The IMF Country Reports Series covers economic and financial developments and trends in member countries. Each report, prepared by a staff team after discussions with officials of the country, is published at the option of the member.
This paper documents two aspects of Canada's regional diversity and compares the results with those across U.S. regions. Although gradually converging, Canadian provinces exhibit a considerably diverse economic structure. The paper suggests that the reduction in macroeconomic volatility in Canada after the introduction of inflation targeting is largely attributable to the reaction of the private sector to the establishment of a credible monetary policy framework. Reduction in personal income taxation provides considerably larger efficiency gains than a reduction in the effective Goods and Services Tax (GST).