of lies: lies, damned lies, and statistics.".
Please, go learn the basic statistic and statistic bias on matching. Also learn that correlation doesn't denote causation. That's why I downvote the question.
mootmoot
CC BY-SA 3.0
2017-05-31T17:35:23.707Z
@mootmoot, I chose to upvote the question; it's a good one. Your gripe is petty and arrogant. This community should support questions, not berate those who ask questions.
c4sadler
CC BY-SA 3.0
2017-06-01T09:38:01.747Z
Can you provide the source of your data? We should not discard as an explanation some measurement issue (for example, different definitions).
luchonacho
CC BY-SA 3.0
2017-06-01T11:30:02.867Z
@c4sadler : Invalid correlation and attempt to derive an "answer" is "Garbage in garbage out".  It is similar to a false debate that spark more false interpretation, bad input and bad answer.
mootmoot
CC BY-SA 3.0
2017-06-01T12:49:12.623Z
@luchonacho, one of the recent news stories was that Ontario had a debt-to-GDP ratio five times that of California. That's well beyond measurement/definitional issues. If you want official numbers, you would need to dig into the national accounts data.
Brian Romanchuk
CC BY-SA 3.0
2017-06-01T15:09:52.103Z
@BrianRomanchuk : " five times that of California" , it seems you simply take another out of context report to support your PoV..  There is a statistical bias by using "dilution by numbers". Ontario population ~ 13.6 millions , California population ~ 39.2 millions
mootmoot
CC BY-SA 3.0
2017-06-01T16:06:05.830Z
@mootmoot, I wrote that it's a debt/GDP ratio, it already incorporates income and population, and not population.
Brian Romanchuk
CC BY-SA 3.0
2017-06-01T17:46:29.447Z
@BrianRomanchuk : this doesn't solve the problem of statistical bias and correlation.
mootmoot
CC BY-SA 3.0
2017-06-01T18:28:25.500Z
@mootmoot Do you have any evidence for your theory that provincial debt ratios are not really lower than state debt ratios? The original question assumed that provincial debt levels are higher is common knowledge, and it in fact is common knowledge among bond investors.
Brian Romanchuk
<gdp><usa><canada>
Why are Canadian provinces' debt-to-GDP so much higher than the US?
A1122
# Why are Canadian provinces' debt-to-GDP so much higher than the US?

(Asked by: username_0 on 2017-05-31)

By the current account, the highest debt-to-GDP state in the US is NY, which is around 23%, with most states around 18%. By comparison, Canadian provinces tend to have much higher ratio, with Ontario at around 37% and Quebec over 40%. What accounts for this? Are the Canadian provinces responsible for distributing social benefits that would be under the federal jurisdiction in the US which skews up their %? Or are they just spending more irresponsibly than the US?

**Tags:** gdp, usa, canada

> **Comments:**
> **username_1**: Higher debt is not the same thing as "spending more irresponsibly." It's possible to run a budget surplus and spend irresponsibly; just as it's possible to run a budget deficit and invest wisely.  
> **username_2**: As in "There are three kinds of lies: lies, damned lies, and statistics.". Please, go learn the basic statistic and statistic bias on matching. Also learn that correlation doesn't denote causation. That's why I downvote the question.  
> **username_3**: @username_2, I chose to upvote the question; it's a good one. Your gripe is petty and arrogant. This community should support questions, not berate those who ask questions.  
> **username_4**: Can you provide the source of your data? We should not discard as an explanation some measurement issue (for example, different definitions).  
> **username_2**: @username_3 : Invalid correlation and attempt to derive an "answer" is "Garbage in garbage out".  It is similar to a false debate that spark more false interpretation, bad input and bad answer.  
> **username_5**: @username_4, one of the recent news stories was that Ontario had a debt-to-GDP ratio five times that of California. That's well beyond measurement/definitional issues. If you want official numbers, you would need to dig into the national accounts data.  
> **username_2**: @BrianRomanchuk : " five times that of California" , it seems you simply take another out of context report to support your PoV..  There is a statistical bias by using "dilution by numbers". Ontario population ~ 13.6 millions , California population ~ 39.2 millions  
> **username_5**: @username_2, I wrote that it's a debt/GDP ratio, it already incorporates income and population, and not population.  
> **username_2**: @BrianRomanchuk : this doesn't solve the problem of statistical bias and correlation.  
> **username_5**: @username_2 Do you have any evidence for your theory that provincial debt ratios are not really lower than state debt ratios? The original question assumed that provincial debt levels are higher is common knowledge, and it in fact is common knowledge among bond investors.  

---

## 1 answers

### Answer by username_5 on 2017-05-31. Score: 3

The Canadian provinces implement most of the welfare state programmes. The role of the Canadian Federal Government is to set out guidelines, and undertake fiscal transfers to allow provinces to stay near national standards. Since they have much larger budgets, they necessarily end up absorbing more of the economic cycle as being an automatic stabliser (i.e. they issue more debt).

There are no balanced budget laws for Canadian Provinces. American states generally have balanced budget rules, so debt levels are necessarily low. The states that do not have balanced budget laws are pretty much forced to follow the borrowing norms set by states with balanced budget rules.

Finally, the funding mechanism is different. Canadian city governments do not issue much debt, and there is very little project-based bond issuance. In other words, debt that shows up at the Provincial level ends up being financed otherwise in the United States (and does not show up in State level debt).

> **Comments:**
> **username_4**: How does this address the question? The issue is **higher** debt per GDP in Canada than US. You are instead saying that the funding is different, so Canada's cities issue less debt. How is this consistent with the numbers provided? How is the budget rule relevant? Do all US states have them? What if taxation rates are different? (Debt depends importantly on tax revenues) And why who implement welfare state programmes matter? I seriously fail to see how this answer is relevant. It needs considerable editing and further information, and ideally, backed with references.  
> **username_5**: It's an argument from authority, I worked as a provincial bond analyst. I'll add a couple of explanatory remarks, but what I gave is the set of reasons that matter.  
> **username_5**: Finding a reference in the public domain would be tough. Ratings agencies would be the only people do to analysis like this, and their research is not free.  
> **username_2**: @BrianRomanchuk : A scientist can tell you that using a specific value e.g. nutrients , to say apple is better than orange, is not science. So call "authority argument" is merely apple and orange comparison , for the sick of political gains only.  
> **username_5**: It's common knowledge among the people who actually care about provincial debt. Finding references for common knowledge is not going to be easy, especially when all the relevant research is private. If states have to balance their budgets and provinces do not, how could states get high debt levels?  
> **username_2**: @BrianRomanchuk How do you make an easy conclusion on countries that using different tax collection policies and fund distributions policies? You can't.  Otherwise, for USA standard, Puerto Rican debt crisis will not be a crisis.  
> **username_6**: This is a good answer.  It says that the relationships between cities, counties, provinces and the national government are different from the comparable levels in the United States.  Since Canadian cities tend not to fund bridges that city level debt becomes provincial level debt.  The question originally asked used weasel words and was problematic.  This answer is common knowledge and does not require references.  The fact that you don't know it is different from it not being widely held knowledge.  

---

