[This is a guest post by Hashmat Khan of Carleton University and Nyamekye Asare of the University of Ottawa.]
Can policies stimulating private investment deliver higher employment? Maybe, but investment and employment have become disconnected recently in Canada.
John Taylor has noted a strong negative correlation between investment and the unemployment rate, and argued that higher investment is the best way to reduce unemployment. Paul Krugman has questioned the direction of this causality, and the Canadian evidence seems to be somewhat supportive of his position.