Although the resulting upward pressure on the Canadian dollar served as a drag on domestic growth, the effects of this headwind were more than offset by the positive effects of stronger U.S. demand for our exports, higher asset prices, higher commodity prices and an improvement in our terms of trade.13 In other words, Fed easing was a net positive for Canada, making a difficult situation better.
It guarantees a secure framework for rule setting, regulatory enforcement and dispute settlement for citizens and businesses. Such legal certainty is crucial for investment decisions, and it in turn supports productivity and welfare. Still, even if we are able to elicit such a creation and diffusion of new technologies, we know it will not solve all problems.